ENABLING
SUCCESS
Computacenter plc
Annual Report and
Accounts 2020
2020 Highlights
Revenue £m
5,441.3
2020
2019
2018
2017
2016
Profit before tax £m
206.6
2020
2019
2018
2017
2016
Diluted earnings
per share Pence
133.8
2020
2019
2018
2017
2016
+7.7%
Dividend per share Pence
+402.0%
1.
50.7
5,441.3
5,052.8
4,352.6
3,793.4
3,245.4
2020
2019
2018
2017
2016
50.7
10.1
30.3
26.1
22.2
+46.5%
Adjusted1 profit before tax £m
+37.0%
200.5
206.6
141.0
108.1
111.7
87.1
2020
2019
2018
2017
2016
200.5
146.3
118.2
106.2
86.4
+50.3%
Adjusted1 diluted earnings
per share Pence
+36.6%
2.
126.4
133.8
89.0
70.1
66.5
52.3
2020
2019
2018
2017
2016
126.4
92.5
75.7
65.1
54.0
The Group has experienced significant operational and financial impacts from the
unprecedented effect of the COVID-19 crisis. All results in this Annual Report and Accounts
include these COVID-19 impacts and no adjustments have been made to exclude these impacts,
whether they be positive or negative. Further information on the COVID-19 impacts on the
Group, and our response, can be found on page 4 of this Strategic Report. The continued
adoption of the going concern basis by the Directors in the preparation of the Consolidated
Financial Statements is set out on page 138 in note 2 to the Consolidated Financial Statements.
The result has benefited from £261.0 million of revenue (2019: £26.0 million), and £6.5 million
of adjusted1 profit before tax (2019: £0.2 million), resulting from all acquisitions made since
1 January 2019. Of this, for the entities acquired in 2020, the result has benefited from
£232.6 million of revenue and £3.2 million of adjusted1 profit before tax. All figures reported
throughout this Annual Report and Accounts include the results of these acquired entities.
The results of these acquisitions are assumed to be excluded where narrative discussion
refers to ‘organic’ growth in this Annual Report and Accounts.
A reconciliation to adjusted1 measures is provided on page 61 of the Group Finance Director’s
Review. Further details are provided in note 4 to the Consolidated Financial Statements.
Adjusted operating profit or loss,
adjusted net finance income or
expense, adjusted profit or loss before
tax, adjusted tax, adjusted profit or
loss, adjusted earnings per share and
adjusted diluted earnings per share
are, as appropriate, each stated
before: exceptional and other
adjusting items including gains or
losses on business acquisitions and
disposals, amortisation of acquired
intangibles, utilisation of deferred tax
assets (where initial recognition was
as an exceptional item or a fair value
adjustment on acquisition), and the
related tax effect of these exceptional
and other adjusting items, as
Management do not consider these
items when reviewing the underlying
performance of the Segment or the
Group as a whole. A reconciliation to
adjusted measures is provided on page
61 of the Group Finance Director’s
Review which details the impact of
exceptional and other adjusted items
when compared to the non-Generally
Accepted Accounting Practice financial
measures in addition to those reported
in accordance with IFRS. Further detail
is provided within note 4 to the
Consolidated Financial Statements.
We evaluate the long-term
performance and trends within our
Strategic Priorities on a constant
currency basis. Further, the
performance of the Group and its
overseas Segments are shown,
where indicated, in constant currency.
The constant currency presentation,
which is a non-GAAP measure, excludes
the impact of fluctuations in foreign
currency exchange rates. We believe
providing constant currency
information gives valuable
supplemental detail regarding our
results of operations, consistent with
how we evaluate our performance.
We calculate constant currency
percentages by converting our prior-
year local currency financial results
using the current year average
exchange rates and comparing these
recalculated amounts to our current
year results or by presenting the
results in the equivalent local currency
amounts. Wherever the performance
of the Group, or its overseas Segments,
are presented in constant currency, or
equivalent local currency amounts, the
equivalent prior-year measure is also
presented in the reported pound
sterling equivalent using the exchange
rates prevailing at the time. 2020
highlights, as shown above, are
provided in the reported pound
sterling equivalent.
3.
Adjusted net funds or adjusted net debt
includes cash and cash equivalents,
other short or long-term borrowings
and current asset investments.
Following the adoption of IFRS 16 this
measure excludes all lease liabilities.
A table reconciling this measure,
including the impact of lease liabilities,
is provided within note 31 to the
Consolidated Financial Statements,
analysis of changes in net funds.
Some of the images that appear in this
report were taken before COVID-19.
Computacenter
at a glance
CENTRED AROUND OUR CUSTOMERS
Who we are
Computacenter is a leading independent
technology partner, trusted by large
corporate and Public Sector
organisations.
What we do
We help our customers to Source,
Transform and Manage their technology
infrastructure, to deliver digital
transformation, enabling people
and their business.
Our ambition
• Strongly recommended by customers
for the way we help them achieve their
goals.
• The preferred route to market for our
Technology Partners.
• People want to join and stay with us,
be proud of our reputation, as we learn,
earn and have fun.
• Trusted as an agile and innovative
provider of digital technology around
the world.
SOURCE
CIO
PEOPLE
BUSINESS
MANAGE
TRANSFORM
REVENUE CHARACTERISTICS
Computacenter has an integrated offering which provides three complementary entry points for our customers, giving us a balanced
business portfolio and helping us to achieve long-term growth.
SOURCE: Technology Sourcing
We help our customers to determine
their technology needs and, supported
by our Technology Partners, we arrange
the commercial structures, integration
and supply chain services to meet
them reliably.
Revenue characteristics
We earn revenue from large contracts,
with thinner margins and lower visibility.
TRANSFORM: Professional Services
We provide structured solutions and
expert resources to help our customers
to select, deploy and integrate
digital technology, to achieve their
business goals.
MANAGE: Managed Services
We maintain, support and manage
IT infrastructure and operations for
our customers, to improve quality
and flexibility while reducing costs.
Revenue characteristics
Our revenue depends on our forward
order book, which contains a multitude of
short, medium and long-term projects.
Revenue characteristics
Our revenue under contract has high
visibility and is long term and stable.
Technology Sourcing revenue
£m
+9.4%
Professional Services revenue
£m
+16.2%
Managed Services revenue
£m
-3.3%
4,180.1
425.4
835.8
2020
2019
2018
2017
2016
4,180.1
3,822.2
3,177.6
2,636.2
2,207.5
2020
2019
2018
2017
2016
425.4
366.1
321.9
319.2
274.2
2020
2019
2018
2017
2016
835.8
864.5
853.1
838.0
763.7
OUR PURPOSE
Our Purpose is enabling success by building long-term trust with our customers, our partners, our people and our communities. If we do this,
we will earn the trust and loyalty of our shareholders.
We’re proud of what we’ve achieved
But we could be even better
We can help our customers deliver faster
Together, we’ve created a can-do culture where people
matter and are encouraged to thrive. Our business
has grown in capability, reach and reputation. We’ve
built powerful partnerships with the world’s leading
Technology Partners. We deliver digital technology to
some of the world’s greatest organisations.
We have many opportunities to better enable our
people and improve our business. As we grow, we
need to remain agile and relevant to our customers.
We must never forget what makes us different and
why customers rely on us.
Our customers can be confident in our skills and
solutions. They can trust our independence and
experience. Our partners can rely on our reach
and scale. This means we can help customers make
wise choices in a complex and changing world.
By acting with pace and confidence
And together, becoming the best
We’ll be the trusted enablers of success
We are giving our teams the freedom to make
responsible decisions that meet customer needs
faster; investing to make our services more innovative
and competitive; building on the capabilities of our
people, supported by better systems and processes;
and focusing on delivering digital technology at
scale, where we can play to our strengths.
We’ll understand what our customers need so we
remain fundamental to their success. We’ll work hard
to keep our promises and always be honest and
straightforward. We’ll build more collaborative
relationships and continue to treat people as we
expect to be treated. We’ll act for the long term and
always strive to improve what we do.
Our customers will strongly recommend us for the
way we help them achieve their goals. We’ll be the
preferred route to market for Technology Partners.
People will want to join and stay with us, be proud
of our reputation, as we learn, earn and have fun.
We’ll be a trusted, agile and innovative provider of
digital technology around the world.
WORLDWIDE REACH AND CUSTOMER FOCUS
BODEGRAVEN, NETHERLANDS
BRUSSELS, BELGIUM
HATFIELD, MILTON KEYNES,
NOTTINGHAM, SHEFFIELD, UK
HATFIELD, BRAINTREE, UK
HATFIELD, UK, EMEA
BARCELONA, SPAIN
GONESSE, PARIS, FRANCE
LYON, MONTPELLIER,
PARIS, PERPIGNAN, FRANCE
POZNAN, POLAND
SAN FRANCISCO, WEST COAST, CA, USA
LIVERMORE, CA, USA
DALLAS, TX, USA
MEXICO CITY, MEXICO
NEW YORK, EAST COAST, NY, USA
CLUJ, ROMANIA
BUDAPEST, HUNGARY
BERLIN, DRESDEN, ERFURT,
KERPEN, GERMANY
KERPEN, GERMANY
CAPE TOWN, SOUTH AFRICA
ZURICH, SWITZERLAND
BODEGRAVEN, NETHERLANDS
BRUSSELS, BELGIUM
HATFIELD, MILTON KEYNES,
NOTTINGHAM, SHEFFIELD, UK
HATFIELD, BRAINTREE, UK
HATFIELD, UK, EMEA
BARCELONA, SPAIN
DALIAN, CHINA
GONESSE, FRANCE
MONTPELLIER,
PERPIGNAN, FRANCE
BANGALORE, INDIA
KUALA LUMPUR, MALAYSIA
KUALA LUMPUR, MALAYSIA, APAC
POZNAN, POLAND
BUDAPEST, HUNGARY
BERLIN, DRESDEN, ERFURT,
LEIPZIG, KERPEN, GERMANY
KERPEN, GERMANY
CAPE TOWN, SOUTH AFRICA
ZURICH, SWITZERLAND
SERVICE CENTERS
INTEGRATION CENTERS
COMPUTACENTER’S COVERAGE
REGIONAL HEADQUARTERS
DALIAN, CHINA
BANGALORE, INDIA
KUALA LUMPUR, MALAYSIA
KUALA LUMPUR, MALAYSIA, APAC
We Source, Transform and Manage technology for our customers in 70 countries worldwide.
COMPUTACENTER’S COVERAGE
REGIONAL HEADQUARTERS
INTEGRATION CENTERS
MARKHAM, ON, CANADA
SAN FRANCISCO, CA, USA
LIVERMORE, CA, USA
DALLAS, TX, USA
MEXICO CITY, MEXICO
ATLANTA, GA, USA
ALPHARETTA, GA, USA
SERVICE CENTERS
We sell to customers
in 10 countries
Belgium | Canada | France
Germany | Ireland | Netherlands
Spain | Switzerland | UK | USA
We have near-shore/
off-shore operations in
another seven countries
Hungary | India | Malaysia | Mexico
Poland | Romania | South Africa
We have entities and
VAT registrations in
another eight countries
Australia | Brazil | China | Hong Kong
Japan | Malta | Norway | Singapore
We source for
and support
customers in
another 45
countries
ENABLING
SUCCESS BY
BUILDING
LONG-TERM
TRUST
Our Purpose is enabling success by
building long-term trust. This means
enabling the success of our:
•
customers, by helping them to navigate
the complex digital environment and to
Source, Transform and Manage their
digital technology;
people, by creating a business
framework and culture, underpinned by
strong values, which allows them to
build rewarding careers;
Technology Partners, by providing the
scale, reach and stable infrastructure
to successfully deploy their
technologies; and
communities, by acting responsibly and
building a sustainable business.
•
•
•
Strategic Report
IFC 2020 Highlights
02 Our Customers
04 COVID-19 Impact Statement
06 Chairman’s Statement
08
10
12
14 Our Marketplace
16 Our Business Model and Differentiation
18
22
Chief Executive’s Strategic Review
Our Customer Offering
Our Strategic Propositions
Technology Sourcing
Managed Services and Professional
Services
Our Performance in 2020
26 Our Strategic Priorities
28
44 Our People and Culture
52 Our Community
57
59 Non-financial Information Statement
60 Group Finance Director’s Review
Principal Risks and Uncertainties
71
Section 172 Statement
Chairman’s Governance Overview
Board of Directors
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
Governance Report
78
80
82
86
90
96
118 Directors’ Report
123 Directors’ Responsibilities
Financial Statements
125
133
134
Independent Auditor’s Report to the
members of Computacenter plc
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
135 Consolidated Balance Sheet
136
Consolidated Statement of Changes
in Equity
If we do this, we will earn the trust and
loyalty of our shareholders.
137 Consolidated Cash Flow Statement
Notes to the Consolidated Financial
138
Statements
187 Company Balance Sheet
188
Company Statement of Changes
in Equity
Notes to the Company Financial
Statements
Group five-year financial review
189
194
194 Financial calendar
195 Corporate information
196 Principal offices
01
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 About us
OUR CUSTOMERS
This sample of customers’ stories illustrates the trust
that our customers place in Computacenter and the skills
and experience of our people.
The structured
approach and
Computacenter’s
experience of other
projects really paid off.
Liviu Sorin Teodorescu
Deutsche Börse AG
In the Corona crisis, our
users were able to work
seamlessly while on the
move – this alone made
the project worthwhile.
Andreas Weinberger
Donner & Reuschel
We created the
complete system
landscape together
with Computacenter,
Apple and Apple
Financial Services.
Erik Bak-Mikkelsen
SHARE NOW
We have been very
impressed with the support
of the Computacenter team
throughout the COVID-19
pandemic.
Didier Generet
UCB
02
With the flight cases,
Computacenter brought
sensitive IT components to
our data centers in a timely
and efficient manner.
Pascal Heinichen
Volkswagen Financial Services Digital
Solutions GmbH
The Corona crisis once
again showed how
much we can rely on
Computacenter.
Michael Kamp
Bundesagentur für Arbeit
The National old-age
pension fund trusts
Computacenter for the
renewal of its
infrastructures.
David Brichet
CNAV
One of the main tools
where the FCO has been
notoriously weak is IT.
Our Tech Overhaul
project aims to change
that quickly.
Simon McDonald
FCO
Computacenter is an
attentive partner who
proved their agility in
supporting us in 2020.
Thierry Nobre
Société Générale
I’ve a lot of confidence in
our partnership helping our
users do better jobs for
London – we share common
values, particularly putting
users at the heart of
everything that we do.
Djamila Guernou
Transport for London
We rely on Computacenter.
They are a partner with
whom we share ideas, we
share solutions, and we
share roadmaps with each
other to get the best out of
the relationship.
Sarah Lucas
William Hill
03
COVID-19
Impact Statement
PROTECT OUR
PEOPLE, DELIVER
FOR OUR
CUSTOMERS
We are a technology company
supporting customers worldwide,
at a time when technology has
proven critical to mitigating
COVID-19’s disruption of normal
business practices. We have also
executed our own business
continuity plans to great effect
and remained sufficiently agile to
deal with issues as they arose.
As we stepped into 2020, we could
never have planned for the impact
of COVID-19. By mid-March our
internal crisis response team,
including the Chief Executive Officer
(CEO), was meeting daily to
implement plans to protect our
people and enable them to continue
to deliver for our customers,
whilst acting for the Company’s
long-term success.
04
Looking after our people
The safety and wellbeing of our employees
remains our highest priority. As the COVID-19
crisis intensified, we followed all available
government and scientific guidance and
implemented remote working for all
employees where possible, amounting to
nearly 90 per cent of our workforce. We used
leading technology solutions that we were
implementing for our customers to ensure
the continued integrity of our working
environment, whilst ensuring that our
people’s health and safety was paramount
in our decision-making, including setting up
response teams to support their physical
and mental wellbeing.
Throughout 2020, we provided extensive
communication and support to all
employees, including working from home
assistance, mental health support and
training, and global employee assistance
programmes. In addition, we ran seven
separate ‘spotlight surveys’ across the
Group, to gain insight into how supported
employees were feeling and to check their
engagement. The feedback suggested very
high levels of satisfaction amongst
participants. Remote working has been an
unqualified success but we believe that,
when the time is right, employees will return
to our offices part-time.
Approximately 10 per cent of our staff
remained working at customer locations,
providing critical on-site support services,
and also at our key Integration Centers, in
line with applicable guidelines. This ensured
that we could provide laptops and other
essential technology to enable our
customers, including key parts of
government, to respond to COVID-19. We
implemented enhanced cleaning and safety
procedures for these key locations and
expressly thank all those who provided
this vital service for our customers. The
challenge was immense and we were
pleased to accomplish it with minimal
disruption. Additionally, we have redeployed
field engineers to support our Hatfield
Integration Center, which has seen a surge in
activity and moved, for a period, to 24/7
shift working to meet demand.
Supporting our customers
The resilience of our Services and
infrastructure was demonstrated during
2020 as never before. Within four weeks of
the start of the pandemic we were able to
move 95 per cent of our 12,600 service
delivery team members to homeworking.
We achieved this without any impact on
customer service, despite an increase of
40 per cent in incident volumes. Our people
showed enormous resilience and
commitment in responding to customer
challenges, often supporting critical
government pandemic response initiatives
and helping customers to Source, Transform
and support new digital initiatives in weeks,
rather than the months that may normally
have been planned for such projects.
The deep relationships we have developed
with customers enabled us to connect
quickly with them and respond to their
requests. Understanding how they operated
and how we could best assist them made the
difference, as we positioned ourselves as an
extension of their own IT teams. During the
early months, we quickly developed new
Services to enable our customers to serve
their businesses effectively, such as our
‘Home Swap Service’ and ‘Virtual Tech Bar’.
This demonstrated both our agility and our
innovative approach to meeting the needs
of customers during the pandemic.
We have also offered our customers a
variety of bespoke support during the crisis,
including the flexibility in enabling them to
scale their services consumption up or down,
as their own business demands shifted. This
flexibility has enabled us to secure new
business, build relationships for the future
and encourage customers to commit to
contract renewals.
The ‘near-shore’ location strategy for our
internal service providers and Service
Centers has proven successful, with regional
workforces able to support customers in the
correct time zone with the right capacity.
Locating these Centers in areas with
pervasive internet connectivity, both in our
offices and at home, has meant little to no
disruption to our Services. Further, our
Service Centers’ single worldwide
telecommunications system and unified
software toolsets have allowed seamless
capacity flows between Service Centers,
enabling us to rapidly adapt to short-term
spikes in utilisation from our customer base.
In addition, our scale and breadth of service
meant that we were a natural choice as an
aggregator of technology, which positioned
us as a strong contender for mass rollouts
for large customers. Our ability to quickly
scale up volumes through our vendor
partnerships and our flexibility in creating
solutions for mass rollout to multiple
locations helped us to secure significant new
business. Customer surveys conducted
during the year, and feedback from business
leaders across our portfolio, demonstrated
that we have strengthened relationships and
built credibility through our agility and speed
to serve.
The Chief Information Officers (CIOs) of our
customers have had an incredibly busy year,
leading their organisations through the
challenges presented by COVID-19 to
transform quickly their IT architecture and
ways of working. In partnership with these
leaders, Computacenter has provided the
solutions to these challenges. The
performance in the year, with growing
revenues, improving margins and a reduced
cost base, reflects both the demand seen by
the IT sector and the quality of our support
for our customers.
As the crisis intensified, we became a critical
partner for governments across Europe and
the UK in particular. Computacenter
responded at short notice to significant
requests for tender from the UK Government
on a range of projects. We proved that we
were the only reseller with the scalable
infrastructure in the country that could
deliver large projects in a timely and low-cost
manner, and have been added to the UK
Government’s list of 36 Strategic Suppliers
across local and central government. We
supported the UK Government in standing up
the infrastructure for a variety of emergency
NHS projects, including the NHS Nightingale
hospital sites, as well as delivering over
a million laptops to disadvantaged children
for home schooling.
Protecting employment
At the start of the pandemic, the Group
decided to participate in various national
employee retention schemes. The schemes
primarily supported our operations in the
UK, Germany and France, with minor
participation in smaller markets including
Spain, Belgium, Switzerland and the
Netherlands. We are clear that this allowed
us to avoid otherwise necessary
redundancies in late March and early
April, in the face of an unfolding and
unpredictable crisis. Approximately 1,300
employees across the Group were initially
supported by wage-subsidy programmes,
utilising various government initiatives and
Company schemes, although this reduced
to an average of circa 150 staff on any
scheme over the second half of the year.
We enhanced the government supported
schemes, for which the rate was different
in each country, as a result of works councils,
employee forums and local legislation.
At the same time Computacenter’s CEO, Mike
Norris, and FD, Tony Conophy, volunteered to
forego their base salary for the second
quarter, alongside the Founder Non-
Executive Directors, Peter Ogden and Philip
Hulme, who waived their Directors’ fees for
the remainder of the year.
The financial impact of COVID-19
The Group has experienced significant
operational and financial impacts from the
unprecedented effect of the COVID-19 crisis.
All results in this Annual Report and Accounts
include these COVID-19 impacts and no
adjustments have been made to exclude
these impacts, whether they be positive
or negative.
Overall, we estimate that the COVID-19 crisis
has had a net positive impact in the year of
approximately £30 million of adjusted1 profit
before tax, primarily comprised of the key
components highlighted below.
During 2020, the cost to the Group of
furloughed employees’ remuneration was
approximately £19.5 million. Against this,
the Group has received approximately
£6.4 million in direct grants from European
governments, excluding the UK. The Group
also benefited from £3.9 million in indirect
savings, such as reduced social charges,
and a reduction of £2.1 million in furloughed
employee remuneration. Against a normal
year, this has had a net negative impact of
approximately £7.1 million of adjusted1 profit
before tax. All of these grants and costs are
included in our adjusted1 results within
administrative expenses.
The Company received £1.1 million from the
UK Government, for the April 2020 claim for
furloughed employee costs on the Job
Retention Scheme. However, we repaid this
during the second half of 2020, once the
Board was assured of the Company’s
ongoing resilience in the face of the
pandemic. We have committed to making
no claims under the Job Retention Bonus
scheme. As at 31 December 2020 a very small
number of UK employees remain furloughed
at enhanced rates and entirely at the
Group’s expense, and a minority of Belgian
employees were on part-time working
arrangements. All other employees across
the Group have fully returned to work
regardless of the availability of local
government employment support schemes.
Offsetting the cost of furloughed staff, we
have had significant COVID-19-related cost
savings, resulting from less travel and using
fewer contractors, although some of this
was due to lower Services activity, as a result
of being unable to work on some customer
sites. We estimate these savings to be
approximately £45 million of adjusted1 profit
before tax. We have also seen benefits in
utilisation, with previously on-site or mobile
employees able to use time they would have
spent travelling to solve issues remotely for
our customers, increasing their billable
hours. This has had a material impact on
our Services margins.
Whilst difficult to measure, we estimate that
the loss of business from COVID-19-impacted
customers materially outweighed
incremental COVID-19-specific business in
the year, with a net decrease in adjusted1
profit before tax of £15 million.
Cash flow and adjusted net funds3
There have been certain COVID-19-related
one-off benefits included in the 2020 full
year cash flow and end of year cash
positions. This includes extended free-of-
charge supplier credit with a major vendor of
approximately £15 million as at 31 December
2020. Temporary tax payment timing
benefits from various governments that
were utilised during the year were fully
repaid as at 31 December 2020.
Adjusted net funds3 of £188.6 million as at
31 December 2020, including £309.8 million
of cash and cash equivalents, give us a
robust platform to manage the business in
support of our customers through
challenging market conditions.
Looking forward
Today, the long-term impact of the COVID-19
crisis remains unknown. However, we are
more certain that the ongoing volatility
within our markets and worldwide locations
will begin to settle, with vaccination
programmes begun globally and the
continued application of science and
technology to meet the medical and societal
challenges that the crisis has brought.
Continued customer investment in
technology has provided short-term growth
opportunities and proven the strength of our
business model. Longer term, the crisis has
accelerated the drive to digital across
industries, customers and governments
worldwide. We continue to monitor the
impact on the Group and maintain our focus
on controlling costs, in order to position the
Company for long-term success.
05
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Chairman’s Statement
ENABLING SUCCESS BY
RISING TO
UNPRECEDENTED
CHALLENGES
We have adapted
to a changed way
of working.
Peter Ryan
Chairman
06
Many words have been used to describe 2020
– unprecedented, challenging, chaotic. The
global pandemic has had a significant
impact on all countries and communities
in which we do business. Our customers,
our partners and our employees and their
families, have all been impacted. We have
provided support for our employees’
wellbeing throughout the many challenges,
which have varied country by country. This
has been a continuous priority, recognising
the mental health pressure that the
confined, and sometimes isolated,
environment can bring. We have, very sadly,
lost employees to COVID-19 and colleagues
have also lost loved ones. We send our
thoughts and condolences to their families,
friends and colleagues.
Amidst the crisis that has engulfed much
of the world, many small and large
demonstrations of the power of the human
spirit became evident – individuals, groups
and whole communities finding ways to
persevere. This has been similar in our
business lives. We have adapted to a
changed way of working, whether digitally
at home or socially distanced and COVID-19-
secure in factories, offices, warehouses,
shops and hospitality venues.
Computacenter’s employees around the
world adapted very quickly to the evolving
reality in our markets. The way they adopted
new methods of working, to help our
customers and partners meet their own
challenges, was admirable. This focus on
doing what was needed for our customers, in
both the private and Public Sectors, was very
well received and significantly strengthened
many of our relationships for the long term.
There was significant uncertainty and
unpredictability in trading, from the
beginning of the pandemic until the end of
our financial year. In many ways, 2020 was a
most severe test of the strategy, operational
execution and resilience of our business.
By the end of the year, we had seen both
a strong financial performance and the
acceleration of our strategy, with the
acquisitions of Pivot Technology Solutions,
Inc. (‘Pivot’) and BT Services France SAS (‘BT
Services France’), which we have renamed
Computacenter NS.
Enabling success
This has been an incredible year of progress
for Computacenter, as we have adapted to
the challenges and supported our customers.
Revenues again surpassed £5 billion, with
the acquisitions made in early November
2020 contributing £232.6 million of the
£388.5 million of revenue growth. The overall
progress across the Group in the year was
very pleasing, with an increase in profit
before tax of 46.5 per cent to £206.6 million
(2019: £141.0 million), following revenue
growth of 7.7 per cent to £5,441.3 million
(2019: £5,052.8 million). The Group’s adjusted1
profit before tax increased by 37.0 per cent
to £200.5 million (2019: £146.3 million) and
by 35.5 per cent in constant currency2.
Diluted earnings per share (‘EPS’) increased
by 50.3 per cent to 133.8 pence for the year
(2019: 89.0 pence). Adjusted1 diluted EPS
grew 36.6 per cent to 126.4 pence (2019:
92.5 pence).
Following the resumption of our dividend
payments in October 2020, and in line with
our policy of paying a dividend that is
covered between 2.0 and 2.5 times by
adjusted1 diluted EPS, we propose to pay
a final dividend of 38.4 pence per share,
bringing our full year dividend to 50.7 pence
per share. This represents an increase of
37.0 per cent over the 37.0 pence proposed
for the 2019 full year dividend, including the
26.9 pence final 2019 dividend proposed, but
not paid, and an increase of 402.0 per cent
over the 10.1 pence actually paid for the 2019
full year dividend.
We continue to monitor our growing adjusted
net funds3, which reached £188.6 million
(2019: £137.1 million) at the end of the year.
The Board reviews investment opportunities
to ensure these remain aligned strategically
with our purpose of enabling success, as
seen with the acquisition of Pivot and BT
Services France, and, if none are suitable, will
look to return excess capital to shareholders
at the appropriate time.
Climate change and sustainability
The Board has continued to address a
number of areas of the Group’s approach to
climate change and sustainability. We hope
to make a difference to the overall impact
of the IT industry, by continuing to focus on
and improve our environmental impact in
our part of the supply chain. The Board
agrees that it is both the right thing to do
morally and a business imperative, so we
can support our customers’ increasing
efforts to improve the sustainability of
their businesses.
This includes focusing on how we continue
to evolve our own offices and Integration
Center infrastructure, to reduce our carbon
footprint. Our initiatives have included solar
power provision and reducing the use of
plastic and unnecessary packaging in our
facilities and solutions. In addition, we play
a key role in refurbishing, recycling and
end-of-life disposal of technology products.
We believe that having a company and board
that is diverse in both representation and
thought is key to our continued success. We
will continue to focus on this at Board level.
We are making steady progress against our
targets for gender diversity across all levels
of the organisation and set the Executive
Directors and senior Management specific
and measurable objectives in this area.
More details are provided on pages 46 to 47
of this report.
The year ahead
We remain focused on strengthening
Computacenter to enable the success of all
of our stakeholders, and I thank them for
their continued trust and support.
As we look to 2021, we do so with the COVID-19
situation still uncertain across all of our
markets. There is much hope associated
with the rollout of the various vaccine
programmes around the world that, at some
point in 2021, we may see a more stable and
predictable trading environment.
That said, we have considered, and will
continue to monitor closely, the impact of the
COVID-19 virus on our business, global trade
and the macro-economic outlook. The
Company’s Principal Risks and Uncertainties
reflect the Board’s view. We consider that the
sensitivity analysis conducted to support the
Directors’ reasonable expectation of the
impact of risks, and assessment of viability,
to be sufficiently robust given what we know
today, although considerable uncertainties
remain surrounding the duration and impact
of COVID-19.
This year has presented many challenges but
our response and financial results have been
strong. One thing is ever-more clear in these
uncertain times – digital technology, solutions
and services are key enablers to help
governments and businesses respond to
their challenges, disruption and necessary
transformations. This, allied to our business
momentum and our US acquisition, makes us
believe that 2021 can be a year of continued
progress for Computacenter.
Peter Ryan
Chairman
15 March 2021
07
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Chief Executive’s
Strategic Review
08
ENABLING SUCCESS BY
BUILDING
LONG-TERM
TRUST
I have always
been proud to lead
Computacenter,
but never more
proud than I have
been in 2020.
Mike Norris
Chief Executive Officer
STRATEGIC PRIORITIES
Strategic Priority 1
To lead with and
grow our Services
business
2020 has been an extraordinary year for
everybody, including Computacenter. I have
to admit I was extremely nervous as the
pandemic broke at the end of the first
quarter but as you can see from the financial
results, we have fared well during this period.
I would like to thank all of our employees for
their speed of response, agility and tenacity,
in response to the challenges laid before us
by our customers, working conditions and
the pandemic.
Customers have asked us to respond in a
variety of ways. From many customers we
have seen a significant surge in demand,
particularly in relation to remote working.
This required us to provide physical product
and meet substantial demand for
implementation and support. On the other
hand, a significant number of customers
have seen a downturn in their industry
sectors, which has meant they have looked
to reduce both capital and operating
expenditure. I am proud that we have
responded to all of our customers, whichever
end of the spectrum they sit, which
enhances our reputation for the long term.
In fact, throughout 2020 I have received
more emails and letters from customers
complimenting Computacenter on our
service than in the previous 25 years put
together, since I have been CEO.
Our customers use us to augment their own
resources and enable their IT functions to be
as flexible as possible. We saw high levels of
utilisation for our Professional Services staff
and a large reduction in our use of external
contractors. Our German business in
particular saw significant Professional
Services growth, as it has for a number of
years, and there has also been a noticeable
improvement in the UK Professional
Services performance.
Long-term support contracts delivered by
our Managed Services business came under
significant top line pressure, as customers’
support requirements reduced and they
looked to save costs. Again, good utilisation
of our own resources and reduction in
external contractors enabled us to improve
margins. Additionally, we have been
successful even during the periods of
remote working, winning a number of new
contracts that will start to deliver revenue in
the first half of 2021.
Technology Sourcing was particularly strong
for workplace products, where we have been
involved in major deployments, one of which
involved hundreds of thousands of laptops.
Computacenter’s assets and resources,
particularly our own Integration Centers,
make us uniquely suitable for these types of
projects. However, it is worth noting it was a
quiet year for data center technology and it
remains to be seen whether this was due to
the pandemic or more workloads being moved
to the cloud. We continued to enhance our
networking capability throughout our
geographies, particularly with the acquisition
we made in France in November 2020.
During 2020, the UK saw substantial top line
organic growth, excluding the impact of
acquisitions, driven by major projects, while
Germany’s revenue was down slightly. We
also achieved strong margin enhancement
in both product and Services, continuing the
bottom-line momentum we have seen in
recent years. In France and Germany we have
a high dependency on industrial customers,
who in general remained very quiet, but both
businesses and the UK were enhanced by the
performance of the Public Sector.
In our smaller geographies in Europe,
particularly Switzerland and Belgium, we do
not have any Public Sector business, which
muted their performance as a whole. In the
Netherlands, where we have a more
balanced portfolio, performance was
somewhat better. In 2020 we started a new
venture in Spain which, as you can imagine,
was difficult to do.
In the US, our Services operation mainly
manages our European customers on the
other side of the Atlantic, and was particularly
strong. We also saw a good performance from
Technology Sourcing, which led to a significant
improvement on the previous year. On
2 November, we acquired Pivot, a Canadian-
based company with the majority of its
operations in the US. We have now set about
integrating the companies into one
Computacenter North America operation.
While the acquisition during lockdown was
remarkably straightforward, the integration,
particularly the cultural integration, is
somewhat more challenging and much work
remains to be done. We have now created the
platform to grow a sustainable, scalable
business in North America that is a value-
added reseller at heart, but with an emerging
strength in Services.
The acquisition confirms our ambition to
retain the largest Services capability of any
value-added reseller in the world and the
largest value-added reseller capability of
any Services business in the world.
Throughout the pandemic, various
lockdown measures put in place by national
governments have restricted our ability to
travel. Computacenter has been aided by our
comprehensive internal IT infrastructure,
which has enabled us to continue to support
customers and develop the business. We have
also benefited from a significant reduction in
cost due to the travel restrictions, which has
enhanced the bottom line and helped our
environment. We are resolute that post-
lockdown, we will not let our travel return to
levels before the pandemic, again benefiting
the bottom line and the environment.
During 2020, Lieven Bergmans, our Managing
Director for the Rest of Europe, also took on
responsibility for Computacenter France and
the integration of our acquisition there. Kevin
Shank, the previous CEO of Pivot, has taken
responsibility for leading our North American
operations and sits as a member of my Group
Executive team. Mike Keogh, who has led our
business in the US since 2015, is leaving to
pursue pastures new but I would like to thank
him for his efforts and we would not be
where we are in North America without him.
As always, I would like to thank our customers
for the trust they place in us. I have always
been proud to lead Computacenter, but never
more proud than I have been in 2020.
Mike Norris
Chief Executive Officer
15 March 2021
Strategic Priority 2
To improve our
Services productivity
and enhance our
competitiveness
Strategic Priority 3
To retain and maximise
the relationship with
our customers over the
long term
Strategic Priority 4
To innovate our
Services offerings
to build future
growth opportunities
09
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 OUR SERVICE CENTERS
Our Service Centers deliver a range of shared
and dedicated capabilities including:
Service Desk
Our goal is to provide a faster and smarter
response to people. We deliver end-to-end
support, locally and globally, and provide a
‘follow-the-sun’ service. Our global Service
Desks handle over 1.1 million contacts per
month, using 25 languages, at a price point
and quality tailored to meet customer
priorities. We leverage analytics, chatbots and
intelligent automation to improve our agent
productivity and each customer’s experience.
Remote Infrastructure Management
The scale of our operation means we can
support users and systems anywhere in the
world, 24 hours a day, seven days a week.
From private and public clouds to user
devices, our Infrastructure Services manage
and improve availability, performance
and security.
Maintenance & Network Support
Our operation hubs provide remote
diagnostics, monitoring and spares capability,
to underpin our Maintenance Services.
Cyber Defence Center
We identify and highlight existing or potential
security breaches, hacks, malware or
vulnerabilities and ensure that they are
managed through to resolution. In doing so,
we help both Computacenter and our
customers to meet increasingly stringent
compliance standards, as well as protecting
users from cyber crime and ensuring that our
customers’ businesses remain productive.
Our Approach to Market
Our Customer Offering
EVOLVING A
DIFFERENTIATED
AND COMPLETE
CUSTOMER OFFER
Our customers are confident in our skills and
capabilities to help them make the right choices
in the complex and fast-changing world of digital
technology. To maintain this trust, we invest to
stay relevant and competitive and ensure we
have a complete offering of Services, which we
can deliver at scale.
This section describes Computacenter’s breadth
of capability and our go-to-market messaging.
In this section
• Our Service Centers
• Our complete customer offer
• Our breadth of skills
• Our strategic propositions
Members of the Group Development team
10
OUR COMPLETE CUSTOMER OFFER
Our comprehensive capabilities help
customers to Source, Transform and Manage
digital technology across the domains of
workplace, application and data, cloud and
data center, networking, and security.
Source
Our powerful partnerships with the leading
Technology Partners in the market allow us
to help our customers to make informed and
wise choices in the selection of digital
technology. With the investments in our
Integration Centers, underpinned by our
people, systems and processes, we can then
help our customers to integrate and deploy
digital technology at scale across the world.
Increasingly, our customers are asking us
to take more responsibility in this area and
help them deliver faster, both for their people
and to underpin the digital strategies for
their businesses.
OUR BREADTH OF SKILLS
Transform
By combining our Technology Partners with
our own project managers, consultants,
engineers and test facilities, we support
customers from initial planning through to
their digital transformations going live.
We provide end-to-end solutions and
Services, within or across the five technology
domains, which enable genuine realisation of
business goals. Our engagements range
from long-term complex transformation
programmes to shorter-term or expert-
leasing based consulting and implementation.
Manage
We use a broad range of operational skills,
across our network of international Service
Centers and distributed engineering teams,
to operate and manage customers’ IT.
This increases quality and flexibility, while
reducing costs. Our Services deliver
engagement and enablement for over
3.7 million users.
Across all domains of our portfolio, we sell
defined Managed Services, with related
service-level agreements and either fixed
or consumption-based pricing. Where
customers want more flexibility or control,
we also provide support and skills on a more
transactional basis. Complementing our
Technology Sourcing Services, we offer a
range of product lifecycle and maintenance
Services, often on a per-device basis.
Our portfolio of Sourcing, Transformation and Managed Services spans all relevant infrastructure areas, ensuring our customers have access
to a reliable, secure and flexible technology platform to accelerate their business.
Workplace
Application
& Data
Cloud &
Data Center
Networking
Security
Technology Sourcing
IT Strategy & Advisory Services
Transformation Services
Support & Maintenance Services
Managed Services
Source
Transform
Transform
Manage
Manage
11
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Approach to Market
Our Customer Offering
continued
OUR STRATEGIC PROPOSITIONS
We reflect the voice of the customer by consolidating our broad
portfolio of capabilities into four strategic go-to-market propositions,
designed to address an emerging market trend with a specific value
proposition and vision:
Digital Me
Workplace
Designed for people and engineered for business,
our workplace solutions accelerate the digital
agenda with agile solutions that unleash the
power of people and enable business success.
Our solutions are increasingly underpinned by
analytics, artificial intelligence (‘AI’) and
automation, to reduce cost and provide
a proactive digital experience.
• EquipMe: Appropriate technology for effective
working
– Technology Sourcing
– Modern device management
– Application lifecycle management
• EmpowerMe: Intuitive collaboration for
increased productivity
– Cloud productivity suites
– Enterprise content management
– Collaboration solutions
• AssistMe: Intelligent support aligned to personal
preference
– Service Desk
– Smart on-site Services
– Analytics and automation
EmpowerMe
INTUITIVE COLLABORATION
FOR INCREASED PRODUCTIVITY
EquipMe
AssistMe
APPROPRIATE TECHNOLOGY
FOR EFFECTIVE WORKING
INTELLIGENT SUPPORT ALIGNED
TO PERSONAL PREFERENCE
12
Digital Power
Cloud & Data Center
We provide sourcing, advisory and support
Services that help our customers to navigate their
cloud and data centers, building platforms that
power their business. For some, this means
building out platforms that support the rapid
growth that their success in the global digital
economy is delivering.
• Applications and data
• Service management platforms
• Cloud native platforms
• Multi-cloud
• Public cloud
• Server and storage
• Converged and hyperconverged infrastructure
• Software-defined infrastructure and networks
• Next generation data centers
ACCELERATE DIGITAL BUSINESS
ADOPT PUBLIC CLOUD
ENABLE MULTI-CLOUD
MODERNISE THE DATA CENTER
Digital Trust
Security
Our customers continue to face an ever-expanding
cyber-threat landscape, with more demanding
compliance requirements and a shortage of
security talent to address it. We have the skills and
partnerships to deliver end-to-end security
solutions, helping our customers protect their data
and information, secure their workplaces and
people, defend their technology platforms and
achieve compliance and manage IT risk. We enable
Public Sector, industry and service organisations
to undertake digital transformation securely.
• Cyber defence Services
• Identity and access management
• Infrastructure security
• Workplace security
• Internet of Things (‘IoT’) security
• Cloud security
• Industrial security
• IT governance, risk and compliance
Digital Connect
Networking
We provide Technology Sourcing, Professional and
Managed Services expertise, with innovation and
delivery across every aspect of enterprise
networking for large corporates and Public Sector
organisations, from business-critical data
centers, to local and wide-area wireless,
to industrial networks.
• Software and automation are at the core of
every future-proof network architecture
• Increasing demand for unrestricted access to
Services and applications; anytime, anywhere
• Hybrid IT and multi-cloud becoming the norm
for the data center
• Increasing regulatory requirements and
accelerated demand for enterprise security
• People, devices and everyday objects
connected, to increase collaboration
and efficiency
• New devices and smart sensors necessitate
a different approach to networking
D
U
D
U
O
ENABLING MULTI-C L O
ATA CENTER & C L
NETWOR K S
D
CONNEC
LOCAL & W
NET
I
D
E
W
O
TIN
G P
E
O
P
L
E
M
O
N
W
I
R
B
I
L
I
S
I
N
E
T
W
O
E
L
ESS
R
KS
G
T
H
E E
NTERPRISE
R
A
K
R
S
E
A
I N D USTRIAL
N ET WORKS
C C ELERATING DIGITAL
A
13
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020
Our Approach to Market
Our Marketplace
STAYING ABREAST
OF CHANGES IN THE
GLOBAL MARKET
To stay competitive, our customers
need to respond faster and more
effectively to changing business
conditions and unpredictable
external factors. This means they
have to innovate and enrich the
digital experiences of their people
and customers, in a secure and
sustainable manner.
In turn, we need to act with pace
and confidence, to help our
customers make the most of their
existing technology and select
new investments that support
their digital agenda, in this
increasingly complex and
fast-changing environment.
This section looks at the major
trends that are changing our
markets and considers our
competitive environment.
14
Five major trends are shaping our
markets worldwide.
Major trend 1:
Speed –
Agility becoming a
competitive advantage
As we move into 2021 and beyond,
organisations continue to face increased
pressure to deliver efficiencies and cost
savings. At the same time, what was on top
of our customers’ agendas yesterday may
not be there tomorrow: the global pandemic
has stressed the importance of adaptability
at pace. Organisations are adopting new
change methodologies, and IT departments
have to innovate at speed, in order for their
organisations to remain serious contenders
in the marketplace. To do so, they are also
using technologies where service is primarily
provided with or through software, and
augmented with analytics and AI.
What this means for Computacenter
Being independent of our Technology
Partners remains a key strength for us.
We can assess our customers’ business
requirements quickly and help them to select
and integrate the appropriate solution and
service model, in an increasingly complex
environment. At the same time, we need to
keep up with the pace of innovation and
invest in new skills, so that our offerings
remain relevant to our customers.
“Uncertainty could be the new normal;
therefore creating repeatable processes to
continually re-evaluate business strategies
and innovation portfolios, at rapid pace,
could support your organisation, not only
in a time of crises and disruption, but also
in the readiness for any disruption or
change.” – Gartner: Don’t Survive, Thrive!
Leverage Crises and Scarcities to Accelerate
Business Innovation, May 2020
Major trend 2:
Resilience –
Ensuring secure
digital delivery
The accelerated adoption of new and
sometimes immature technologies, as well
as remote working models during the
pandemic, increases the risk of security
and privacy breaches. Additionally, our
customers have to react to changing
regulatory requirements and security
legislation. To protect themselves from
financial and reputational losses and to
meet compliance requirements, customers
often implement rigid and fragmented
security concepts that inhibit innovation
and fast reactions to market changes.
What this means for Computacenter
Our strong security practice, with almost
200 security consultants, represents a
competitive advantage and differentiates
us from many of our competitors. We help
our customers to implement an end-to-end
security concept, allowing them to stay
ahead of criminal threats and remain
compliant with regulatory requirements.
“IT security projects are often demanding
and diverse. This is why service providers
that offer a wide range of technical security
services from a single source and address
numerous IT security solutions have an
advantage. Those that cooperate with
renowned technology providers and have
employees with numerous high-quality
certifications can also set themselves
apart.” – ISG Provider Lens, Cyber Security
Solutions and Services, Germany,
August 2020
Major trend 3:
Disruption –
Technology innovation
delivering impact
Too often we see companies that fail to
move forward, allowing competition to
move in swiftly. There is no time to stand
still, especially with the rise of ‘unicorn’
businesses disrupting industries. Thanks
to the unparalleled speed of technological
advancement and mass business
digitalisation, start-ups are now able to
reach unicorn status in less time than ever
before, posing a real challenge to traditional
businesses. Hence, organisations must
connect their business directly to the IT
function and the IT function must
understand how its services directly
influence market share and profits. This
continues to drive new ways of working,
service delivery and productivity, for both
future unicorn business and traditional
organisations.
What this means for Computacenter
We have a competitive advantage through
our proximity to customers, our long-term
relationships with them, our understanding
of their business requirements and the
flexibility to provide technology and service
options specific to those requirements.
To continue enabling success for our
customers, Computacenter will invest to
build vertical-specific skills and know-how.
“Disruptive trends and technologies continue
to challenge incumbent enterprises. CIOs
need to understand the impact of these
challenges and how they affect their
organizations. Successful CIOs leverage new
trends and technologies to their enterprises’
advantage, with emerging practices focused
on sustainable value creation.” – Gartner, CIO
Leadership of Innovation, Disruptive Trends
and Emerging Practices Primer for 2020,
January 2020
Major trend 4:
Experience –
Transforming customer
and employee
experience
Disruption has accelerated the requirement
for new, digital experiences for both
customers and employees. Both groups are
becoming more diverse, more mobile and
more distributed, using a large variety of
devices, technologies and apps to access
their work environment and to purchase
products. To improve both employee
engagement and customer satisfaction and
loyalty, organisations will have to explore
these new technologies and accelerate
their adoption.
What this means for Computacenter
Customers can benefit from our broad
technology skills, which include automation
solutions such as Blue Prism and UiPath, as
well as the ServiceNow consulting practice
we built with the acquisition of TeamUltra.
Our end-to-end portfolio covering front-end
collaboration tools and technologies, as well
as modern back-end application platforms,
is a true asset for supporting customers to
implement a seamless, total experience for
their employees and customers.
According to Bitkom, during the pandemic
25% of the German workforce (10.5 million
employees) are working full time from home.
Additionally, another 20% (8 million
employees) are working partially form home.
In total, 45% of the German workforce has
adopted a remote working model. – Bitkom,
December 2020
Major trend 5:
Sustainability –
Social purpose
influencing strategic
decision making
Sustainability is becoming one of the most
relevant influencing factors for strategic
decision making. Covering a wide range of
topics, from environmental to social and
economic aspects, sustainability creates
a long-term context for organisations.
Ignoring this trend presents a financial risk
and, more importantly, a reputational risk.
What this means for Computacenter
Computacenter, with its stable shareholder
and management structure, has always
taken strategic decisions in favour of
long-term success and created a safe and
sustainable business for shareholders,
employees and partners. Beyond being a
significant business and corporate taxpayer,
Computacenter has implemented a wide
range of programmes covering employee
wellbeing, diversity and inclusion, reduction
of carbon footprint and innovation and
technology, and will continue to invest in
its sustainability framework.
The 2 megawatt solar photovoltaic system
on the Hatfield Integration Center roof
consists of approximately 6,500 solar panels
that generate approximately 2 million
kilowatt hours of electricity per annum or
around 24 per cent of our energy usage in
operations. The installation has an expected
life span of 25 years and helps us to negate
some 1,100 tonnes of CO2 per year.
THE COMPETITIVE MARKET
In addition to the major trends described
above, a number of factors are influencing
the way we compete in our markets.
Market segments – Save to innovate
With IT budgets staying flat or growing very
slowly, IT decision makers need to reduce
costs in order to fund new digital initiatives.
Procurement departments also push to
reduce costs in existing contracts and
legacy platforms, which puts pressure on
renewals, and we therefore continue to drive
efficiencies in our scale operations to
remain competitive. This includes various
initiatives from implementing automation
to significant investments in our offshore
Service Centers.
At the same time, we help CIOs to select,
implement and manage technology
platforms such as multi-cloud, big data and
the IoT, to become the foundation for new
digital business models and applications.
Our ability to select the right solutions from
a wide range of options, paired with our
security and networking skills, put us in
a good position to exploit these digital
business markets.
Shifting buying centres
The traditional buying centres in our industry
are our customers’ IT and procurement
departments. However, customers are now
shifting to include other parts of the
business, as digital transformation rises to
the top of all departments’ agendas. While
this shift is real and we are adapting with
new value propositions, we believe it is
happening slowly and our core Services will
continue to provide ongoing differentiation
and genuine value for our customers.
Substitutes
Organisations that had previously bought
their own networking and data center
infrastructure are now able to substitute
them with cloud-based services. This could
affect demand for our Technology Sourcing
business over the coming years. However,
the process of moving to the cloud offers
considerable Professional Services
opportunity and the knock-on effect for
customers’ network, security and workplace
environments will support growth in all parts
of our portfolio associated with those
technology areas. In addition, many
hyperscale cloud providers themselves
are among our customers.
Partner ecosystems
With shifting buying centres and the trend
to cloud computing and hybrid IT, customers
are looking for solutions addressing their
business needs and covering all aspects
from infrastructure to applications, as well
as business adoption. In response, we
continue to expand our portfolio, and our
partnerships in particular, building on those
we already have with the world’s leading
Technology Partners and the mature
processes to adopt partner technologies
and take them to market. We will also
continue to integrate Services partners, to
ensure a comprehensive Services portfolio.
15
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Approach to Market
Our Business Model and
Differentiation
HOW WE CREATE
SUSTAINABLE
VALUE
Computacenter is a leading
independent technology partner
trusted by large corporate and
Public Sector organisations. We help
our customers to Source, Transform
and Manage their technology
infrastructure to deliver digital
transformation, enabling people
and their business.
Our business model is customer-
centric, based on enabling success
by building long-term trust with
our customers, our people and our
partners. This underpins our value
to our communities and our
shareholders. In doing so, we
leverage the long-term investment
in our infrastructure and physical
assets and place great confidence
in the depth of skills and knowledge
of our teams.
16
Our customers
We deliver digital technology to some of the
world’s greatest organisations. Our target
market is the largest 500 corporate and
government organisations in each of the 10
countries in which we sell. Our operational
model supports this aim through having
account managers, sales specialists,
consultants, and project and service
managers aligned to our customers, to
build strong customer intimacy. We give our
customer teams the freedom to make
responsible decisions that meet customer
needs faster. The majority of our customers
have been trading with us for over 10 years,
showing the value of these trusted
relationships and of our financial stability.
We have a balanced spread of business with
most of our customers, supporting them
through Technology Sourcing, as well as
Professional and Managed Services, as each
part of our customer offering supports
the others.
More information about how we create value
is on pages 10 to 13.
Our people
Together, we have created a can-do culture
where people matter and are encouraged to
thrive. Computacenter employs over 17,000
people worldwide. This includes more than
5,000 engineers, 4,500 support staff in our
Service Centers, 1,600 project and service
managers and 1,500 consultants. These
service delivery teams are backed by the
skills and experience of our sales and
business Services teams. Our aim is that
people want to join and stay with us, be
proud of our reputation, as we learn, earn
and have fun.
More information about how we attract,
retain and develop our people is on pages
44 to 51.
Our partners
We have built powerful partnerships with the
world’s leading Technology Partners, who
can rely on our reach and scale. We are
among the largest partners in EMEA for each
of the Technology Partners who are
increasingly recognising us for our
achievements at a global level. We use our
technology understanding to build solutions
for our customers across all parts of our
portfolio. We aim for our customers to be
confident in our skills and solutions and
trust in our independence and experience.
This means we can help our customers to
make wise choices in a complex and
changing world.
More information about our partners and
Technology Sourcing is on pages 18 to 21.
Our brand
Our brand and reputation are underpinned
by our Winning Together values. We maintain
a strong brand by putting customers first,
being straightforward, keeping promises
and considering the long term, while
understanding that people matter and
inspiring success.
Our Purpose is ‘Enabling Success’ by building
long-term trust with our customers, people,
Technology Partners, and communities. We aim
to be strongly recommended by customers
for the way we help them achieve their goals,
ensuring customer referenceability. Where
we make acquisitions, we usually transition
the acquired business quickly to the
Computacenter brand and embed our values.
More information about our values can be
found on page 47.
Our infrastructure and physical assets
We sell to customers in 10 countries, have
supporting near-shore and off-shore
operations in another seven countries.
We have legal entities and VAT registrations
in a further eight countries. We source for,
and support, customers across more than
70 countries worldwide. Our customers
demand that our operations are delivered to
high industry standards and we have a range
of ISO certifications, including ISO 27001, ISO
9001, ISO 20000-1, ISO 14001 and ISO 45001.
Our Service Centers, as indicated on the map
located on the inside front cover, help us to
support our Managed Services contracts.
They are underpinned by a common
technology infrastructure, to allow customers
to be supported by multiple Centers. In 2020,
we expanded capacity in Poznan, Poland,
and Bangalore, India. We have opened a new
operation in Cluj, Romania, in early 2021.
Our Integration Centers, as indicated on the
map located on the inside front cover, allow
us to stage, test and integrate technology
for our customers around the world. In early
2020, we opened our Silicon Valley Integration
Center in Livermore, California.
We have a number of underlying systems
that support our business, including our SAP
ERP solution, systems that connect us to our
customers’ sourcing functions, and systems
that underpin our Managed Services.
Our service offerings
We drive engagement with our customers
through our strategic propositions, which
are underpinned by a range of service
offerings which are designed to deliver
solutions to our customers.
BUSINESS MODEL AT A GLANCE
Making all of the elements of our business model work together.
Our resources
Our
people
Digital technology
from our partners
Our
brand and values
Our
service offerings
Our infrastructure
and physical assets
Our leverage
Technology
Partner
independence
Scale
Infrastructure
Powerful
partnerships
SOURCE
CIO
PEOPLE
BUSINESS
Service
offerings
MANAGE
TRANSFORM
Depth of
experience
Financial
stability
Breadth
of skills
Worldwide
reach
Our customer offer sits at the
heart of our strategy.
See page 11 for more information
Creating value for all stakeholders
Our
customers
Our
people
Our
communities
Our
partners
Our
shareholders
17
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Technology Sourcing
OUR PARTNERS CAN
RELY ON OUR REACH
AND SCALE
Technology Sourcing is our traditional core
business and we continue to see it as both
fundamental to our customers and a significant
growth driver. We help our customers to
determine their technology needs and,
supported by our Technology Partners, we
provide the commercial structures, integration,
and supply chain services to meet those needs
reliably. We earn revenue from large contracts,
with thinner margins and lower visibility than for
Services, but with amazing customer loyalty,
which we earn through reliability, agility
and scale.
In this section
• Growth drivers
• Technology Sourcing is a Service
• Powerful Partnerships
• Sustainability and Circular Services
Members of the Group Technology Sourcing leadership
team
Members of the Group Technology Sourcing team
18
Alpharetta
Bodegraven
Braintree
Brussels
Gonesse
Hatfield
Kerpen
Livermore
We provide our customers with huge
flexibility, adapting our processes to fit
their often very specific quotation, order
management, shipment, receipt and
documentation requirements. This flexibility
comes from our significant long-term
investment in our people, systems and
Integration Centers. Our supply chain
services range from pre-configuration
of all types of technology to end-of-use
management. Our customers value our
ability to support them across the entire
hardware and software lifecycle and to act
as a partner who can deliver at scale and,
increasingly, globally.
GROWTH DRIVERS
A number of key drivers in the market are
underpinning our customers’ continuing
investment in new digital technology. In
particular, our customers want to:
• modernise their workplaces, to enable
people through better technology that
attracts and retains talent, increases
collaboration and drives closer customer
proximity (Digital Me);
• transform their legacy applications, data
centers and processes, and adopt cloud
technology, to be more scalable, flexible
and agile (Digital Power);
• ensure that their networks and
communications can support their
digitisation and future operational models
and that everything is secure (Digital
Trust); and
• connect their people, data and IoT devices,
to better leverage existing know-how and
improve the efficiency and productivity of
their workforce (Digital Connect).
TECHNOLOGY SOURCING IS A SERVICE
We integrate and deploy across workplace,
data center, networking and security. Our
investment in Integration Centers in the UK,
Germany, France, Belgium, the Netherlands
and the US gives us the scale to meet the
most demanding customer requirements.
The importance to our customers of the
scale and resilience of our Integration Center
infrastructure was demonstrated in 2020 by
our ability to support their deployment of
new technology at incredible pace, in
response to the COVID-19 pandemic.
Top: RDC Integration Center – Braintree, UK
Helping customers make a positive impact at the end
of the IT lifecycle.
Top Left: Integration Center – Livermore, California
Technical Services: expert rack integration.
Middle: Integration Center – Hatfield, UK
Technical Services: volume configuration.
Bottom: Integration Center – Kerpen, Germany
Long-term investment in the German market
through our new Kerpen facilities.
19
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Technology Sourcing
continued
The most visible example of this is in the UK,
where we have been operating our Hatfield
Integration Center, by far the largest facility
of its type in the country, nearly 24/7 to meet
customer demand. We have brought in
additional engineering teams from service
delivery to supplement the technical services
teams in Hatfield, allowing us to configure
hundreds of thousands of laptop devices
for customers.
Computacenter’s long-term investments in
systems and infrastructure have positioned
us as a trusted partner for major
organisations needing to deploy technology
at scale.
The flexibility of our integrated systems has
also allowed us to move shipments of
equipment to the EU that we would normally
have supplied from our Integration Center
in Hatfield, UK, to our Integration Center in
Kerpen, Germany, to ensure service
continuity for customers following the
departure of the UK from the EU.
Our new Silicon Valley Integration Center in
Livermore, California, opened in March 2020
and has significantly upgraded our capacity
and capability. Our older facility nearby in
Newark, California, was retired. With the
acquisition of Pivot in North America, we also
now have a major facility in Alpharetta, near
Atlanta in Georgia. The combination of
Livermore and Alpharetta gives us a strong
national deployment capability in the US.
SUSTAINABILITY AND CIRCULAR SERVICES
The circular economy is an alternative to a
traditional linear economy where goods are
made, used and then disposed. We keep
resources in use for as long as possible,
extract the maximum value from them whilst
in use, then recover and regenerate products
and materials at the end of each service life.
In 2020, our subsidiary R.D. Trading Limited
(‘RDC’) implemented its new Circular Services
proposition. The bedrock of the service is the
audit, data-wiping and safety testing of every
customer asset. Once in our system, the
circular journey can then begin, bringing to
customers the benefits, both financial and
environmental, of redeploying, remarketing
or recycling their old equipment. Putting
customer assets to good use elsewhere
within their business through redeployment
saves money and carbon against purchasing
new. Likewise, remarketing all functional
assets that are no longer required generates
cash, as well as reducing the carbon footprint
of third parties buying new. In addition,
recycling all the equipment that is too old
20
POWERFUL PARTNERSHIPS
The increasing pace of technological change
and the diversity of the vendor landscape
has made our Technology Partner
independence more critical to our
customers. We are trusted to provide
impartial and knowledgeable advice and to
integrate solutions comprising products
from multiple Technology Partners.
Computacenter is one of the largest
value-added resellers worldwide for most of
the major Technology Partners. We invest
heavily in working closely with them, to ensure
we can effectively help our customers to
Source, Transform and Manage their IT
infrastructure. The breadth and depth of our
technology partnerships allows us to help
our customers navigate the complexity and
speed of change in the current market.
Our expertise in our Technology Partners’
solutions is unrivalled, with our people
holding more than 10,000 technical
certifications. Our strong working
relationships and our desire to collaborate
and seek innovation and new Services help
us remain relevant, so we are increasingly
seen as the partner of choice.
We are not just working with our established
Technology Partners. There is increasing
demand for new vendors and innovative
approaches, which are often integrated
with core vendor technology to provide
complete solutions.
Our ability to design, source, integrate, deploy
and support means we can add material value
in delivering new digital solutions. This is
reflected in another year of awards and
recognition across the Group.
For example:
Apple – We extended our UK and Germany
accreditations to become an Apple
Authorised Education Specialist and in
France we were approved as an Apple
Authorised Enterprise Reseller
Cisco – Partner of the Year Germany
Cisco – Global Enterprise Partner of the Year
Citrix – UK Partner of the Year
Dell – One of the first Titanium Black Partners
and now an accredited Service Partner
Dell – UK Partner of the Year
F5 – UK Partner of the Year
HPE – Computacenter is now a charter
member of HPE’s International Partner
programme for Hybrid IT and one of the first
HPE International Solution Partners
HPE – Northern Europe Solution Partner
of the Year
Intel – Partner of the Year US
NetApp – EMEA Converged Partner of the Year
VMware – EMEA Partner of the Year
or damaged removes potentially harmful
materials from landfill, whilst extracting
metal and plastic products that can be
reused in manufacturing.
RDC has put huge effort into ensuring the
accuracy of our recycling management, with
whole recycling facilities dedicated to testing,
measuring and filming our customers’
systems, display unit and printer scrap in
2020. This has enabled us to provide detailed
records of metal, circuit board and plastic
material extracted from the waste stream.
Combining redeployment, remarketing and
recycling with secure logistics and data
management into an integrated package
is at the core of Circular Services.
RDC in numbers 2020
Redeployed units = 207,713
Remarketed units = 297,893
Recycled units = 286,121
(2,069 metric tonnes)
RECYCLE
REMAR
K
E
T
RED
E
P
L
O
Y
REP
A
I
R
Above: Vendor Village at Group Kick-Off 2020 – Manchester, UK
Building Powerful Partnerships with the world’s leading Technology Partners.
OUR ESTABLISHED TECHNOLOGY PARTNERS
We hold over 200 partner accreditations and our people hold over 10,000 certifications.
21
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Managed Services and
Professional Services
OUR CUSTOMERS
CAN BE CONFIDENT
IN OUR SKILLS AND
SOLUTIONS
We employ over 12,000 people globally to deliver
Services to our customers. These range from
IT Strategy, Advisory, Transformation and
Deployment Services (Professional Services)
to Support, Maintenance and Managed Services
(Managed Services).
In this section
• Managed Services
• Professional Services
Members of the Group Delivery and Group Services teams
22
Bangalore
Barcelona
Berlin
Budapest
Cape Town
Dallas
Kuala Lumpur
Mexico City
Milton Keynes
Montpellier
Above: Group Kick-Off 2020 – Manchester, UK
Computacenter’s stand at Group Kick-Off, exhibiting
our capabilities to our sales force and key
Technology Partners.
Left: Group Delivery – London, UK
Group Delivery extended leadership team meeting.
MANAGED SERVICES
We maintain, support and manage IT
infrastructure and operations for our
customers, to improve quality and flexibility
while reducing costs. Despite competitive
pricing in the market, our revenue under
contract has high visibility and is long term
and stable. We see this recurring income as
a strategic means of balancing our business,
as well as essential to our Source, Transform
and Manage customer offer. Customers
ask us to reduce their costs by running
some of their support operations, as well
as taking end-to-end responsibility for
sourcing, deploying, transforming and then
providing the ongoing managed support of
digital projects.
We have continued to improve the
predictability of our Services, to the benefit
of our customers and our own business.
As our customers’ businesses continue to
evolve and be challenged, we will continue to
adapt our offerings to remain relevant and
competitive. We see significant opportunities
to add value to our customers.
Our Service Centers are the core of our
Managed Services capability and we have
continued to invest in improving and
updating the technology underpinning
them. This includes implementing a new
ScienceLogic-based support platform and
continued development of our Artificial
Intelligence, Automation and Analytics (AIMY)
collection of tools.
The resilience of our Services and
infrastructure was demonstrated during
2020 as never before. Within four weeks of
the pandemic we were able to move 95 per
cent of our 12,600 service delivery team
members to homeworking. We achieved this
without any impact on customer service,
despite an increase of 40 per cent in incident
volumes. Our people showed enormous
resilience and commitment in responding
to customer challenges, often supporting
critical government pandemic response
initiatives and helping customers to Source,
Transform and support new digital initiatives
in weeks, rather than the months that may
normally have been planned for such projects.
The pandemic response demonstrated the
resilience of our infrastructure, the benefits
of scale of our operations and the skills and
commitment of our people.
2020 highlights include:
• A number of successful new service
go-lives, many global, despite the
pandemic – a testament to outstanding
‘virtual’ teamwork between our teams and
our customers.
• A number of successful new significant
Managed Service contract wins,
renewals and extensions, even as we
worked virtually.
• Significant expansion of our off-shore
Service Center in Bangalore, India, where
we are on target to have approximately
700 people by the end of 2021.
• Significant expansion of our near-shore
Service Center in Poznan, Poland, where
we are on target to have approximately
300 people by the end of 2021.
• Reducing our Managed Services ‘cost to
serve’, to ensure we remain competitive in
the evolving market.
23
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Managed Services and Professional Services
continued
PROFESSIONAL SERVICES
We provide structured solutions and expert
resources to help our customers to select,
deploy and integrate digital technology, so
they can achieve their business goals. Our
revenue depends on our forward order book,
which contains a multitude of short, medium
and long-term projects.
As the technology landscape has become
more complex, our 1,500 consultants play an
increasingly important role in advising our
customers. Our Professional Services and
Technology Sourcing businesses have always
been linked and we see this linkage
increasing, as our clients need our help to
make wise choices in the complex technology
landscape and to then deploy and integrate
these technologies.
Our Professional Services revenue also
includes some of our 5,000 engineering staff
and 1,000 project managers, who are
charged as part of customer integration and
deployment projects. These Services range
from workplace rollouts to complex network
and data center solution integrations.
We see significant opportunity to grow our
Professional Services business across all our
portfolio areas, which are workplace, data
and analytics, cloud and data center,
networking, and security.
OUR SERVICE CENTERS
The resilience of
our Services and
infrastructure was
demonstrated
during 2020 as
never before.
Julie O’Hara
Group Delivery Director
Our Professional Services business
continued to perform much better than we
could have anticipated in 2020, despite the
pandemic. Our customers needed the skills
and experience of our people and quickly
adapted to working virtually with our teams.
2020 highlights include:
• Significant improvements in Professional
Services utilisation and revenues in our
major markets.
• Increased leverage of Group assets and
initiatives across our Professional
Services, including:
– Our network automation framework for
software-defined networks;
– Our security incident and event
management services with Splunk; and
– Our end-point management services
with Tanium.
• Development of our strategy to gain better
access to skills, through to the early 2021
launch of a new Professional Services
near-shore hub in Cluj, Romania.
POZNAN, POLAND
CLUJ, ROMANIA
BUDAPEST, HUNGARY
BERLIN, DRESDEN, ERFURT,
KERPEN, GERMANY
CAPE TOWN, SOUTH AFRICA
DALIAN, CHINA
BANGALORE, INDIA
KUALA LUMPUR, MALAYSIA
KUALA LUMPUR, MALAYSIA, APAC
MARKHAM, ON, CANADA
SAN FRANCISCO, CA, USA
DALLAS, TX, USA
MEXICO CITY, MEXICO
ATLANTA, GA, USA
HATFIELD, MILTON KEYNES,
NOTTINGHAM, SHEFFIELD, UK
HATFIELD, UK, EMEA
BARCELONA, SPAIN
LYON, MONTPELLIER,
PARIS, PERPIGNAN, FRANCE
SERVICE CENTERS
COMPUTACENTER’S COVERAGE
REGIONAL HEADQUARTERS
24
Left: Service Center – Cape Town,
South Africa
Enhancing our capabilities and ensuring
the highest environmental standards.
Below: InfoSecurity Conference –
London, UK
Leading the way in a complex and
changing world.
Bottom left: Engineering &
Maintenance Services
We help customers support and
maintain their technology across
the world.
Bottom right: Vendor Village at Group
Kick-Off 2019 – Berlin, Germany
Building Powerful Partnerships with the
world’s leading Technology Partners.
25
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Strategic Priorities
STRATEGIC PRIORITY 1
To lead with
and grow our
Services
business
Services Contract Base £m
815
2020
2019
2018
2017
2016
+2.4%
815
796
787
763
752
STRATEGIC PRIORITY 2
To improve
our Services
productivity and
enhance our
competitiveness
Services revenue generated
per Services head £’000
95
2020
2019
2018
2017
2016
26
+1.7%
95
93
90
90
90
We go into 2021 with a Contract Base of £815 million. Overall our Managed
Services business is challenged, due to customers expecting continual
productivity enhancements, which are deflationary. In order to grow,
we therefore need to win market share.
Progress in 2020
While the Contract Base is up from £796 million at the end of 2019, this was helped by the
acquisitions made in November 2020, particularly the acquisition in France in the networking
area, which added £44 million to the Contract Base. Without acquisitions, the Contract Base
has declined. This is predominantly due to the loss of a major contract in France, which
happened in 2019 but only affected the Contract Base in 2020. There have been substantial
renewals during 2020, which gives us confidence for next year.
Target for 2021
The new contracts and renewals secured in 2020 give us confidence in our service quality and
competitiveness and while this area of our business is probably the most challenged, we
believe we will gain market share in 2021.
How we define Services Contract Base
This is our forward order book of committed Managed Services spend as at the year end.
The prior year comparatives are restated on a constant currency2 basis, to provide a better
indicator of underlying growth.
Technology encourages standardisation and commoditisation.
Organisations such as ours must therefore differentiate the way we deliver
value to customers. We do this by rigorously applying effective processes
and utilising the right resources, including automation and robotics, in
suitable locations. This allows us to best meet the needs of our global
customers, at a competitive price.
Progress in 2020
After a successful 2019, we made further significant progress in Services revenue in 2020,
which has had a corresponding effect on our margins. During 2020, we achieved high
utilisation of our own staff and reduced our spend on contractors dramatically, which was
particularly useful given the challenges of the pandemic.
Target for 2021
The most important thing in 2021 is that we lock-in the gains we have made over the last two
years as permanent improvements in our performance, particularly as and when lockdown
comes to an end.
How we define Services revenue generated per Services head
This is our Group Services revenue divided by the number of employees directly involved in the
provision of either our Managed Services or Professional Services offerings. The prior year
comparatives are restated on a constant currency2 basis, to provide a better indicator of
underlying growth.
STRATEGIC PRIORITY 3
To retain and
maximise the
relationship with
our customers
over the long term
Number of customer accounts with
contributions of over £1 million
135
2020
2019
2018
2017
2016
STRATEGIC PRIORITY 4
To innovate
our Services
offerings to build
future growth
opportunities
Services revenue £m
1,261
2020
2019
2018
2017
2016
+0.0%
135
135
118
107
103
+1.4%
1,261
1,243
1,178
1,167
1,085
Computacenter focuses on the large account market in both the Public and
private sectors and looks to maintain these customers for the long term.
The number of large customers we have has a direct relationship to our
long-term profitability. Growing the number of customers who contribute
more than £1 million of margin is therefore a key driver for Computacenter.
Progress in 2020
2020 was an unusual year in many ways and gaining new customers was very difficult. The
number of customers we had generating more than £1 million of gross margin remained the
same at 135. However, this will increase by approximately another 20 customers, due to the
acquisitions in North America and France. Within the 135 customers were some new entrants
and some who dropped to less than £1 million of contribution. Customers’ spend was highly
dependent on the effects of COVID-19 on their industry segments.
Target for 2021
In 2021 we have much to do. First, we must secure the new customers we gained with the
acquisitions in France and North America. Next, we must grow our customer base organically.
Over the last two years we have started to invest significantly in our sales force, so the
number of major customers does not plateau. We maintained this investment throughout
2020 when there was an obvious temptation to cut back, due to the pandemic. Growing the
number of customers, particularly those generating more than £1 million of gross margin,
is how we will show a long-term return on this commitment.
How we define customer accounts with contributions of over £1 million
A customer account is the consolidated spend by a customer and all of its subsidiaries. Where
our customer account exceeds £1 million of contribution to Group adjusted1 gross profit, it is
included within this measure. The prior year comparatives are restated on a constant
currency2 basis, to provide a better indicator of underlying growth.
Annual Services revenue, which comprises our Managed Services and
Professional Services businesses, is the key measure for this Strategic
Priority. Our portfolio and Services development activities are focused on
improving our differentiation and building competitive advantage, thus
laying the foundation for future Services growth.
Progress in 2020
In 2020, we grew Services revenue by 1.4 per cent, including acquisitions, and it was flat
excluding acquisitions. While there was increased demand from some customers, there was a
corresponding reduction from others, particularly those from sectors such as industry, travel
and hospitality. Services projects were significantly reduced in the second and third quarters
of 2020 and while we saw some return to more normal trading patterns towards the end of
the year, as many projects were started or restarted, activity was not at the same level we
saw pre-pandemic.
Target for 2021
We expect the trading conditions seen towards the end of 2020 to be with us for the majority
of the first half of 2021. However, we do believe that the thirst for digital transformation is
with us for the long term. Therefore, we are targeting more material growth in 2021 as a
whole, than we saw in 2020.
How we define Services revenue
Services revenue is the combined revenue of our Professional Services and Managed Services
business. The prior year comparatives are restated on a constant currency2 basis, to provide
a better indicator of underlying growth.
27
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020
+7.7%
+46.5%
Revenue £m
5,441.3
Profit before tax £m
206.6
Revenue by business type
1
3
2
1. Source 76.8%
2. Transform 7.8%
3. Manage 15.4%
Our performance in 2020
GROUP
The results for 2020
demonstrate the resilience
of the Computacenter
business model, which is
built on the three primary
business lines of
Technology Sourcing,
Professional Services
and Managed Services.
Mike Norris
Chief Executive Officer
Members of the Group Executive team
28
Financial performance
The results for 2020 demonstrate the
resilience of the Computacenter business
model, which is built on the three primary
business lines of Technology Sourcing,
Professional Services and Managed Services.
The Group’s revenues increased by 7.7 per
cent to £5,441.3 million (2019: £5,052.8 million
million) and were 6.6 per cent higher in
constant currency2.
Whilst it took 36 years for the Group to reach
£100 million of adjusted1 profit before tax,
we are very pleased that it only took another
three years to reach £200 million. The Group
made a profit before tax of £206.6 million,
an increase of 46.5 per cent (2019:
£141.0 million). The Group’s adjusted1 profit
before tax increased by 37.0 per cent to
£200.5 million (2019: £146.3 million) and by
35.5 per cent in constant currency2.
The difference between profit before tax and
adjusted1 profit before tax relates to the
Group’s net gain of £6.1 million (2019: charge
of £5.3 million) from exceptional and other
adjusting items. These relate principally to
the gain on acquisition of the BT Services
France subsidiary, partially offset by the
amortisation of the acquired intangible
assets resulting from the Group’s recent
North American acquisitions. Further
information on these can be found on
page 63.
With the increase in the Group’s profit after
tax, the diluted EPS increased by 50.3 per
cent to 133.8 pence for the year (2019:
89.0 pence). Adjusted1 diluted EPS, the
Group’s primary EPS measure, increased
by 36.6 per cent to 126.4 pence for 2020
(2019: 92.5 pence).
The result has benefited from £261.0 million
of revenue (2019: £26.0 million), and £6.5
million of adjusted1 profit before tax (2019:
£0.2 million), resulting from all acquisitions
made since 1 January 2019. Of this, for the
entities acquired in 2020, the result has
benefited from £232.6 million of revenue,
and £3.2 million of adjusted1 profit before
tax. All figures reported throughout this
Annual Report and Accounts include the
results of these acquired entities.
Revenues from Public Sector customers,
such as local and central government,
increased by approximately 37 per cent,
offsetting material falls in revenues from,
primarily, our industrial customers. Public
Sector now accounts for 32 per cent of our
revenues (2019: 25 per cent). Whilst
significant volumes of this Public Sector
business were at lower than normal margins,
particularly through the second half of the
year, we are pleased that we maintained
efficiencies and reduced costs within the
business delivery areas, such that margins
showed a slight rise overall. Where we had
significant Public Sector relationships within
our Segments, the local businesses have
quickly switched focus to supporting them,
particularly in our core established
geographies of the UK, Germany and France.
Our other European operations, with a much
greater share of private sector revenue,
were not able to respond in the same manner
and suffered revenue attrition as a result.
Excluding the impact of the acquisitions
made since 1 January 2019, revenues grew
organically by 2.0 per cent on a constant
currency2 basis. This modest growth
understated the Group’s underlying
performance. With a large number of very
significant industrial customers rapidly
reducing their IT spend on both equipment
and services, there was considerable
difficulty in forecasting how the business
would perform throughout the year, as the
COVID-19 crisis escalated. We are pleased
with the overall result and, with 5.0 per cent
organic revenue growth in the second half of
the year excluding the impact of acquisitions,
are confident that further growth and
market share remain on offer, as many
customers’ activities return to normal. In
markets where we operate at scale, notably
the UK and Germany, we have been able to
leverage our world-class Integration Centers
beyond normal operating capacities, thereby
proving ourselves one of the few resellers
that could rapidly react to serve customers’
needs, as they transformed from office-
based working to remote working.
The UK, in particular, has seen very strong
demand within Public Sector and financial
services, as organisations relied heavily
on the Group to urgently support their
Technology Sourcing needs, to enable
working from home, other emergency
IT responses and a small number of very
large national infrastructure projects.
Professional Services in Germany has
grown spectacularly against a very strong
comparative period, as the business
supported customers transitioning to
remote working. This business remains one
of the key drivers for the Group as a whole
and continues its growth trajectory year
after year. In the US business, some
customers materially reduced spend during
the year, whilst large data center-based
customers increased spend, with an
overall satisfactory revenue and profit
performance. The French business had
a significantly better second half of 2020,
with improving Technology Sourcing
performance partially offsetting the impact
of the previously announced loss of our large
Managed Services contract.
The International Segment was the only part
of the business that was disappointing
throughout the year. Technology Sourcing
revenues were impacted as industrial
customers reduced expenditure, whilst
Services revenues also fell, driven by lower
volumes. In Belgium in particular, the
business suffered from not having sufficient
scale in the market to replace quickly
volumes with new customers or look to
Public Sector customers for growth.
Expenditures to grow the business, with
additional sales capacity in Switzerland
and new organic sales capacity in Spain,
continued as planned, which also
contributed to reduced profitability in the
year within the International Segment.
29
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
Whilst overall revenues held up in the
challenging environment, margins and
profits increased as costs reduced across
the Group. Overall Group gross margins
increased slightly by 12 basis points to 13.2
per cent of revenues during the year (2019:
13.1 per cent) and administrative expenses
decreased by 0.5 per cent in constant
currency2, when compared to the prior year.
A combination of good quality Technology
Sourcing deals supporting pricing, and a
reduction in costs to serve our customers
across the Services business, as we moved
to a remote working environment, all
contributed. As the business moves to a
more normal operational footing we expect
costs to return, but at a potentially
permanently lower level than before the
COVID-19 crisis. We therefore continue to
analyse and review individual cost
reductions, to ensure that we only incur
costs truly necessary for the performance
of the Group.
As a UK-headquartered IT company, we are
pleased to have been added as a Strategic
Supplier to the UK Government’s list of the
36 most-important cross-government
vendors, reflecting our growth in Public
Sector over the past seven years, but
accelerated due to our support for a number
of critical infrastructure IT projects during
the pandemic. The most visible of these
projects was our successful support for the
Department for Education, as its primary
partner on its programme to roll out more
than a million laptops to disadvantaged
children. The list encompasses Whitehall’s
largest and most important suppliers, with
whom relationships are managed on
a Government-wide basis by a named
‘Crown Representative’.
Technology Sourcing performance
The Group’s Technology Sourcing revenue
increased by 9.4 per cent to £4,180.1 million
(2019: £3,822.2 million) and by 8.3 per cent
on a constant currency2 basis.
The overall Technology Sourcing result
benefited from £239.8 million of revenue
resulting from the acquisitions made since
1 January 2019 (2019: £24.6 million) with
£209.5 million of this as a result of the
Pivot acquisition.
30
The UK Technology Sourcing business saw
exceptional growth, driven by workplace
contracts to support our customers’
emergency transition to homeworking in the
first half of the year and significant Public
Sector critical national infrastructure
support to the UK Government in the second
half of the year. A small number of massive
projects has materially assisted the
business over the course of the year. The
strength and scale of our Integration Center
capabilities have enabled us to efficiently
address this growth, as we have proven
ourselves to be the only reseller in the
country that can handle the volumes driven
through these contracts.
In Germany, Technology Sourcing revenue
declined, in particular as automotive and
other industrial customers reduced spend
through large framework agreements, given
the COVID-19-related business challenges.
This was partially offset by successfully
directing more sales activity towards the
Public Sector and healthcare sectors, which
saw good growth through the period.
The French Technology Sourcing revenue saw
excellent growth in the second half of the
year, following a stable first six months.
A number of new and expanded Public Sector
framework contracts drove higher than
anticipated volumes through the business.
We saw significant growth in workplace
within the product mix which, whilst reducing
the average margin rates achieved, helped
lift the contribution overall.
The North American Technology Sourcing
business saw revenues decline, excluding
the impact of the Pivot acquisition. Whilst
hyperscalers remained largely unaffected by
the pandemic, the mid-market core of the
business slowed significantly. The
acquisition of Pivot adds substantial volumes
to the business, with opportunities to reach
a wider addressable market and more US
locations and through complementary
business lines with the existing business.
Overall Group Technology Sourcing margins
increased by 15 basis points during the year,
when compared to the prior year, partially
due to customer and product mix changes.
Significant volume growth of low-margin
workplace product sold through to the Public
Sector has been offset by the decline in some
large low-margin industrial customers.
Services performance
The Group’s Services revenue increased
by 2.5 per cent to £1,261.2 million (2019:
£1,230.6 million) and by 1.4 per cent on a
constant currency2 basis. Within this, Group
Professional Services revenue increased
by 16.2 per cent to £425.4 million (2019:
£366.1 million), and by 14.8 per cent on
a constant currency2 basis, whilst Group
Managed Services revenue decreased
by 3.3 per cent to £835.8 million (2019:
£864.5 million), and by 4.3 per cent on
a constant currency2 basis.
The overall Services result benefited
from £21.2 million of revenue from the
acquisitions made since 1 January 2019
(2019: £1.3 million).
UK Services revenue reduced slightly,
primarily due to a decline in Managed
Services volumes, which was attributable
to contract attrition and COVID-19 impacts.
The pipeline for new opportunities remains
healthy with several significant wins in the
second half of the year increasing the
optimism in the business. Professional
Services revenues were up strongly in the
second half of the year, even with the
constraints on face-to-face working, as
customers undertook a number of business
continuity projects to assist with their
migration to remote working or brought
forward planned investments in their
IT estates.
German Services revenues have followed a
similar but more pronounced pattern to the
UK business. Managed Services has declined
slightly as customer volumes have
decreased due to COVID-19. Significant
reductions have been seen, particularly in
industrial customers, which experienced full
manufacturing site closures and had little to
no opportunity to transition to remote
working. Demand from these customers
remains depressed, reflecting subdued
demand for their products. The Professional
Services business has seen extraordinarily
strong growth, with all existing contracted
commitments met by our teams working
remotely and with significant increases in
utilisation, driven by time saved not
travelling to customer sites. Further demand
for our Professional Services skills emerged
during the crisis, to support new and existing
customers with their transition to remote
working. This included an increasing emphasis
on material Public Sector framework
contracts, which provides stability to
revenue flows and utilisation rates.
Outlook
At the start of last year, our performance
in 2019 set us a high bar for 2020. The
COVID-19-related lockdowns towards the end
of the first quarter made improving on 2019
feel even more challenging.
After multiple upgrades during the year and
today’s excellent results it is clear that the
2020 performance has exceeded all
expectations and 2020 has seen the fastest
profit growth Computacenter has achieved
in its 22 years as a public company. Clearly,
the challenge it gives us is to grow again
in 2021.
While Computacenter will always focus on
the long term and resist the temptation of
short-term actions to maintain growth, we
feel the opportunity for progression this
year, while not certain, is real. We have come
into 2021 with solid momentum and have
experienced a very positive start to the year.
As always, we will give an update to
shareholders in our April statement once we
have completed our first quarter at the end
of March.
Growth rates are obviously difficult to
predict as our geographies will come out
of lockdown at different times, but our
experiences of the last 12 months has
convinced us more than ever that our
customers will continue to invest in
Information Technology and will require the
services of Computacenter to enable them
to do so. This, combined with the fact that
we are growing in more geographies and
across more technology platforms than we
have ever done before, makes us even more
excited about our long-term growth potential.
Our French Services business saw sharp falls
in Professional Services, with nearly half of
our deployable specialists placed on
government job retention schemes, as
demand fell away due to the COVID-19 crisis
in the first half of the year. The French
Professional Services business is more
reliant on on-site activity than the equivalent
businesses in the UK or Germany. These staff
have now returned to work, and whilst the
order book for consultancy returns to a more
sustainable footing, revenues remain below
expectations. The Managed Services
business performed better than expected,
following the loss of a large global
outsourcing contract at the end of last year,
the impact of which was partially seen
during the first half. The business has done
well to make up some of the volumes by
winning several significant global contracts,
which have been successfully transitioned
during the COVID-19 crisis. Other contract
extensions and additions have also
materially assisted the recovery in the
Managed Services business.
In North America, Professional Services
revenue fell as COVID-19 led to project delays
or cancellations. Mid-market customers,
which generate much of the Professional
Services revenue in the USA, were the
weakest business area. Unlike the core
geographies, the North American business
has very little Public Sector business to
support a downturn in the private sector.
The new Integration Center, however, has had
early success at expanding higher-end data
center project work and looks to continue to
grow this area, as overall project levels
return to normal.
Overall Group Services margins increased
by 65 basis points during the year, when
compared to the prior year. The reduction of
travel costs, lower subcontractor costs and
improved Professional Services utilisation all
contributed to this increase.
31
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
UNITED KINGDOM
The investment in our
front-end sales and
services management
teams in 2019 gave us
the capacity to take on
more new customers
during 2020.
Neil Hall
Managing Director, UK and Ireland
Members of the UK leadership team
32
Revenue £m
1,773.4
2020
2019
2018
2017
2016
+11.0%
1,773.4
1,597.0
1,611.3
1,468.2
1,352.0
Adjusted1 operating profit £m
+40.2%
90.4
Services Contract Base £m
+2.6%
300.1
Revenue by business type
1
3
2
1. Source 74.9%
2. Transform 7.3%
3. Manage 17.8%
Financial performance
Revenues in the UK business increased by
11.0 per cent to £1,773.4 million (2019:
£1,597.0 million).
The UK business reported increased
revenues in Technology Sourcing, with
modest declines in Services. The restrictive
measures arising from COVID-19 affected all
of our core markets, and we saw materially
increased demand for Technology Sourcing
and integration services, to facilitate remote
working for employees. Some customer
digital transformation plans accelerated,
whilst other programmes were deferred due
to the pandemic, as a result of restricted
access to customer sites. Some customers
redirected resources to support their
business continuity activities, following
a material decline in their revenues, with
others needing to reduce their costs.
Our commitment to long-term partnerships
with our customers required us to be flexible
about contract delivery and terms, including
agreeing service levels to reflect COVID-19
requirements, which impacted the fees to
support our customers and the cost of
delivery. Critical National Infrastructure
organisations in the Public Sector and across
all verticals increased their demand for
technologies and services during this period,
whilst other industries saw a material
decline in their own markets, resulting in
reduced requirements for our Services.
The investment in our front-end sales and
services management teams in 2019 gave us
the capacity to take on more new customers
during 2020, which balanced some of the
impact to markets affected by the pandemic.
We have established new, longer-term
contracts, which secure a more predictable
future for our customers and for
Computacenter.
Overall gross margins in the UK increased by
20 basis points, with total adjusted1 gross
profit increasing from 13.9 per cent to 14.1
per cent of revenues. Adjusted1 gross profit
grew by 12.7 per cent to £249.2 million (2019:
£221.2 million).
Administrative expenses increased by 1.3 per
cent to £158.8 million (2019: £156.7 million),
with reduced travel and expenses being
offset by increased variable pay outcomes
related to the performance of the business.
This resulted in adjusted1 operating profit
growing by 40.2 per cent to £90.4 million
(2019: £64.5 million).
Resource utilisation was better than
expected for both our consulting and
engineering teams, as we adapted our
ways of working to cope with the national
lockdown. Our investment in new and
emerging skills has helped to build a strong
pipeline of multi-cloud related demand.
Technology Sourcing performance
Technology Sourcing revenue increased by
16.2 per cent to £1,328.0 million (2019:
£1,142.7 million).
The Technology Sourcing revenue mix was
dominated by workplace business in 2020,
with a small decline in enterprise business.
This was due to our customers’ materially
higher demand for homeworking capabilities
and reduced focus on core infrastructure
transformation during the year.
Technology Sourcing margins grew by 43
basis points compared to the prior year.
Given the growth in 2020, we expect moderate
growth in Technology Sourcing in 2021, with
our customers continuing to invest in
workplace technologies under a number of
private and Public Sector frameworks. We
also expect higher demand for enterprise
technologies, reflecting the growth potential
we see in our existing clients.
The Pivot acquisition in the US supports our
strategy to meet the international needs
of our existing customers and may see
reciprocal benefit for the UK, as we gain
access to sell into the UK subsidiaries of
Pivot’s North American customer base.
Services performance
Services revenue declined by 2.0 per cent
to £445.4 million (2019: £454.3 million).
Professional Services grew 9.7 per cent to
£129.1 million (2019: £117.7 million) despite
a decline in cabling projects due to the
COVID-19 crisis. Managed Services declined
by 6.0 per cent to £316.3 million (2019:
£336.6 million).
Given the global context, we were pleased to
increase Professional Services revenues in
2020. Alongside accelerated digital
workplace transformation, we rapidly
designed, contracted and transitioned new
Services to address directly our customers’
challenges in ensuring their business
continuity, including new solutions to equip
remote workforces directly. We closed the
year with an increased Professional Services
order book again, particularly with respect
to multi-cloud consultancy demand. This
reflects our investment in people and
technology partnerships throughout 2020.
Despite the decline in Managed Services
revenue in 2020, which resulted from
challenges in core industries such as
manufacturing, travel and tourism and high
street retail, we were pleased to recently be
awarded a large contract in the telecoms
sector. We remain confident in the pipeline of
opportunities for Managed Services, which
relate to and build on our workplace
credentials, alongside managed security
and cloud adoption.
Services margins increased by 153 basis
points over the year. This was the result of
the efficiency gains we realised through new
service solutions and changes to ways of
working enabling lower use of sub-
contractors, along with our continued
attention to driving quality through our
Services, as we transition between on,
near or offshore delivery models.
33
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
GERMANY
The pandemic made 2020
the most extraordinary and
challenging year in the
history of Computacenter
Germany.
Reiner Louis
Managing Director, Germany
Members of the German leadership team
34
Revenue €m
2,108.2
2020
2019
2018
2017
2016
-2.5%
2,108.2
2,161.9
2,115.7
1,954.2
1,690.1
Adjusted1 operating profit €m
+38.1%
125.7
Services Contract Base €m
-4.5%
401.0
Revenue by business type
1
3
2
1. Source 69.1%
2. Transform 12.5%
3. Manage 18.4%
Computacenter Germany finished 2020
significantly above target and the previous
year. This was the result of a strong
Professional Services business, a Managed
Services business delivering above
expectations, a slightly weaker performance
in Technology Sourcing due to the COVID-19
pandemic, and lower indirect costs.
The pandemic made 2020 the most
extraordinary and challenging year in the
history of Computacenter Germany. After
starting the year well, we were confronted,
like all other companies, with a crisis of
unprecedented proportions. Concerns
about the health of employees, a looming
shutdown of the global economy and the
resulting potential loss of business for
Computacenter, as well as the personal fears
of many employees, had to be taken into
account at very short notice.
From a business point of view, what
particularly distinguished us were the
sustained high motivation of all employees
and our excellent and resilient relationships
with our existing customers. Working closely
with customers during the crisis to overcome
the challenges together has tended to
strengthen these relationships even further.
While business with existing customers has
held up well so far in the crisis, new customer
acquisition has proved very challenging.
benefited from COVID-19-related cost
savings in all delivery units and especially
in consultancy delivery. Increased remote
working also improved both efficiency and
margins. The largest profit growth was
achieved in Professional Services, resulting
from its strong top-line growth, the
increased margin and efficiency effects.
We benefited from the high share of Public
Sector and healthcare customers in our
customer base and were able to expand the
business significantly. By contrast, business
suffered with customers in the automotive
industry and the retail sector.
Even though it is not currently possible
to assess fully the future course of the
pandemic, and some cost-saving benefits
from 2020 can only be repeated to a limited
extent, we expect a positive business
performance in 2021, characterised
by growth.
Financial performance
Total revenue decreased by 2.5 per cent
to €2,108.2 million (2019: €2,161.9 million)
and by 0.6 per cent in reported pound
sterling equivalents2.
The top line benefited in 2020 from the
Professional Services business, which
performed well above expectations.
After strong growth in the previous year,
Professional Services growth in 2020 was
just under 20 per cent. In our Managed
Services business, despite COVID-19-related
revenue shortfalls in the middle of the year,
we almost achieved our minimum target of
maintaining revenue at the prior-year level.
Only in our Technology Sourcing business,
which has seen sustained growth for years,
did business decline. This was mainly due to
the pandemic and to lower revenues from
a few large customers which were strongly
impacted by the pandemic.
Overall margins in Germany increased by
150 basis points, with adjusted1 gross profit
increasing from 13.4 per cent to 14.9 per
cent of revenues. Adjusted1 gross profit
grew by 8.2 per cent to €313.8 million
(2019: €290.1 million) and by 10.5 per cent
in reported pound sterling equivalents2.
Although revenue was down slightly on the
previous year’s level, we were pleased with
the significant adjusted1 gross profit growth
achieved. Product margins were maintained
at the high level of the previous year, while
margins in both service lines increased
significantly. This was particularly pleasing
for our Managed Services business, as
improved performance in this area was
one of our goals for 2020. In addition, we
Administrative expenses decreased by
5.5 per cent to €188.1 million (2019:
€199.1 million), and by 3.7 per cent in
reported pound sterling equivalents2.
Indirect costs were below the previous year
and our target. This was due to savings in
travel costs and events and to a significantly
lower headcount increase than originally
planned. However, in order to ensure future
growth, further investments in the sales
force are required, which were suspended
in 2020 due to COVID-19.
Adjusted1 operating profit for the German
business increased by 38.1 per cent to €125.7
million (2019: €91.0 million) and by 41.6 per
cent in reported pound sterling equivalents2.
For 2021, it is important to continue to
develop the Services business, to use market
trends to grow the product business and to
limit the increase in indirect costs. Another
year of earnings growth is therefore
achievable.
Technology Sourcing performance
Technology Sourcing revenue reduced by
5.4 per cent to €1,457.4 million (2019:
€1,541.3 million) and by 3.5 per cent in
reported pound sterling equivalents2.
The product business was characterised
by some good growth in 2020 in the Public
Sector and healthcare, partly due to
COVID-19. However, we also had pandemic-
related counteracting effects, especially
with customers from the automotive
industries. As these are among our major
customers, it was not possible to
compensate fully for these effects.
We recorded slight growth in workplace,
a stable network and security business and
a declining data center business. In the latter
area, the decline was also driven, among other
things, by significantly fewer procurements
from a German hyperscaler customer.
Technology Sourcing margins increased by
20 basis points over last year and remained
at a high level. Margins remained at a good
level in all areas, with slight improvements in
workplace and slight deteriorations on the
data center side.
Services performance
Services revenue grew by 4.9 per cent to
€650.8 million (2019: €620.6 million) and
by 6.6 per cent in reported pound sterling
equivalents2. This included Professional
Services growth of 19.8 per cent to
€262.8 million (2019: €219.4 million), an
increase of 21.8 per cent in reported pound
sterling equivalents2, and a reduction in
Managed Services of 3.3 per cent to
€388.0 million (2019: €401.2 million),
a decline of 1.7 per cent in reported pound
sterling equivalents2.
While revenue in Managed Services reduced
slightly, we were able to achieve significant
double-digit growth in the Professional
Services project and consulting businesses.
This is particularly remarkable because,
in a pandemic such as we are currently
experiencing, customers might have been
expected to reduce their investments
significantly. Instead, customers made
additional investments in expanding
infrastructure to quickly support remote
working and projects already planned were
continued under new framework conditions.
This mainly concerned the areas of network,
security, workplace enablement, and identity
and access management.
We successfully concluded many contract
extensions but were unable to retain three
existing contracts. In addition, we succeeded
in concluding a major new contract, which
secures additional business for the next five
years. The pipeline is strong and shows
additional growth potential.
Overall, the Services margin was 380 basis
points higher than last year.
One of our goals for 2020 was to continue
to stabilise service quality in our Managed
Services business. We took a more proactive
approach to managing quality in deals,
with less need to react to issues that have
previously had a negative impact on
business performance. Further progress is
expected in 2021, as the service quality
management framework which underpins
the way we work expands and matures, with
the potential to increase significantly both
performance and delivery quality, especially
in the area of problem contracts. This is due
in particular to the measures we implemented
in 2019. For all contracts, we achieved or
even exceeded our target. Only one new
contract had implementation problems and
exceeded the transition budget. However,
this contract was stabilised in the course of
the year. Overall, we are very satisfied with
this improvement in performance.
35
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
FRANCE
On 2 November 2020 we reached
an important milestone for
our French business, as we
completed the acquisition
of BT’s domestic Services
operations in France.
Lieven Bergmans
Managing Director, France
Members of the French leadership team
36
Revenue €m
753.9
2020
2019
2018
2017
2016
+5.3%
753.9
715.8
557.4
581.3
514.3
Adjusted1 operating profit €m
-27.3%
14.4
Services Contract Base €m
+13.9%
116.1
Revenue by business type
1
3
2
1. Source 78.3%
2. Transform 5.3%
3. Manage 16.4%
On 2 November 2020, the Group acquired
BT Services France, now known as
Computacenter NS. The acquisition
contributed €15.0 million of revenue and an
adjusted1 operating loss of €1.6 million in the
two months of trading to 31 December 2020
and all results below reflect this contribution.
Financial performance
Total revenue increased by 5.3 per cent
to €753.9 million (2019: €715.8 million).
In reported pound sterling equivalents2,
total revenue was up 7.6 per cent.
Although revenues in the first half of 2020
were flat compared to 2019, we were pleased
that business volumes accelerated
significantly in the second half of the year.
This resulted in a good performance for the
year as a whole, which was particularly
pleasing given the challenges we faced in
2020. We saw the expected impact of a large
international contract that was not renewed
in 2019, whilst the COVID-19 crisis had a
severe effect on many customers, which
resulted in reduced business volumes.
Our two business sectors showed different
performance patterns. The Public Sector
continued to deliver excellent growth with
existing customers, with more and more
organisations consolidating their
infrastructure services and solutions
requirements into large framework tenders.
We have grown our market share by winning
several of these large framework contracts.
Winning these contracts is important, but it
is essential that we then create a good
account team to define the best solutions for
our customers, with specialised sales and
technical experts supported by our delivery
organisations and our Technology Partners.
Our private sector business had a reasonable
year but the COVID-19 crisis made it impossible
to reach the same volumes as 2019. At the
start of the pandemic, multiple customers in
the private sector put a stop on investments.
Some of these investment decisions were
finally approved during the summer but
there are still numerous large organisations
that remain very cautious about their IT
spending, as COVID-19 continues to have
a severe impact on their core businesses.
It was encouraging that we successfully
transitioned a new large Managed Services
contract for an international transport
company, in the first half of the year.
On 2 November 2020 we reached an
important milestone for our French business,
as we completed the acquisition of BT’s
domestic Services operations in France and
welcomed over 540 new people to our French
operations. This subsidiary has been
renamed Computacenter NS. The acquisition
is a step change for our French business,
significantly increasing our capabilities,
especially in networking design, IT and
networking operations and support. Whilst
much remains to be done, we have made
good progress with integrating our teams
and processes and we are encouraged by
our first business successes as one sales
team, with our joint customers.
The Computacenter NS business contributed
to revenue for the last two months of 2020
and therefore had only a limited impact on
our overall financial performance in France.
The business was loss making at acquisition,
and will remain so for some time, which will
reduce reported profits in 2021. However, we
are able to utilise the spare capacity in the
business as we sell the capability to our
Computacenter France customers, which will
improve the performance.
satisfaction and improve the consistency
and certainty of our business performance.
This improvement process is expected to
continue in 2021, as we introduce the
‘improvement and lessons learned’
components of our service quality
management framework, which have already
proven beneficial in the UK and Germany.
Overall, margins in France decreased by 105
basis points, with adjusted1 gross profit
decreasing from 12.1 per cent to 11.1 per cent
of revenues.
Overall adjusted1 gross profit reduced by 3.9
per cent to €83.3 million (2019: €86.7 million)
and by 1.7 per cent in reported pound sterling
equivalents2.
Administrative expenses increased by 3.0 per
cent to €68.9 million (2019: €66.9 million), and
by 5.1 per cent in reported pound sterling
equivalents2 as we have continued to invest
to support long-term growth.
Adjusted1 operating profit for the French
business decreased by 27.3 per cent to €14.4
million (2019: €19.8 million), and by 24.9 per
cent in reported pound sterling equivalents2.
Technology Sourcing performance
Technology Sourcing revenue increased by
7.4 per cent to €590.0 million (2019: €549.2
million) and by 9.8 per cent in reported pound
sterling equivalents2.
We grew our Technology Sourcing volumes
in 2020, thanks to winning some significant
framework contracts, our continued
investment in presales resources and our
excellent relationships with our Technology
Partners.
The COVID-19 crisis had several impacts on
the Technology Sourcing business. In
particular, the workplace business has
become a greater part of our product mix,
as large end-user communities needed to
move rapidly to a new working environment
that enabled them to work from home or
remotely. This resulted in a significant
increase in demand for our Digital Me
proposition, mainly through the sale of
workplace and mobility solutions.
We have worked hard throughout the year to
maintain and grow our vendor certifications.
We are proud to have obtained both the Apple
Authorised Enterprise Reseller and Apple
Authorised Education Specialist certifications.
Services performance
Services revenue decreased by 1.6 per cent
to €163.9 million (2019: €166.6 million) and
increased by 0.5 per cent in reported pound
sterling equivalents2. Professional Services
revenue decreased by 10.3 per cent to
€40.0 million (2019: €44.6 million), which was
a decrease of 8.5 per cent in reported pound
sterling equivalents2. Managed Services
revenues increased by 1.6 per cent to
€123.9 million (2019: €122.0 million), an
increase of 3.8 per cent in reported pound
sterling equivalents2.
Despite the COVID-19 situation, the Services
business in France continued to deliver strong
results. We knew that our revenues in 2020
would be affected by the loss of a large
international contract that was not renewed
in 2019, but we have largely overcome this
challenge by improving overall service margins.
We started the year with a good pipeline of
Managed Services opportunities. The COVID-19
crisis caused many organisations to stop their
tender processes or to put their decisions on
hold. Despite this difficult situation, we were
pleased to win and successfully transition
several international Managed Services
contracts. Additionally, we have been able to
extend our Services scope at three of our
largest existing support contracts.
Based on the existing Contract Base, the
pipeline and the fact that some of the
campaigns that were put on hold in 2020 will
restart, we are looking forward to further
growth in our Managed Services business
in 2021.
Our Professional Services business faced a
challenging year with a decline in revenues,
mainly due to the COVID-19 situation. As our
Professional Services business in France is
relatively small compared to the capabilities in
the Group, the impact on the overall result was
modest. Moreover, we were able to minimise the
contribution loss, as we benefited from
Government temporary unemployment
support programmes in the second quarter,
to compensate for the reduced utilisation
of resources during lockdown. The
Computacenter NS team has significantly
strengthened our Services capabilities in
France and we are looking forward to
significant improvement in our Professional
Services market share and profitability in 2021.
Services margins decreased by 247 basis
points over last year.
As the French business continues to grow, we
are focused on reviewing and improving our
quality processes. These should help us to
maintain a high level of customer
Overall, Technology Sourcing margins
reduced by 61 basis points, primarily due
to the shift towards the lower margin
workplace business within the product mix.
37
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
NORTH AMERICA
With the acquisition of
Pivot, North America will
further scale our technical
capabilities to enhance
our value to customers.
Kevin Shank
President, North America
Members of the North American leadership team
38
Revenue $m
1,223.8
2020
2019
2018
2017
2016
+27.8%
1,223.8
957.8
351.6
32.5
31.2
Adjusted1 operating profit $m
+58.6%
18.4
Services Contract Base $m
19.0
Revenue by business type
123
1. Source 97.1%
2. Transform 2.1%
3. Manage 0.8%
During the second half of 2020, the Group
completed the material acquisition of Pivot.
This business was combined with our
existing US Segment to create the North
America Segment from 2 November 2020.
The acquisition contributed $292.7 million
of revenue and an adjusted1 operating profit
of $6.8 million in the two months of trading to
31 December 2020 and all results below
reflect this result.
With the acquisition of Pivot, North America
will further scale our technical capabilities to
enhance our value to customers and deploy
our expanding portfolio framework to enable
our customers’ success.
Financial performance
Total revenue increased by 27.8 per cent to
$1,223.8 million (2019: $957.8 million). In
reported pound sterling equivalents2, total
revenue was up 25.8 per cent.
Adjusted1 operating profit for the North
America business increased by 58.6 per cent
to $18.4 million (2019: $11.6 million), and by
53.8 per cent in reported pound sterling
equivalents2.
The increase in operating profit was largely
due to the acquisition of Pivot, which
contributed $6.8 million of operating profit
since it was acquired. December was by far
Pivot’s most profitable month of the year and
this level of performance should not be
extrapolated. Excluding Pivot, North
America’s adjusted1 operating profit was
largely flat, despite the impacts of COVID-19,
as hyperscale customers continued to
purchase in volume. The Integration Center
continued to perform well in the second half
of 2020, while operating expenses were
reduced due primarily to the inability to
travel as a result of COVID-19.
Technology Sourcing performance
Technology Sourcing revenue increased
by 27.3 per cent to $1,189.2 million (2019:
$934.1 million) and by 25.4 per cent in
reported pound sterling equivalents2.
The addition of Pivot results in significant
growth in our Technology Sourcing business.
Pivot contributed $280.0 million of
Technology Sourcing revenue since
acquisition. Excluding Pivot, Technology
Sourcing revenue declined by 2.7 per cent,
as mid-market customers reduced their
spending as a result of COVID-19, while
hyperscale customers were not significantly
impacted. We saw a similar technology
spending mix amongst major partners and
technologies, particularly in the data center
and networking lines of business. We
benefited from significant continuing
investments by our customers, as they
digitise their operations and modernise their
infrastructure. We continue to see customers
seeking to simplify their operations by
consolidating to fewer suppliers, resulting
in long-term commitments and larger
transactions. By adding the Pivot volume,
driving consistent supply chain via
consolidation and process integration
remain powerful value propositions to our
target market customers.
North America Technology Sourcing margins
improved 65 basis points over last year, as
a result of a number of activities to improve
the underlying efficiency and effectiveness
of the business. The addition of Pivot
improved margins by 20 basis points,
while the implementation of the partner
management organisation provided margin
improvement that was partially offset by
customer mix, as large hyperscale customers
comprised a larger portion of revenue than
the prior year.
Services performance
Services revenue increased by 46.0 per cent
to $34.6 million (2019: $23.7 million) and by
44.1 per cent in reported pound sterling
equivalents2. Professional Services
increased by 48.8 per cent to $25.6 million
(2019: $17.2 million), which was an increase
of 45.2 per cent in reported pound sterling
equivalents2. Managed Services increased
by 38.5 per cent to $9.0 million (2019:
6.5 million), an increase of 41.2 per cent in
reported pound sterling equivalents2.
Excluding Pivot, Services revenues
decreased by 7.9 per cent as project activity
slowed, with customers either delaying
expected spend or cancelling projects while
they responded to COVID-19.
The overall Services performance was mixed.
Our pre-acquisition Professional Services
business decreased, driven by COVID-19-
related project delays or cancellations.
The majority of the Professional Services
business is with our mid-market customers
and that segment was most affected by
COVID-19. A bright spot remains our rack
fabrication business, which is delivered from
our new Integration Center and experienced
a strong year. We continue to see significant
growth for our Integration Center projects,
including complex distributed branch rollouts,
as well as global data center build-out
projects for our hyperscale customers.
Services margins decreased and are now
431 basis points below the overall combined
Group Services margin. While we saw
reduced spending on Services, we were not
able to reduce costs as much as revenue was
impacted. Managed Services improved its
gross margin, due to certain higher-margin
non-recurring activities.
Growth in North America was driven by the
acquisition of Pivot, which contributed
$292.7 million in revenue. Organically, North
American revenue was down 2.8 per cent due
to reduced spending by our mid-market
customers, primarily because of the COVID-19
pandemic, partially offset by the strength of
hyperscale data center customers. Overall,
revenue was slightly ahead of forecast for the
year, on an organic basis, in both Technology
Sourcing and Services.
Overall, margins in North America decreased
by 12 basis points, with adjusted1 gross profit
decreasing from 9.3 per cent to 9.1 per cent
of revenues.
The Technology Sourcing business increased
its margin due to the acquisition of Pivot.
Pivot’s technology sourcing margins are
approximately 1 per cent higher than the
FusionStorm business, as its customer mix
is not as focused on hyperscale customers,
who tend to drive lower margins. Excluding
Pivot, Technology Sourcing margins rose by
44 basis points, primarily due to improved
vendor rebate performance through a
change in the mix of vendors towards those
with higher rebate structures, more in line
with our European businesses. Investments
in the partner management function in the
prior year also resulted in improved
Technology Sourcing margins.
Professional Services margins were down
compared to the prior year, as customer
projects were deferred due to COVID-19,
which resulted in lower staff utilisation. The
Managed Services business reported higher
margins year-on-year due to improved mix,
currency benefits and leveraging lower-cost
regions for some of its work. Reported
margins were below expectations overall.
Overall adjusted1 gross profit grew by 26.6
per cent to $112.2 million (2019: $88.6 million)
and by 24.2 per cent in reported pound
sterling equivalents2.
Administrative expenses increased by 21.8 per
cent to $93.8 million (2019: $77.0 million), and
by 19.7 per cent in reported pound sterling
equivalents2. This was due to the acquisition
of Pivot, which added $23.0 million of
administrative expenses for the period after
acquisition. Excluding the impact of acquisition,
administrative expenses were reduced
year-on-year. Reduced travel costs due to
COVID-19 were partially offset by other increases
in administrative expenses, which were driven
by higher variable remuneration, continued
long-term investments in our new Livermore
Integration Center and the deployment of our
Group ERP system, which will underpin our
future systems strategy in the region.
39
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
LIVERMORE
Computacenter
locations prior
to Pivot
Pivot locations
40
Left: Integration Center – Alpharetta, Georgia
We have improved our US Technology Sourcing
coverage and capability with Pivot.
Bottom left: Engineer working on Data Center
rack cabling
We have improved the scale of our Integration
& Deployment Services with Pivot.
Below and bottom right: Integration Center –
Livermore, California
In 2020 we opened a major new facility next to Silicon
Valley, close to major hyperscale customers.
ALPHARETTA
The combination
of the businesses
allows us to scale
the organisation
and better support
our existing and
new clients.
Kevin Shank
President, North America
ENABLING SUCCESS BY
INCREASING
OUR CAPABILITY
AND COVERAGE
The acquisition of Pivot, which completed on 2 November 2020, significantly
increases our scale and capability in North America, allowing us to offer
a wider range of services to our customers.
Above: New York City office, opened in 2019
Above: Integration Center – Livermore, California
We have been progressively increasing our
capability in the United States since we took
control in 2015 of services that were
previously partner-delivered. In late 2018 we
acquired FusionStorm Inc. and we have been
pleased with our progress, especially how
our people in the US have embraced our
culture and values.
Pivot is an IT solutions provider, with
approximately 85 per cent of its revenues
from customers in the US and the remainder
from customers in Canada, where Pivot’s
wholly-owned subsidiary, TeraMach
Technologies Inc., is a leading IT supplier to
the Canadian Public Sector. Pivot’s presence
in Canada expands our total market
opportunity and helps us to meet the needs
of international customers. Pivot employs
approximately 600 people in the US and
around 100 people in Canada.
In the US, Pivot’s customers are large
enterprises across the country, with
particular strength in the West Coast (CA,
WA), Central (TX) and South East (GA, FL)
regions. We will integrate our existing US
operations with Pivot, approximately
doubling our North American revenue to over
$2 billion per annum and headcount to over
1,200. The acquisition significantly increases
our combined coverage and capability, with
our Technology Sourcing business benefiting
from two major Integration Centers, one on
the West Coast next to Silicon Valley in
Livermore and the other in Alpharetta,
Georgia, with our own-delivered Services in
North America increasing to over $150 million
per year.
Pivot and our existing US business are
complementary and together will offer
customers closer to the full range of
capabilities that Computacenter provides
in its more mature European businesses.
Senior leadership in Pivot has been retained
and will play a key role in the combined
Computacenter business. Kevin Shank, Pivot
President & CEO, worked in partnership with
Computacenter in a previous role and has
been appointed President of Computacenter,
North America.
The combination gives us the opportunity to
enable the long-term success of customers,
partners and people from both teams.
41
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Performance in 2020
continued
INTERNATIONAL
Whilst 2020 was a difficult
year for the International
Segment, we are encouraged
by the way we returned to
good business levels towards
the end of the year.
Lieven Bergmans
Managing Director, Rest of Europe
Members of the Rest of Europe leadership team – part of International
42
Revenue £m
174.3
2020
2019
2018
2017
2016
-9.7%
174.3
193.0
102.2
75.3
68.0
Adjusted1 operating profit £m
-56.1%
3.6
Services Contract Base £m
+2.0%
44.9
Revenue by business type
1
3
2
1. Source 63.4%
2. Transform 4.1%
3. Manage 32.5%
The International Segment comprises
a number of trading entities and offshore
Global Service Desk delivery locations.
The trading entities include Computacenter
Switzerland, Computacenter Belgium and
Computacenter Netherlands. In addition to
their operational delivery capabilities, these
entities have in-country sales organisations,
which enable us to engage with local
customers. As of January 2020, we started to
develop a sales and trading entity in Spain,
with offices in Madrid and Barcelona.
These trading entities are joined in the
Segment by the offshore Global Service Desk
entities in Spain, Malaysia, India, South Africa,
Hungary, Poland, China and Mexico, which
have limited external revenues.
Financial performance
Revenues in the International business
decreased by 9.7 per cent to £174.3 million
(2019: £193.0 million) and by 11.5 per cent in
constant currency2.
2020 was challenging for our trading entities
in the International Segment, especially at
the start of the year. Due to the COVID-19
crisis, the business saw a significant decline
in both revenues and profitability during the
first six months of the year. However, in the
second half we saw a remarkable recovery
of business volumes and profitability. This
positive trend and the promising pipeline at
the beginning of 2021 make us confident
about our growth ambitions for the
coming years.
Adjusted1 gross profit decreased by 29.4 per
cent to £30.7 million (2019: £43.5 million),
and by 29.6 per cent in constant currency2.
Administrative expenses decreased by 23.2
per cent to £27.1 million (2019: £35.3 million)
and by 23.9 per cent in constant currency2.
Overall adjusted1 operating profit decreased
by 56.1 per cent to £3.6 million (2019:
£8.2 million), and by 55.0 per cent in
constant currency2.
In 2019 we invested significantly to increase
our sales capabilities in Belgium, the
Netherlands and Switzerland. Due to the
COVID-19 crisis, we did not see immediate
returns on these investments.
The Belgian business saw a small decline
in profitability in 2020, mainly because of
a reduction in contribution in Technology
Sourcing. This was due to its focus on
customers in the private sector, which we
believe has suffered more from the COVID-19
crisis than Public Sector customers. Our
Managed Services contribution has grown
year-on-year as key private customers
continue to count on Computacenter to
support the business with the new normal:
users working from home.
The Swiss business was also affected by
the pandemic. However, a more important
reason for the profitability decline in 2020
was the significant scope change in our two
major Managed Services contracts. As we
anticipated that this could happen, we
invested in 2019 and early 2020 in additional
sales capacity and Technology Sourcing
capabilities. We are pleased that we have
been able to offset part of the Managed
Services profitability decline with these
new capabilities.
Our business in the Netherlands had a
difficult first half but its performance
improved in the last five months of the year.
Whilst Public Sector spending was very slow
at the start of the year, we have been able to
win and develop significant contracts that
started to become very active towards the
end of the year. Additionally, we are
encouraged by the win of an international
procurement and services contract with
a large petrochemical company. This is
particularly pleasing as this is an
international contract where we will be able
to leverage our worldwide capabilities, either
through our own operations or through
strategic partners.
In early 2020, we started to build a sales
team in Spain. This business has currently
onboarded a team of around 15 account
managers and specialist salespeople. Whilst
it was difficult to gain market share during
the pandemic, the Spanish team has
progressed well in developing a local sales
pipeline and leveraging some existing
international contracts. Furthermore, the
team has been concentrating on achieving
vendor certifications with Cisco and the ISO
9001 and 14001 quality accreditations.
Technology Sourcing performance
Technology Sourcing revenue decreased
by 10.7 per cent to £110.5 million (2019:
£123.7 million) and by 12.4 per cent in
constant currency2.
During the early months of the COVID-19
crisis clients reduced spend, particularly in
the private sector. Investments around the
workplace remained important, as
organisations were required to enable their
end users with new ways of working. We
struggled, however, to maintain the same
volumes as previous years in the data center,
networking and security business lines.
As we want to build a business for the long
term, we have continued to work with
organisations to identify their future
requirements, even when they were not clear
that investment decisions could be made.
As it was difficult to meet customers in the
traditional way, we have been creative in
developing new ways of presenting our
offering, discussing their needs and creating
proposals. For example, in Belgium we have
developed virtual ‘meet-the-expert’
information sessions, where we share
insights such as how organisations can
better anticipate new challenges like those
we all faced in 2020 or discuss new
technology trends.
Towards the end of the year, Technology
Sourcing business volumes returned to
normal, as some organisations decided to
push ahead with infrastructure projects
that were put on hold earlier in the year.
Additionally, the workplace business
remained very busy throughout the year.
We could have had an even stronger end to
the year in this business line, but we were
confronted by reduced availability of
systems from all of our main vendors. On the
other hand, this has resulted in a strong
order book to start 2021. We are confident
that in the coming years we will continue to
reap the benefits of the investments we have
made to increase our sales capacity in the
entire International Segment.
Services performance
Services revenue decreased by 7.9 per cent
to £63.8 million (2019: £69.3 million) and by
10.0 per cent in constant currency2.
Professional Services revenue increased by
80 per cent to £7.2 million (2019: £4.0 million),
and by 75.6 per cent in constant currency2
whilst Managed Services decreased 13.3 per
cent to £56.6 million (2019: £65.3 million), and
by 15.3 per cent in constant currency2.
In general, we were pleased with the
performance of our Managed Services
business. All major contract renewals were
concluded successfully and we have been
able to increase our Contract Base slightly.
As mentioned, our Swiss business was
affected by the revised service scope for two
of its major contracts, but we are committed
to continuing to help our customers succeed
and look forward to new extension
opportunities in the future.
Our Professional Services business suffered
from the COVID-19 crisis, as many customers
were forced to reduce projects due to
financial pressure or for practical site
access reasons.
Whilst 2020 was a difficult year for the
International Segment, we are encouraged
by the way we returned to good business
levels towards the end of the year.
Additionally, we have a continued opportunity
to gain further market share in each of our
operations, mainly by leveraging the offering
we have developed as a Group and by using
our strength on an international level.
43
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our People and Culture
OUR BUSINESS IS
ABOUT TECHNOLOGY.
BUT FIRST OF ALL IT’S
ABOUT PEOPLE.
Computacenter is a people-centric company that
depends on its employees to deliver real value to
its customers.
We therefore need to attract talented people and engage
and inspire them to do their best for our customers,
Computacenter and themselves.
This requires us to provide the right tools, training and
development, so our people feel valued and work for
a company they believe in.
In this section
• Protecting our people while supporting customers during COVID-19
• Transforming our people management capabilities
• Attracting talent
• Diversity and inclusion (D&I)
• Computacenter’s culture and values
• Employee engagement
• Health, safety and wellbeing
Non-financial information statement
The content of this section forms our non-financial information
statement, with the exception of the Business Model which
can be found on pages 16 to 17, Principal Risks and Uncertainties
(pages 71 to 76) and Strategic Priorities (pages 26 to 27).
Members of the Group HR team
44
PROTECTING OUR PEOPLE WHILE
SUPPORTING CUSTOMERS DURING
COVID-19
As we stepped into 2020, we could never have
planned for the impact of COVID-19. However, as
the seriousness of the outbreak became more
apparent during February, we formed a team to
begin risk assessment and planning for the
possible business impact. By early March, we
had created a Global COVID-19 task force, led by
our Chief People Officer (‘CPO’), CIO and Services
operations, and reporting to the CEO. By
mid-March, the team were meeting twice a day
to execute plans to get our people safely home,
keep them working and continue to deliver for
customers. Throughout, our mantra has been
keep our people safe, deliver for our
customers and act for the long term.
We responded to the global lockdown by
moving almost 90 per cent of our global
workforce to homeworking over a two-week
period. The Group Information Systems team
quickly scaled our virtual private network
capacity and provided laptops and other IT
equipment to enable effective homeworking.
We set up short-time work and furlough
schemes in seven countries, utilising
government support in some countries and
putting our own schemes in place in others.
For most countries where government support
was provided, Computacenter also contributed
to schemes to enhance pay for our people who
were furloughed. The funds we received in April
under the Job Retention Scheme in the UK were
repaid in full. For countries without any
government support, we enabled managers to
provide flexibility to staff, while ensuring we
kept delivering great service to our customers.
TRANSFORMING OUR PEOPLE
MANAGEMENT CAPABILITIES
In 2020, we delivered the majority of the
AHEAD Digital Transformation programme
and moved the management of our HR
systems strategy and projects into the HR
operating model. The programme has been
crucial, giving HR a more consistent global
capability, providing the data to help us be
highly responsive to the continuous changes
in the global situation during the pandemic,
and helping to support planning and
management of our response for our people
and our business.
Overall, we have already seen considerable
benefits from our new processes in the
following areas:
Service and user experience
• Our people have access to the right people
to answer their queries, via the new global
HR helpdesks in Hungary and Germany.
• We have consistent Group processes for
managers in recruitment, variable pay,
pay review and employee recognition,
and a new learning platform.
• Our managers are seeing benefits,
including less time spent and reduced
manual intervention on many processes
such as pay review and variable pay.
Global scalable HR model
• We have the foundation for aligning HR
systems, which enables global scalability
and the opportunity to continuously
improve and develop our manager,
candidate and user experience.
• We have Group centres of excellence,
to support the business in recruiting,
developing, rewarding and engaging
our people.
• We have consistent employer branding
globally, with a single global recruitment
database.
• All of our new HR processes are signed
off for compliance and have works
council agreement.
Data and management information (MI)
• We have created a reporting, analytics and
market intelligence capability to enable
change and continuous improvement
and governance.
• We have Group MI tools through a centralised
source for both HR and the business.
Our priority for 2021 is to build on this
foundation, in particular in three key areas:
• Supporting business growth, through the
ability to consistently deliver our HR
processes into new geographies, such as
India and the US.
• Refining and improving the HR tools and
efficiency, by completing the rollout of our
HR systems to the Computacenter Group
countries and refining the processes
within the operating model.
• Enhancing HR operational effectiveness,
through further automation of our
processes and increasing the capability
of our HR analytics and information.
ATTRACTING TALENT
After a strong period of recruitment in
January 2020, we were hit by the uncertainty
of COVID-19. Due to our personal, timely and
very transparent communication approach,
we were able to build a strong talent pipeline
and improve our employer brand during this
time, receiving a high level of positive
feedback from candidates on our approach.
During this initial stage of the pandemic,
we quickly switched to a virtual assessment
and selection process and provided hiring
managers with updated training material, to
ensure the business was properly supported
and candidates received a professional and
engaging process. This approach was
recognised by the leading German employer
rating portal Kununu (equivalent to
Glassdoor), which awarded us a higher score
and recommendation ratio than many of our
competitors, in a survey it conducted on how
employers had managed the pandemic
during the first phase.
By the end of 2020, we had recruited around
2,000 people across the Group, a similar
number to 2019. However, there was a shift
by country and target groups. The majority
of talent acquisition activity was in the UK,
France and Germany, focusing on sales,
consultancy and engineer roles. We also
increased our Future Talent apprentice and
graduate programmes, due to the quantity
and quality of the applications we received,
offering us a great opportunity to drive
forward with one of our strategic
recruitment pipelines.
2020 also saw us invest in our employer
brand, to ensure it reflected the changes we
had made to our talent acquisition processes
and approach as a result of the pandemic.
This included new design, photos and video
concepts, as well as producing material to
support our continued growth in 2021,
focusing on our values and our purpose.
We also invested in a modern and
comprehensive blended learning solution
on best practice interviewing, training our
interviewers to deliver better outcomes for
our candidates and our business.
Our talent acquisition capability has
progressed significantly through the
investment in tools and the function has
evolved into a Group centre of excellence,
allowing us to refocus resources across
countries, to meet local recruiting demand
peaks and troughs.
Developing and supporting our talent
In response to the pandemic and national
lockdowns we set up a dedicated learning site
on our My Learning channel to support our
people working remotely. We covered topics
such as ‘how to stay connected’, ‘keeping well
and healthy’, ‘managing yourself and your
teams remotely’ and ‘embracing virtual
teamwork and using remote working tools like
Microsoft Teams’. We virtualised 90 per cent of
our training offerings and continued to deliver
virtual sessions, for example on behaviours,
motivation and aptitude, to minimise the
disruption to people’s personal development.
We set up social learning channels with
business areas, to promote personal
development and engage learners digitally,
which has received great engagement and
feedback as people enjoy the flexibility of their
investment in learning.
In autumn 2020, we started to prepare for
our Executive and senior team succession
planning and development, which included an
internal needs analysis as well as utilising
learning organisations such as Gartner, CIPD
and CRF for industry best practice. We are now
starting the pre-launch of the first phase of
our new succession planning programme.
Three flagship leadership development
programmes were developed and launched
globally. These were ‘Leadership Basics’, for
our aspiring leaders, ‘Mastering Personal
Leadership’, for our new leaders and ‘The
Purposeful Leader’, for our experienced
leaders. All have received acclaim for
relevance, effectiveness and providing value.
The flagship programmes are one element of
a comprehensive learning roadmap, which
has been developed for leaders to select the
learning intervention that best suits them.
To support our existing leaders with their
development, we have also started to pilot a
‘self-reflection’ approach, which will support
leaders to assess their leadership strengths
and development needs.
Performance management
Having piloted a new employee performance
and development approach focusing on
continuous dialogue between managers and
employees in Germany in 2019, we were in a
strong position for performance discussions
to become remotely managed during 2020.
We quickly adapted a version of this for many
employees and continued to improve the
approach before launching to all employees
across the Group, including a supporting tool,
in January 2021.
45
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our People and Culture
continued
DIVERSITY AND INCLUSION (D&I)
One of the most important factors in
Computacenter’s growth as a global
business is ensuring that all our people are
valued and supported to reach their full
potential. Having a diverse and inclusive
organisation enables us to:
• attract, retain and promote the best talent;
• create strong leaders;
• utilise the diverse experiences, skill
sets and ways of thinking that our
employees provide;
• understand and reflect our diverse
customers, enabling us to provide them
with the best possible service;
• recognise local and legal differences
across the Group;
• improve performance; and
• be more innovative and forward thinking.
Computacenter is built on our Winning Together
values, one of which is understanding people
matter. We commit to ‘building strong,
rewarding, supportive relationships and to
treat people as we expect them to treat us’.
We want to create a sense of belonging
through our Group approach to D&I, delivered
through a local lens to make sure whatever
we do is appropriate for our people in their
local context. We are committed to making
sure our culture is one where everyone is
valued, respected and able to be themselves.
Inclusion is not something that can be led by
one person, or even a team of people, because
we all experience the workplace differently.
We need our people to bring D&I into their
everyday conversations, ask questions, share
best practice and champion D&I. To do this,
we are embedding conversations on D&I into
everything we do. However, we know that
there are specific topics and issues that are
important to focus on, so alongside this we
are targeting key areas. Our six pillars of D&I
were developed by our people, to help us to
structure and focus our work. They are:
• Gender – Balancing the gender mix in
a male-dominated industry.
• Culture – Respecting the diverse cultures,
ethnicities, religions and beliefs that make
up our international family.
• Be Heard – Making sure everyone knows
they are valued and listened to, regardless
of age, seniority or length of service.
• Accessibility and Wellbeing – Making sure
everyone at Computacenter has the
support and environment they need to
fully participate.
• LGBT+ – Embracing the diversity of our
workforce’s sexual orientation and gender
identity.
• Life Balance – Finding a balance that
works for each individual and their
personal circumstances.
46
Key themes that run alongside the six pillars
are recruitment and retention and
organisational culture. We have continued to
focus on our key objectives this year, which
include improving our gender balance and
promoting positive wellbeing, and have made
significant progress. We have delivered our
first Group-wide wellbeing training, launched
our healthy leadership training for managers
and expanded our Growing Together
programme across the Group, which focuses
on supporting women to achieve their
career goals.
Our People Panel is chaired by Mike Norris,
our CEO, and brings together more than 35
people from across the Group, with a mission
to create a culture which is fair, where we
value and respect differences and
understand that people matter. To do this,
the People Panel promotes a fair and
inclusive culture, researches best practice
and shares it across our business,
encourages change, measures progress
and communicates.
The Group has a dedicated D&I manager,
who centrally coordinates our activities.
We also have established a D&I project team,
made up of about 20 people from across the
Group, who look at how we can drive D&I in
every part of our hiring, retention and
engagement processes.
Gender diversity
The table below shows our gender diversity
at the year end:
2020*
2019
Women
2
Men Women
2
7
25
98
24
Men
7
91
4,196 12,340
4,062 11,890
4,223 12,445
4,088 11,988
Board
Senior
managers
Other
employees
Total
*
Includes the headcount for the acquisitions made
in 2020.
Although the proportion of women employed
in Computacenter is in line with industry
norms, we are committed to increasing it.
Initiatives specifically aimed at improving
gender diversity include our Growing
Together (UK) and Women@Work (Germany)
networks, which are delivering real benefits.
In addition, we have seen good growth in the
number of female senior leaders across the
Group during the year.
We were delighted that two of our female
leaders were recognised at the CRN Women
in Channel Awards 2020 in the UK. Julie O’Hara
was named winner of ‘Woman of the Year’
and Helen Croft named winner of ‘Sales
Employee of the Year’.
Ethnic diversity
One of our key successes this year has been
the launch of the first of our new Employee
Impact Groups (EIG), focusing on ethnic
diversity. Our new EIG enables our
employees to influence and create
sustainable change within the business.
The EIG includes members from across the
business who meet and work towards the
objectives shown in the diagram below.
The EIG launched first in the UK, creating a
network of over 140 people and delivering
its first two events, which celebrated Black
History Month and hosted a discussion on
identity. The EIG continues to work to drive
progress with this important issue, with the
sponsorship of our Chief Executive and the
support of our Chief People Officer.
Speak FREELY
Create an environment which
enables employees to speak openly,
and to identify actions to improve
employee experience.
Cultivate TALENT
Support the recruitment, retention
and advancement of a more
ethnically diverse talent pool
across all job levels.
DATA
To ensure we have
data that enables us to
measure the success
of ongoing work.
Help EDUCATE
Facilitate the delivery of targeted
education to every Computacenter
employee, to equip them with the
knowledge they need to promote
a positive and inclusive environment
for all.
External IMPACT
Support external initiatives as part
of our commitment to making the
IT industry more accessible to
people from ethnic minority
backgrounds.
In Germany, we also had two winners in the
Women’s IT Network awards. Katja Könnecke
won ‘Team Leader’ and Linda Schneider was
named as ‘Young Leader’. These wins
showcase once again Computacenter’s
female talent and our focus on increasing
gender diversity within the Group.
Simone Heitmann, Partner Management, was
recognised as one of the 30 most influential
women in the European channel by Channel
Partner Insight.
At the EMEA Canalys Forum, Diversity and
Inclusion Partner of the Year was awarded to
Computacenter. It is the second year for this
new awards category. Computacenter’s
OUR WINNING TOGETHER VALUES ARE:
submission demonstrated its commitment
to driving diversity and inclusion across not
only its employees but also its suppliers,
while at the same time achieving strong
revenue and profit performance. As part of
its emphasis on Board-driven diversity and
inclusion values, it is also taking action to
reduce its environmental impact.
COMPUTACENTER’S CULTURE AND VALUES
Computacenter is a people-centric company
that depends on its employees to deliver real
value to its customers. We have a well-
established culture, developed over nearly
40 years from the beliefs and strong
direction of our founders and leaders.
Winning
Together
Our Values
We win by:
We do this together by:
Putting customers first
We work hard to get to know our customers
and really understand their needs. This lets
us use our experience to help them in the
right way at the right time.
Being straightforward
We’re practical and pragmatic. We believe
in solutions over talk. We express ourselves
in the clearest possible way. And we’re open
and honest in all of our dealings.
Keeping promises
We do our very best to keep our promises.
And when that’s difficult, we help our
customers find other ways of solving
their problems.
Understanding people matter
We build strong, rewarding, supportive
relationships. And we treat people as we
expect them to treat us.
Considering the long term
We’re building a business for the long term.
This leads our decisions and actions and
helps people really trust us.
Inspiring success
We’re proud of the people we work with.
We do the best to support each other through
the downs and we always celebrate the ups.
Computacenter has a highly positive,
customer-centric, performance-aligned
culture, based on having committed people
who deliver fantastic results for our
customers every day, who feel engaged and
motivated and enjoy coming to work. Our
culture contributes to an average length of
service of more than nine years. We also
frequently see people rejoining Computacenter
after taking roles elsewhere or having
career breaks.
Our culture directly supports our purpose
and is underpinned by our Winning Together
values. Our Purpose was launched during
2019 and has been cascaded throughout the
business by the leadership in the different
countries and business divisions. Our
Purpose is a multi-layered message, which
enables our people across the business to
understand what we do, why we do it and how
we deliver successfully for our customers,
our business and for each other.
Our values are at the heart of how we
operate as a business and underpin our
leadership principles of driving success by
collaborating, being inclusive, having an
open mindset, innovating and leading as
a coach. These leadership attributes are
utilised when recruiting for future leaders
and as part of our leadership development
programmes. We use our values in every
aspect of our people engagement, from
recruitment through to recognition, and
throughout our people’s career development.
Our performance management process
links directly to our values and guides our
people’s behaviours, as well as directing
their achievements.
As we grow, maintaining our values and
culture becomes even more important.
Across different offices and countries,
Company values are the only constant and
they play an integral role in shaping company
culture. Therefore, to create a sense of
community in a multi-national organisation
that has employees based on customer sites
and remotely, we must continue to monitor
and reinforce our Company values at every
opportunity, while being respectful and
embracing local culture and ways of working.
To that end, our Group approach to values is
cascaded in-country through our leadership
and our HR teams, to ensure that we have the
right balance of Group culture and local
application.
47
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 HEALTH, SAFETY AND WELLBEING
Protecting those who work for and with us,
as well as our customers and members of
the public, is extremely important.
Computacenter’s policy is that, in so far as is
reasonably practicable, we will create and
maintain an environment that is committed
to eliminating or reducing health and safety
risks to employees, customers, suppliers,
contractors, visitors and members of
the public.
Our approach to health and safety is an
integral part of the efficient operation of the
business. It is based on identifying and
controlling hazards and preventing incidents,
particularly those involving personal ill-health,
injury and damage to equipment or property.
Near-miss reports, which identify unsafe
acts or conditions, are also investigated, as
we recognise these as being an essential
method of avoiding future incidents.
We understand that it is not enough to have
a general Health & Safety Policy Statement,
containing procedures for safe methods and
conditions for work. It is more important that
everyone concerned is made aware of their
responsibilities in implementing the policy.
All line managers are therefore required to
ensure that the policy is implemented within
their areas of responsibility and employees
must take reasonable care of their own
health and safety and that of others who
may be affected by their acts or omissions.
Failing to observe the policy can result in
disciplinary action.
In addition, Computacenter shall:
• maintain a constant and continuing
improvement culture in health and
safety performance and encourage
all employees to set an example in
safe behaviour;
Our People and Culture
continued
EMPLOYEE ENGAGEMENT
We know engagement is key to our success
and that a highly engaged workforce helps us
deliver better outcomes for our customers.
Employee engagement was more critical than
ever in 2020. The pandemic has created the
need to remain connected with our people
and engage in different ways, recognising
the pressures they face with home and work.
This has included a step change in
communication with our people, both at a
Group and country level, so they understand
how we are managing our response to the
pandemic and the support available to them.
It was also important that we measured our
employees’ engagement and wellbeing, in the
new remote management world they were
experiencing. We ensured this was carried out
regularly across the globe, through a mix of
country, function and team-specific methods,
carrying out spotlight surveys and collecting
feedback from our people through seven
different surveys. Through these, we
identified key themes, areas of strength and
opportunities for further support. In response,
teams from across the business have worked
with leadership and HR to provide further
support to our people and to improve
employee wellbeing. The greatest feedback
we had through the employee surveys we ran
during 2020 was that our people felt well
supported by Computacenter and that they
had great respect for their leaders.
We have a number of different forums for
engaging with our people. These include our
People Panel, which is described on page 46.
In the UK, we have MyForum, and we have
Works Councils in Germany, France, Spain,
Belgium, Switzerland and the Netherlands, as
well as a European Works Council. All of these
meet regularly with the Group Executive
team and other senior managers, to provide
business insight and inform how the
business is managed. These engagements
have predominantly been online during 2020
and, in the case of our works councils, more
frequent meetings have been held to engage
on changes to employee working patterns
during the pandemic.
Our Senior Independent Director, Ros Rivaz,
is our nominated Non-Executive Director
aligned to our people. She has performed this
role for three years and has engaged with
employee representatives such as our
European Works Council, as well as attending
a number of People Panel and EIG sessions in
order to gain direct insight from employee
representatives across the Group. These
insights are shared with the Board and are
brought into Board discussions to ensure
that the employees’ input is heard and taken
48
into account. These employee interactions
are highly appreciated by the employee
groups and feedback regarding Ros’
engagement is unanimously positive.
Improving the employee experience
In March 2020, we launched a global
peer-to-peer recognition tool called ‘Bravo!’
This allows our people to immediately
recognise the contributions of their peers
and to thank them for it. The tool is mobile
enabled, to allow for fast and frequent
recognition. This helps to reinforce our
values and outcomes, based on behaviours
and best practice. The tool also allows
managers to award points for exceptional
performance and behaviours, which can be
redeemed with selected retailers or donated
to our chosen charities in-country. This new
tool provides the Group with a global ability
to recognise and reward exceptional
behaviour and outcomes across all areas
of the business, encouraging collaborative
working across the Group. The launch of our
new recognition tool has proven to be
invaluable during the pandemic, as an
instant and visible way to celebrate the great
achievements, effort and teamwork that
took place, particularly at the beginning of
the crisis, in a way that we previously could
not have done globally or remotely.
Our people policies
Computacenter has a range of people-
related polices, covering topics such as
equality and respect at work, health and
wellbeing, recognition and reward, and
whistleblowing. Together, they are designed
to ensure that our people are supported,
protected and suitably recognised for the
contribution they make, and that we are an
inclusive and ethical employer, with a
diverse, talented and motivated workforce.
Our people can report any HR policy
compliance issues to their line manager
or HR, or they can call our Safecall
whistleblowing hotline, which allows them to
report in confidence. All calls to the hotline
are handled by an independent third party
and the issues are monitored, resolved and
reported to the Audit Committee. All other
issues are dealt with operationally, through
the HR function.
We also monitor other indicators of policy
compliance, such as the number of
grievance or disciplinary proceedings, which
we aggregate at a country level. Our HR
managers review this data to see if there are
trends requiring Management action. No
material policy breaches were identified
during the year, either through the
whistleblowing hotline or our other reporting
and monitoring mechanisms.
• promote participation and consultation
between employees and Management
concerning matters of health and safety;
• provide the necessary resources in the
form of finance, equipment, personnel and
time, to ensure the policy is implemented
and maintained; and
• maintain and monitor an online legal
compliance register, which includes a
commitment to fulfilling legal and other
statutory requirements.
Performance
During 2020, we saw a solid health and
safety performance across the Group, driven
by our robust and well-established health &
safety management system. We continued
to improve the European Accident Incident
Rate (AIR), which is the number of accidents
per 1,000 employees and the Accident
Frequency Rate (AFR), which is the number of
accidents per 100,000 working hours. The
number of accidents across the UK, Germany
and France have reduced from 123 to 64,
which was largely due to the offices not
being fully open throughout the year.
Health & safety performance
Average results for 2020:
UK
Germany
France
AIR
0.58
1.62
0.64
AFR
0.11
0.34
0.14
The UK has had continual uptake of training
courses being rolled out. Nearly 11,000 courses
have been completed so far, with 1,129 courses
completed in 2020. These cover display
screen equipment (‘DSE’), manual handling,
environmental awareness and safe driving.
During 2020, Computacenter remained
compliant with all relevant health, safety and
environmental (‘HSE’) legislation. In the UK this
has been monitored via the MyCompliance
website and reviewed at monthly HSE
meetings. In Germany this is monitored
through a tool that lists all the tasks relating
to the individual HSE laws and records when
they are completed. The HSE team has
monitored both existing and forthcoming
legislation, to ensure compliance. In 2020 our
German business received an external award
for the best degree of compliance in this area.
Each regulatory jurisdiction outside the UK
and Germany has a similar programme with
appropriate controls and measures in place
which form part of our overall compliance
management system, which is governed by
the Group Compliance Manager and
Compliance Steering Committee.
During the COVID-19 pandemic,
Computacenter invoked its business
continuity planning with the closure of the
offices, excluding the Integration Centers,
ensuring staff were able to work from home
in line with Government advice. The HSE
department has supported home workers by
assisting HR with working from home advice.
We have also supported staff with DSE
advice, online training and the supply of
standard office chairs and orthopaedic
chairs to employees’ homes.
Achilles UVDB accreditation (health, safety
and environment)
This is required to be able to provide
services to utilities companies. The UVDB
Verify Hatfield annual Category B2
Interim Site Assessment (Utility Suppliers
Verification Audit Scheme – supplier no.
058763) was conducted in a two-day audit.
The results were as follows:
Management
System
Evaluation
100%
100%
100%
100%
On-site
Assessment
99%
100%
100%
100%
Health & Safety
Environment
Quality
CSR
Wellbeing
Supporting mental health at work is a priority
for us and has become even more critical
during 2020. With wellbeing at the forefront
of our agenda, we quickly developed a new
range of support tools across the Group for
working from home that included guidance
and advice on physical and mental wellbeing.
In the UK, this supported the work of our
established network of 55 wellbeing
champions, who are trained in mental health
first aid.
Across the Group, numerous support events
and webinars have taken place. These
included the launch of ‘The SanCCtuary’, a
new employee wellbeing programme in the
UK that was designed to harness the power
of activities and content to help people build
healthy habits. The programme focuses on
four key areas: ‘Think Well’, ‘Eat Well’, ‘Sleep
Well’ and ‘Exercise Well’.
In Germany, we continued the work we had
started through the ‘Health Circle’, to raise
awareness of conditions that can limit
people’s activities and set up preventative
measures. We also continued with our online
training on mental health for line managers
and offered courses on subjects such as
stress. Our awareness programme for
employees runs campaigns on a quarterly
basis on a variety of wellbeing topics.
Our commitment to further developing
our wellbeing support for our employees
continues as we start 2021, with the launch
of a new global employee assistance
programme. This means all our people and
their families across the globe now have
access to confidential, professional
resources and counsellors to support
their wellbeing.
Left: Group headquarters – Hatfield, UK
A place where people matter.
Far left: People matter
Neil Hall, UK & Ireland Managing Director
49
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our People and Culture
continued
WINNING
TOGETHER
A selection of our people from across the Group,
sharing their stories about what 2020 has
meant for them and their customers.
Joining Computacenter in
2020 as part of the Pivot
business, I’m proud to
know I’m surrounded by
a global team of experts
that I can share business
experiences with and
learn from.
Rick Eddings
Vice President Technology
Services, North America
The past year has been
unprecedented. The
successful remote transition
of our largest global client,
and building a diverse
multicultural team in over
70 countries has been a truly
rewarding experience for me.
Liane Artmann
Service Manager, Germany
50
Making the impossible
possible. Implementing
things from one moment
to the next that were
previously unthinkable.
It worked because I had
the necessary flexibility
and stability from
the company.
Katja Könnecke
HR Manager Future Talent, Germany
Despite constant
challenges, our team rose
to conquer Year 2020 with
great strength, and I am
honoured to have helped
keep everyone safe in
Computacenter Malaysia.
Bernard Wong
Senior IS & Facility Manager,
Malaysia
We will all remember 2020.
I will remember it as the
year we accomplished the
impossible. This was possible
because of the tools we had,
but more importantly, by
people working together
to make things happen!
Cesar Villagran
GSD Service Operations Manager,
Mexico
I felt safe and empowered
to take measured risks
and use creativity and
innovation to help us
deliver solutions that
made the world better
for our customers.
Colin Williams
Chief Technology Officer, UK
Utilising interactive and
virtual solutions helped
retain the working
culture. I felt recognised,
valued, and able to
engage with colleagues
and customers while
working remotely.
Asif Shilston
Software Specialist, UK
The focus and trust we put
on our people, customers
and partners are crucial to
our success. I am proud
to be a part of it.
Khaled Thaler
Partner Director, Germany
Facing such an unexpected
situation in 2020, Computacenter
has remained strong and
consistent, demonstrating care
for its people and, more than
ever, being an amazing partner
for customers in need of
urgent support.
Anne Mérinville
Projects & Consulting Director, France
This year has given me
lessons in both humility
and ambition. I believed
that the work/life changes
couldn’t be an excuse not
to achieve our goals and
I have felt greatly supported
by Computacenter.
Angela Dougherty
Service Manager, North America
51
Our Community
WE’LL ACT FOR THE
LONG TERM AND
ALWAYS STRIVE TO
IMPROVE WHAT WE DO
We are committed to continuing to reduce our
environmental footprint, through investments
in renewable energy generation and energy
efficiency, and sourcing green energy for the
Group, under the leadership of our new
Climate Committee.
We value our local communities and look to
support them through fundraising and
volunteering activities. In addition, we insist
on an ethical approach to business, including
protecting human rights and zero tolerance
for bribery and corruption.
In this section
• The environment
• Greenhouse gas emissions
• Prevention of bribery and corruption
• Wider community
• How we do business
We continue to make great
progress with reducing our
impact on the environment.
Since 2015, we have cut our
Scope 1 and Scope 2
emissions by 44 per cent
and we expect a further
large reduction in 2021.
Tony Conophy
Group Finance Director
52
THE ENVIRONMENT
Computacenter Climate Committee
In 2020, we established a Climate Committee,
chaired by our FD and made up of Group
Managers and senior staff with specific
environmental interests. The Committee’s
aim is to debate and propose initiatives to
continue to reduce our environmental
impact, with some material investments to
be approved at Group Executive level. These
initiatives were started in the UK and Germany
and will be rolled out to all Group operations by
the end of 2021. To ensure internal employee
communication and participation, we have
introduced a dedicated environment section
on our Group internal communications
portal, which includes the electricity
generated each day from the 6,308 solar
panels installed on the roof of the Hatfield
Integration Center. There is also an
environment social media presence.
The impact of all the initiatives shown below
is that emissions have reduced from 19,808
metric tonnes of CO2 in 2019 to 13,856 metric
tonnes of CO2 in 2020 for Scope 1 and 2,
a reduction of 30 per cent. The full-year
effect of these initiatives will reduce
underlying emissions by a further 19 per cent
in 2021. Although the two acquisitions made
in 2021 will reduce this effect, the 2020
figures do include a full year of RDC, and
two months of data from the Pivot and
Computacenter NS businesses.
Electricity generation
During 2020, we completed the installation of
6,308 photovoltaic panels on the roof of the
Hatfield Integration Center. We believe that
this was the largest rooftop installation in
the UK in 2020, and based on our experience
in the year, we expect that energy generation
per annum will be up to 2 million kWh,
depending on weather conditions. This will,
in turn, save approximately 1.1 million kg
from Computacenter’s CO2 emissions.
Above: Photovoltaic system – Hatfield, UK
This is believed to be the largest rooftop
installation in the UK in 2020.
Following the success of the new
photovoltaic solar panels, the Board has
approved the implementation in H1 2021 of
two new solar installations at our office and
Integration Center in Kerpen. The Kerpen
systems will collectively generate circa
1.3 million kWh of electricity per annum.
This is another significant investment for
Computacenter and furthers our
commitment to self-generate electricity
wherever feasible.
Green energy purchases
In 2020, the Group committed to two
significant new contracts to use 100 per cent
green energy for our UK and German
operations. For Germany, this was a full year
and for the UK it represented two months of
usage. We purchased in excess of 24 million
pa kWh of renewable energy, which in turn
has reduced our Scope 2 emissions by circa
5,952 tonnes of CO2 in 2020, a reduction of
30 per cent, with an estimated further
reduction of 3,852 tonnes of CO2 in 2021.
Our green energy purchases mean that at
the end of 2020, circa 30 per cent of the
Group’s electricity usage was from renewable
sources, which will rise to circa 75 per cent
at the end of 2021.
In addition, Group electricity usage in real
terms reduced by 17.8 per cent in 2020
versus 2019. The UK equated to 50.3 per cent
of Group electrical usage, and the rest of the
world a combined 49.7 per cent. In 2020
consumption was 35.4 million kWh, down
from a 2019 total of 41.7 million kWh. Note
that 2020 figures include full-year RDC
consumption of 1.1 million kWh following
their acquisition. For further information on
RDC’s role in reducing our environmental
impact on the supply chain refer to page 20.
This is a major focus for Computacenter
and enhances our environmental credentials
still further.
Group fleet
For our main car fleets in the UK, Germany
and France, we introduced a policy
restricting maximum car emissions to 110
grams of CO2 per vehicle. This has resulted in
greater emphasis on low and ultra-low
emission vehicles. We have also installed
electric charging points at our UK and
German Integration Centers.
Group travel
Business travel is necessary for us, both for
our customer requirements and for our own
staff. However, we intend to reduce business
travel and to ensure all business trips are
truly necessary. This will help reduce both
cost and carbon emissions. Travel emissions
reduced materially in 2020 due to the impact
of COVID-19, with most meetings carried out
by video conference, and we aim to use this
experience to reduce travel when the
pandemic is behind us. We are investing
further in technology to allow greater use
of existing communication platforms. We
believe that we can reduce emissions from
business travel by up to 35 per cent by 2025,
compared to 2019. We will also reduce our
property locations over time, as homeworking
becomes more commonplace.
Group carbon emissions
The table on page 54 highlights the real
progress the Group has made in recent
years, through concentrated effort and
investments in initiatives, technology and
green energy. These reductions are despite
growth through acquisitions and in Group
revenue. In 2021, we will see the Group’s
carbon emissions reduce by an estimated
35 per cent, due to our new Kerpen solar
installation and the impact of a full year
of the UK green energy contract.
Delivery of goods to customers
We have some UK customers who ask us to
send products from the UK to EU countries.
As part of our Brexit preparations, we have
successfully negotiated with many of these
customers and the relevant suppliers to
despatch products from our Kerpen
Integration Center instead of from the
Hatfield Integration Center, with the triple
benefits of reducing potential Brexit
challenges, reducing delivery charges and
reducing our environmental impact. We are
reviewing similar issues across the Group
and are negotiating with a large US customer
to agree a process to despatch European
requirements from Kerpen, rather than
from Livermore.
Above: Operating dashboard of the Hatfield solar installation
CO2 emissions per employee have fallen from 1.92 tonnes in 2015 to
0.84 tonnes in 2020.
53
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Our Community
continued
Group
Total Scope 1 and 2 emissions
Metric tonnes per £1 million of revenue
Metric tonnes per employee
Other initiatives
We have implemented various IT tools and
programmes to send an increasing
proportion of our circa 100,000 sales invoices
each month through e-invoicing. Along with
similar initiatives, this saves paper and
reduces our use of postal systems, thereby
lowering costs and our environmental
impact. Currently, less than 10 per cent of
UK sales invoices are sent by post and we aim
to reduce that number still further in 2021.
A new system was implemented to
centralise invoice production and despatch
in Germany, resulting in a significant
reduction in paper invoices.
Carbon Neutral/Net Zero
The Board is aware of the commitments by
the UK and other governments to achieve
country-level carbon neutrality within
specified timescales. Our Climate Committee
has been tasked with looking at all
recognised carbon offsetting schemes and
investigating the possibility of offsetting,
to help Computacenter further reduce its
carbon footprint. We will report on this
important area in due course.
Manchester Data Center cooling
system upgrade
Computacenter completed a £1.6 million air
conditioning unit refresh, replacing the
existing units with energy efficient equipment.
These new units are state-of-the-art dual
cool air conditioning units, which make use
of ‘free’ cooling from the environment when
the external temperature is low. We are also
upgrading the chilled water system to take
Annual Report
2015
24,795
8.11
1.92
Annual Report
2016
25,518
7.86
1.80
Annual Report
2017
22,662
6.20
1.54
Annual Report
2018
19,741
4.53
1.30
Annual Report
2019
19,808
3.91
1.23
Annual Report
2020
13,856
2.55
0.84
full advantage of the free cooling from
the water chillers. A new ACIS building
management system has been installed that
will control the Data Center environment to
ASHRAE guidelines, whilst making it more
energy efficient by reducing electrical
consumption by 12.5 per cent and thus
improving the PUE Data Center efficiency
metric to 1.58. The combined energy
consumption reduction should be
16 per cent.
General data center estate
From the beginning of 2018, our data center
technical teams have conducted several
energy saving projects and have achieved
outstanding results. In 2017/18 we enlisted
the services of industry experts, Operation
Intelligence, to partner with us and enhance
our skills to operate the data centers more
efficiently. With this increased knowledge
and several key projects, we have
successfully reduced our consumption at all
our UK Data Centers. We have seen a 14 per
cent reduction in our consumption over the
whole data center estate in 2020, compared
with 2018.
LED lighting
LED lighting systems are a long-term
investment, which last significantly longer
than fluorescent lighting and up to 50 times
longer than traditional incandescent lighting.
LED lighting solutions offer tremendous
energy and maintenance savings that easily
justify their higher upfront cost.
Computacenter has been specifying LED
whenever replacements are needed, and this
is an ongoing activity throughout our offices
and will remain a focus. In 2020 we replaced
all lighting in our 330,000 sq. ft RDC recycling
facility in Braintree, which is expected to
reduce annual electricity consumption from
circa 994,000 kWh to circa 393,000 kWh,
a saving of circa 60 per cent.
Tree planting
Our Climate Committee members are
championing the planting of new trees at our
offices in suitable locations. We planted 50
trees on our Hatfield site in 2020 and aim to
do similarly at our large Kerpen site in 2021.
Redeveloping areas with new trees gives
both carbon and aesthetic improvements.
In our French business, we have purchased
330 trees through a local initiative to ensure
we are offsetting some of our carbon
footprint in the area.
Single-use plastics
Through our Climate Committee, we are
eliminating this harmful waste stream
from all Computacenter locations, finding
alternative replacements to drinking,
catering and packaging requirements.
We have eliminated single-use items such as
plastic cups and bottles from our two large
headquarter sites at Hatfield and Kerpen, as
well as in other premises. By the end of 2021,
we aim to have eliminated similar usage
across all major sites, including the two
acquisitions made in 2020.
Above left and above right: Photovoltaic system – Kerpen, Germany
An artist’s impression of the new car park photovoltaic system.
54
GREENHOUSE GAS EMISSIONS
The Company is required to state the annual quantity of emissions in tonnes of carbon dioxide equivalent from Group activities.
Details of this can be found below. Further details of our environmental policies and programmes can be found on our corporate website:
computacenter.com.
Computacenter plc mandatory greenhouse
gas emissions reporting
Global GHG emissions data for period:
1 January to 31 December 2020.
Methodology
We have used the main requirements of the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition).
Emissions = metric tonnes of CO2e
Emission factors used are from the UK Government’s Conversion Factors, supplied by DEFRA.
Year
Scope 1
Scope 2
Total
2020
5,640
8,216
13,856
2019
3,306
16,502
19,808
Scope 1 = Combustion of fuel and
refrigerants usage
Scope 2 = Electricity, heat, steam and
cooling purchased for own use
Group’s chosen intensity measurements:
Emissions as reported above are 2.55 metric
tonnes per £m of Group revenue: (2019: 3.91
tonnes, a reduction of 34 per cent).
Emissions as reported above are 0.84
metric tonnes per Group employee (2019:
1.23 tonnes, a reduction of 31 per cent).
Packaging Waste Regulation
ISO 14001:2015
(EMS 71255)
Energy Savings Opportunity Scheme (ESOS)
Emissions = 13,856 metric tonnes of CO2e
External consultants provided Excel spreadsheets that were further developed internally to include the
full requirements to collate the additional emissions, such as refrigerants.
This activity has been conducted as part of our UK Environment Management System (EMS) ISO
14001:2015 standard (EMS 71255).
Group properties included in this report are all current locations in the UK, Germany, France, Belgium,
Spain, South Africa, USA, Switzerland, Malaysia, Hungary, Mexico, India, Poland and the Netherlands.
We have reported on all of the emission sources required under the Companies Act 2006 (Strategic
Report and Directors’ Reports) Regulations 2013.
Limitations to data collection
Less than 5 per cent of emissions were estimated or based on an average energy usage per square foot
of space occupied.
Via the compliance company Paperpak, Computacenter UK is registered as a distributor of product
ensuring full compliance since 2000.
The EMS of the UK has been registered to this standard since 2003.
Computacenter complied with this legislation by submitting its energy report, which covered the period
1 April 2018 to 31 March 2019. The next submission is required in 2023.
1
6
5
4
3
2
1. UK 41.77%
2. Germany 16.81%
3. France 12.12%
4. USA 9.76%
5. Netherlands 5.25%
6. Others:
South Africa 4.26%
Belgium 4.17%
Switzerland 1.61%
Mexico 1.56%
Malaysia 0.86%
Spain 0.84%
Hungary 0.74%
Poland 0.26%
India 0.01%
Above: Tree planting – Hatfield, UK
FD and members of the Climate Committee,
planting new trees at our Hatfield offices.
55
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020
Our Community
continued
Above: Electric vehicle charging point – Hatfield, UK
One of 12 new electric vehicle charging points
installed at our Hatfield offices.
Expert advice
We recognise that climate change is a global
issue that requires significant focus from
both individuals and companies. It is a
journey that we have embarked on and we
understand that we need to focus our efforts
in the short, medium and long term. The
Board believes we have made good progress
in 2020 and is pleased with the projects and
initiatives we have undertaken.
To ensure we continue in a manner that
maximises our investments in and
commitments to reducing our environmental
footprint, we have engaged Tulchan
Communications Group (‘Tulchan’) as expert
advisors to help us plan, communicate and
implement our roadmap for the future.
Tulchan is an advisor to a wide range of
leading companies on financial and broader
stakeholder communications, including
evolving sustainability strategies. In addition,
we have purchased a benchmarking contract
with Institutional Shareholder Services (‘ISS’),
which enables us to monitor and enhance our
environmental performance on a wider scale.
Commitment to Science Based Target
Incentives (SBTI)
We are pleased to announce we have
committed to joining the global movement of
leading companies aligning their businesses
with the most ambitious aim of the Paris
Agreement, to limit global temperature rise
to 1.5°C above preindustrial levels and reach
net-zero by 2050 for the best chance of
avoiding the worst impacts of climate change.
PREVENTION OF BRIBERY AND CORRUPTION
Computacenter has a well-established
Anti-Bribery and Corruption compliance
framework. This is underpinned by our Ethics
Policy which, together with specific
56
Anti-Bribery and Corruption and Fraud
policies, provides a clear set of rules and
expectations that apply across our business.
This is supported by employee training and
guidance documentation. The Anti-Bribery
and Corruption compliance framework is
overseen by the Group Head of Legal and our
Compliance Steering Committee and is
regularly audited by our Internal Audit
function. The framework is supported by
our externally managed confidential
whistleblowing hotline provided by Safecall,
an industry recognised provider of such
services. No material breaches of our
policies were identified during the year.
We continued to reinforce our zero-tolerance
approach to Anti-Bribery and Corruption
throughout 2020, providing training as an
integral part of our induction process and
ensuring continued awareness of our
whistleblowing hotline across the Group.
This ensures that all employees, contractors,
third parties and suppliers know that they
are able to report any issues on a
confidential basis.
WIDER COMMUNITY
We support our wider communities by
working with selected charities. Our three
main aims are to:
• demonstrate our commitment to the
wider community;
• motivate staff across the Group, by
encouraging teambuilding activities in
a worthwhile cause; and
• communicate Computacenter’s core
values to customers, staff and other
stakeholders.
Around the world, we continue to support
initiatives to raise money for local charities,
as well as supporting events and initiatives
proposed and run by our employees.
In France, we support the ‘Children of the
Desert’, who work with Moroccan populations
isolated in the desert and provide access
to education for children. We have also
continued our partnership with Aide et
Action, to support the schooling of children
who are forced into child labour due to their
circumstances. We have run further blood
donation campaigns in Germany, in
conjunction with the Red Cross. In Spain, we
continued to work with our charity partner
Comitè Català per als Refugiats, a local
branch of United Nations High Commissioner
for Refugees (UNHCR).
We do this through fundraising steered by
the charity committee, which comprises
a cross section of employees, from branch
administrators to senior Management.
We also offer a ‘Give as You Earn’ scheme,
through which employees can make monthly
contributions to any UK charity of their
choice through automatic deduction from
their salaries. In addition, our Bravo!
employee recognition scheme also allows
employees to donate their voucher rewards
to our chosen charities across the Group
(see page 48).
Supporting charitable causes is important
to us and our people. However, as it does not
have a material impact on our business, we
have not developed a formal policy setting
out our approach in this area.
HOW WE DO BUSINESS
Protecting human rights
Being a socially responsible business
benefits the environment, the community,
our shareholders, customers and
employees alike.
We remain signatories of the United Nations
Global Compact (UNGC) and are committed to
carrying out business responsibly. As part of
this, we incorporate the Ten Principles of the
UNGC into our strategy, culture and day-to-
day operations, as part of our ethical and
responsible business practices. For
Computacenter, human rights falls into two
areas: protecting the rights of our employees
and ensuring we are not complicit in human
rights abuses in our supply chain. The human
rights of our employees are covered by our
people and Health & Safety policies. Human
rights in the supply chain primarily relate to
the risk of modern slavery. We published our
most recent Modern Slavery Statement,
covering our 2019 financial year, in the first
half of 2020, with our report covering the
2020 year due to be published imminently.
We continue to work with a diverse set of
suppliers and when selecting who we want
to work with, we ensure that our terms of
engagement are clear and that they support
both our Group values and our wider corporate
social responsibility objectives. Our Supplier
Code of Conduct sets out the ten principles in
the UNGC, which include human rights, and
we expect our suppliers to abide by these. We
will continue with our commitment to ethical
and responsible business practices, ensuring
that if modern slavery is identified anywhere
within our supply chain, we will not tolerate it.
In the UK, we have continued to provide
support to the charity partners selected by
employees – Make-a-Wish Foundation,
British Heart Foundation and Dementia UK.
The Group publicises its whistleblowing
hotline to suppliers, to enable reporting of any
suspected human rights issues. There were
no such issues reported during the year.
Section 172 Statement
Directors’ duties – compliance with section 172 of the Companies Act 2006
Section 172 of the Companies Act 2006 requires directors to promote the success of the company for the benefit of the members as a whole and,
in doing so, have regard to the interests of stakeholders including clients, employees, suppliers, regulators and the wider society in which it
operates. On pages 57 to 59, we have set out how we have engaged with our key stakeholders and how the Board has considered their interests
during the year. The Chairman’s Statement on page 6 outlines how the Board considered the Group’s environmental impact in 2020, and
information on our environmental performance can be found on pages 52 to 56.
Section 172 also places a number of other obligations on company directors, namely to consider the likely consequences of any decision in the
long term, the desirability of the company maintaining a reputation for high standards of business conduct, and the need to act fairly between
members of the company.
Computacenter’s Board naturally takes a long-term view in its decision making and this is reflected in our Winning Together values on page 47.
The Group’s business is based on developing multi-year relationships with customers, as evidenced by more than half of our top 50 customers
having been with us for more than a decade. The Directors also have a substantial combined shareholding in Computacenter, totalling 42.2 per
cent of total voting rights, and therefore have a significant interest in ensuring the business’s continued success in the long term.
The Group has a reputation for high standards of business conduct, including putting customers first and delivering on its promises. This is shown
both by our Winning Together values and by the work we have done in recent years to turn around problem contracts. Maintaining a strong
reputation in the market is also important to our Technology Partners, who are crucial stakeholders for our business.
The size of the Directors’ shareholding directly aligns their interests with other shareholders, while the Board has a majority of independent
Non-Executive Directors. Both these factors ensure that all shareholders are treated fairly in the Board’s decision making.
Information on the matters considered by the Board during the year can be found on pages 83 to 84.
Stakeholder engagement
Our stakeholders are an important part of our operations and are referenced throughout this report. Details of our key stakeholders and how we
engage with them are set out below.
Who they are
Shareholders
Why they are important
• We rely on the support and
How we engage and consider their interests
• The Chairman and Company Secretary conduct a governance roadshow with significant
engagement of our
shareholders, to allow us to
operate the Company
effectively and enable
success for them and the
rest of our stakeholders.
shareholders, following the release of the Annual Report and Accounts.
• The Executive Directors undertook virtual investor roadshows throughout the year and
in multiple geographies.
• The Board approves the half-year and full-year results, and the Annual Report and Accounts.
• The CEO and FD deliver half-year and full-year results presentations to sell-side research
analysts and institutional shareholders.
• Our shareholder base
• The Board intends to attend the 2021 Annual General Meeting, after the truncated
supports the Company’s
focus on delivering
success over the long
term, rather than relying
on short-term results.
Community
• We recognise the
importance of being good
neighbours to our local
communities, which are
also home to many of our
employees. This includes
our commitment to paying
our fair share of tax in the
jurisdictions in which we
operate, which in turn
supports vital public
services.
format for the 2020 Annual General Meeting.
• Investor feedback is presented to the Board through monthly reports and regular
broker notes.
• The Senior Independent Director writes annually to significant shareholders, offering
the opportunity for an individual meeting to discuss any concerns.
• The Remuneration Committee Chair wrote to significant shareholders, proxy firms and
other interested parties regarding the execution of the Directors’ Remuneration Policy
in its first year following approval, given the COVID-19 remuneration environment, and
engaged with those that responded.
• The Company runs biennial Capital Markets days, to engage with sell-side research analysts.
• The Board strives to maintain high standards of governance across the Group, to ensure
that we can engage with our communities’ environmental and societal concerns.
• The Company partnered with the Daily Mail in their Mail Force Computers for Kids initiative
to provide new and refurbished donated laptops to schools across the UK, utilising our
laptop wiping and recommissioning services via our dedicated subsidiary, RDC.
• A charity committee comprising a cross section of employees organises fundraising for
our UK charity partners.
• The Company remains committed to paying our fair share of tax in the jurisdictions
in which we operate. Our adjusted1 effective tax rate has increased from 22.8 per cent
in 2015 to 27.3 per cent in 2020. The Audit Committee reviews the Company’s tax
strategy and policy each year, to ensure this remains in line with our commitments
to our communities.
• Community engagement is typically co-ordinated by local management teams. An
example is our renewed sponsorship of the next generation of the Hertfordshire Fire
and Rescue fire investigation dog.
57
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Section 172 Statement
continued
Who they are
Regulators
Why they are important
• Our other stakeholders’
interests are best served
through proactive
engagement with
regulatory bodies including
the Financial Reporting
Council (‘FRC’) and
proxy advisors.
• Customers are at the core
of what we do. Our focus on
building trust by always
delivering on our
commitments underpins
the culture of the Company.
• Staying close to our
customers’ evolving needs
allows us to adapt our
strategic approach, to
ensure we stay relevant in
an ever-changing industry.
• Our Technology Partners
are crucial to our ongoing
success.
• They are typically leaders
in the IT industry, who
supply the Technology
Sourcing solutions that we
sell to our customers.
• We remain Technology
Partner independent and
maintain relationships
across the industry, so we
can provide the best
technology solutions for
our customers’ needs.
Customers
Technology
Partners
58
How we engage and consider their interests
• From time to time, we engage with regulators and policymakers to ensure that our
business understands and contributes to evolving regulatory requirements.
• The Board receives regular reports that outline the material changes in the regulatory
environment in which the Group operates and reviews Management’s response to
these changes.
• During the year, the Audit Committee reviewed Management’s response to a letter
received from the FRC in relation to disclosures within the 2019 Annual Report and
Accounts, to ensure that the response aligned with the Board’s position.
• The Remuneration Committee consulted with proxy advisors when formulating its
Remuneration Policy that was approved at the AGM on 14 May 2020.
• The CEO meets regularly with key customers and updates the Board on his discussions
and any concerns raised. The Board considers this feedback when reviewing and
assessing the Company’s strategy.
• Materially adverse customer feedback is reported to the Board.
• Client Directors and Account Managers lead teams that build lasting relationships with
current and potential customers, to develop a clear view of customer objectives and
how these will evolve.
• Service Directors and Service Managers lead teams that monitor day-to-day operational
performance of key Services contracts, to ensure that our commitments to delivering
the service our customers expect are met.
• The Board ensures that succession planning for key Client Directors and Service Directors
is in place, as part of their annual review with each Country management team.
• The Board reviews regular reports on the achievements of the Client Director, Account
Manager and Sales Solution Specialist community, to ensure that they have the tools
needed to enable their success.
• Key contracts where customer contractual commitments are not met are reviewed at
every Audit Committee meeting and escalated to the Board where appropriate.
• The Board reviews contract governance improvements, to ensure that the Company
is empowered to deliver on our promises to customers.
• The Board receives regular reports on the Contract Base and the number of significant
customers providing over £1 million of contribution for the Company. These reports
measure and monitor two of our Strategic Priorities, demonstrating the need to
maintain and grow significant relationships with our customers.
• The Board received a number of presentations on Company initiatives to improve the
service and capability that we can provide to our customers.
• We hold an annual Group Kick-Off sales event every year in early February. Key vendors
from across the industry attend to address our sales force directly and demonstrate
the latest in innovation in a Technology Village that accompanies the event. Over half of
the Board attended the most recent event in February 2020 and had the opportunity
to engage with our Technology Partners directly. For 2021, this event was moved to
a collaborative virtual environment, attended by the Chairman and the Executive
Directors, and we look forward to the resumption of in-person participation at the 2022
Group Kick-Off.
• We engage proactively with our suppliers and have a Supplier Code of Conduct that sets
out the high standards and behaviours we expect from them. The code requires our
suppliers to incorporate the prohibition of forced labour and human trafficking,
together with the ethical and responsible sourcing of goods or services, into their
sourcing governance and execution process.
• The Board monitors changes in key accreditations in our core geographies, to ensure
that we remain relevant to both our Technology Partners and customers. These
accreditations are considered when making significant acquisitions.
• The Board monitors developments in these relationships and the emergence of new
critical Technology Partners.
Who they are
Our people
Why they are important
• Our people are the primary
reason for the ongoing
success of our business.
• We are proud of the
recognition that we receive
for our efforts to
continually improve the
Company as a workplace of
choice for our people and
this is reflected in the
lengthy average tenure
of employment.
How we engage and consider their interests
• The Board considers the Group’s employees to be a key stakeholder and the
consideration of their interests forms part of many Board discussions.
• Ros Rivaz, the Senior Independent Director, is the designated Non-Executive Director
responsible for gathering workforce feedback, a key requirement of the Code, which
requires that the Board engage with the wider workforce. Ros was appointed to this role
in November 2017 and has engaged with a wide variety of employee representative
groups, to hear directly from employees on the issues that concern them. Ros reports to
the Board on each engagement, with recommendations for action by senior Management.
• Ljiljana Mitic, our German-based Non-Executive Director, has engaged with various
representatives of our German business, including Human Resources, to ensure that
any specific issues are raised at the Board. Ljiljana has also assisted in the mentoring
of local German management through a number of bid processes.
• We engage through a variety of channels, including management briefings, videos and
presentations by the CEO, to discuss progress made by the business, together with
future objectives and challenges.
• Employee shareholders normally have the opportunity to meet the Board at our AGM and
ask questions.
• The Board reviewed its significant investment in a new Group-wide people toolset, which
allows a common approach to rewarding our employees and monitoring their progress
against objectives and through the Company. The Board will continue to review this
implementation, to ensure it is delivering for our people.
• The Board approved the payment of a one-off bonus, totalling circa £5.2 million, to
approximately 80 per cent of employees in recognition of the Company’s achievement
of exceeding £1 per share in adjusted1 EPS.
• People-related topics including diversity and talent management are scheduled on the
Board agenda.
• We conduct an employee engagement survey and have invested in our corporate
communications, to help employees understand and deliver our Strategic Priorities. The
Board discusses the results of the biennial employee engagement survey and reviewed
an action plan to address the issues raised. The Company delayed the scheduled 2020
employee engagement survey until 2021, as the focus remained on supporting
employees directly through the COVID-19 crisis.
Non-Financial Information Statement
Computacenter aims to comply with the Non-Financial Reporting Directive requirements contained in sections 414CA and 414CB of the Companies
Act 2006. The table below sets out where more information on non-financial matters can be found within this Annual Report and also on our
website: computacenter.com. The due diligence carried out for each policy is contained within each respective policy’s documentation.
Reporting requirement
1. Business model
2. Principal risks and impact of business activity
3. Employees
4. Social matters
5. Human rights
6. Anti-bribery and Corruption
7. Environmental matters
Relevant information
• Business model
• Strategic Priorities
• Principal risks and uncertainties
• Viability Statement
• Employees
• Diversity policy
• Health & Safety
• Stakeholder engagement
• Supporting charity and community
• Human rights
• Suppliers
• Details of our Supplier Code of Conduct, as well as our
approach to protecting human rights, can be found on
our website
• Whistleblowing
• Our Code of Business Conduct and other related
policies, can be found on our website
• Environmental matters
• Greenhouse gas emissions
• Energy use and emissions
Page
16
26
71
69
44
46
48
48
56
56
56
56
52
55
53
59
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Group Finance
Director’s Review
ENABLING SUCCESS BY
CONTINUED
INVESTMENT
The business
remained agile
and innovative,
enabling us to
adapt and
support our
customers in
both the private
and Public
Sectors.
Tony Conophy
Group Finance Director
60
In 2020, the Group benefited from
Technology Sourcing growth in the UK,
particularly in the Public Sector, and the
continuing strong growth of Professional
Services volumes in Germany. This offset
revenue slowdowns in some other
businesses across the Group, principally
due to the COVID-19 crisis.
The Group’s return to organic revenue growth
in the second half of the year, which excludes
the impact of acquisitions, was pleasing,
given the significant reduction of spend seen
in a number of key industrial customers, as
they focused on other priorities. Across the
business, we had more customer accounts
with declining revenues than those with
growth. However, a small number of
accounts performed very strongly, which
more than offset the weakness elsewhere.
The business remained agile and innovative,
enabling us to adapt and support our
customers in both the private and Public
Sectors, as they migrated to a remote
working IT environment in the first half of the
year and then faced the ongoing challenges
brought by the continued COVID-19 crisis.
We are immensely proud of the way that our
people have responded to our customers’
challenges, generating innovative solutions
to ensure the business remains a key partner
for customers through this period.
The revenue performance was driven by our
biggest markets, the UK and Germany, and
was supported by increases in gross margins
across all business lines. This margin
performance was due to a changed
customer mix within Technology Sourcing
and a reduction of expenses within costs of
goods sold, benefiting both Technology
Sourcing and the Services businesses. Whilst
some of these costs, such as travel, fleet and
contractors, will partially return as the Group
goes back to its pre-COVID-19 mode of
operation, we aim to manage this carefully
within certain cost categories and therefore
permanently lower the overall cost base.
The Group result saw significant double-digit
increases in adjusted1 operating profit
across the UK and Germany, more than
compensating for reductions in the French
and International Segments. North America
saw significant growth in profitability,
against a weak comparative year.
Professional Services revenue continued its
very strong and sustained growth pattern in
Germany, with continuing high demand for
our highly skilled people to work on digital
transformation, cloud and security projects
for customers. The German business is
clearly the leader in this area for the Group
and has seen demand increase through the
Reconciliation to adjusted1 measures for the year ended 2020
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Gain on acquisition of subsidiary
Finance income
Finance costs
Profit before tax
Income tax expense
Profit for the year
Reconciliation to adjusted1 measures for the year ended 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income
Finance costs
Profit before tax
Income tax expense
Profit for the year
Amortisation
of acquired
intangibles
£’000
–
–
–
Adjustments
Utilisation of
deferred tax
£’000
–
–
–
Exceptionals
and others
£’000
–
–
–
Adjusted1
full-year
results
£’000
5,441,258
(4,720,717)
720,541
7,434
7,434
–
–
–
7,434
(1,695)
5,739
–
–
–
–
–
–
–
–
540
540
(514,080)
206,461
(14,030)
–
–
(13,490)
(715)
(14,205)
–
475
(6,421)
200,515
(54,825)
145,690
Full-year
results
£’000
5,441,258
(4,720,717)
720,541
(522,054)
198,487
14,030
475
(6,421)
206,571
(52,415)
154,156
Full-year
results
£’000
5,052,779
(4,389,665)
663,114
Amortisation
of acquired
intangibles
£’000
–
–
–
Adjustments
Utilisation of
deferred tax
£’000
–
–
–
Exceptionals
and others
£’000
–
–
–
(516,090)
147,024
980
(7,046)
140,958
(39,397)
101,561
4,374
4,374
–
–
4,374
(1,149)
3,225
–
–
–
–
–
733
733
94
94
–
825
919
(878)
41
Adjusted1
full-year
results
£’000
5,052,779
(4,389,665)
663,114
(511,622)
151,492
980
(6,221)
146,251
(40,691)
105,560
COVID-19 crisis. There remains significant
appetite to expand our Professional Services
capacity in Germany, whilst rolling out this
capability across the Group. The UK
Professional Services revenue saw a
significant rebound in the second half of the
year, as customers re-engaged on projects
that were temporarily paused by the
COVID-19 crisis in the first half, whilst modest
decreases were seen in France, mainly due
to the inability to access customer sites.
Managed Services saw revenue reductions
across the UK and Germany, continuing the
deflationary trend over recent years, but the
top line was affected by a number of
contracts which are based on price times
quantity, rather than a fixed periodic fee. As
call volumes to our Service Centers surged at
the beginning of the crisis, the field engineer
workforce saw significant reductions in
activity, due to customer sites being closed.
Despite this revenue reduction, margins
improved due to significantly increased
utilisation of our now remote working
engineers, who no longer have to spend
otherwise billable time travelling to customer
sites, and a significant reduction in the use
of external contractors.
The acquisition of Pivot and BT Services
France on 2 November 2020 was very
pleasing, being achieved in the middle of the
pandemic and during a series of rolling
national lockdowns. Pivot increases the scale
and breadth of our North American business,
allowing us to serve a wider range of
customers in more locations in the United
States. BT Services France will, over time,
enhance the network Services offering of
our existing French business, improving our
go-to-market propositions and aligning the
business with our capabilities in Germany,
albeit on a smaller scale. Much remains to be
done to transform the business and bring it
back to break-even and beyond. Combined,
61
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020
Group Finance Director’s Review
continued
these acquisitions added £232.6 million of
revenue and £3.2 million of adjusted1 profit
before tax to the Group’s 2020 results.
A reconciliation to key adjusted1 measures is
provided on page 61 of this Group Finance
Director’s Review.
Further details are provided in note 4 to the
Consolidated Financial Statements. For the
avoidance of duplication, further information
on the Group’s financial performance can
be found on pages 28 to 43 of this
Strategic Report.
Profit before tax
The Group’s profit before tax increased by
46.5 per cent to £206.6 million (2019:
£141.0 million). Adjusted1 profit before tax
increased by 37.0 per cent to £200.5 million
(2019: £146.3 million) and by 35.5 per cent
in constant currency2.
The difference between profit before tax and
adjusted1 profit before tax primarily relates
to the Group’s reported net gain of
£6.1 million (2019: net costs of £5.3 million)
from exceptional and other adjusting items.
This is principally the gain on acquisition of
BT Services France, partially offset by the
amortisation of acquired intangibles as a
result of the acquisition of FusionStorm on
30 September 2018 and Pivot on 2 November
2020. Further information on these items
can be found on page 63.
The Group adopted IFRS 16 ‘Leases’ from
1 January 2019, which has resulted in
changes in accounting policies and
adjustments to the amounts recognised in
the Financial Statements, as disclosed in the
2019 Annual Report and Accounts. The
current year results include an overall
decrease in profit before tax of £2.0 million,
including on an adjusted1 basis, due to the
impact of IFRS 16 (2019: £1.7 million).
Net finance charge
The net finance charge in the year amounted
to £5.9 million (2019: £6.1 million). The charge
includes £4.5 million of interest on lease
liabilities recognised following the adoption of
IFRS 16 on 1 January 2019 (2019: £3.7 million).
A further £0.8 million of cost relates to
interest on the term loan drawn down for the
FusionStorm acquisition (2019: £1.8 million),
along with a £0.3 million cost on the term
loan for the Kerpen facility (2019: £0.4 million)
and £0.4 million of cost related to the Pivot
facility. Interest costs of £0.1 million related
to the French retirement benefit obligation
were incurred in the year (2019: nil). The prior
year net finance charge also included
exceptional interest costs of £0.8 million
relating to the unwind of the discount on the
62
deferred consideration for the purchase of
FusionStorm and a further £0.1 million cost
for the unwind of the discount on the
deferred consideration for acquisitions,
the former of which was excluded on an
adjusted1 basis.
Outside of the specific items above, net
finance income of £0.2 million was recorded
(2019: £0.7 million). On an adjusted1 basis, the
net finance cost was £5.9 million during the
year (2019: £5.2 million).
Taxation
The tax charge was £52.4 million (2019:
£39.4 million) on profit before tax of
£206.6 million (2019: £141.0 million). This
represents a tax rate of 25.4 per cent (2019:
27.9 per cent). The tax rate has fallen
primarily due to the inclusion of the gain on
acquisition of BT Services France of
£14.0 million, recognised on consolidation of
the acquired entity. This is not taxable, as no
chargeable gain has been realised in any
legal entity. Further, the Group’s adjusted1
tax rate has previously benefited from the
historical tax losses in Germany, the final
part of which was utilised during the
previous year. The utilisation of the asset of
£0.7 million in 2019 increased the tax rate by
0.5 per cent but was considered to be outside
of our adjusted1 tax measure.
During 2020, a tax credit of £0.7 million
(2019: £0.8 million) was recorded due to
post-acquisition activity in FusionStorm.
This benefit derived from payments which
were settled by the vendor, out of the
consideration paid, via post-acquisition
capital contributions to FusionStorm. As this
credit was related to the acquisition and not
operational activity within FusionStorm, is a
one-off and material to the overall tax result,
we have classified this as an exceptional tax
item, consistent with the treatment in 2018
and 2019.
The tax credit related to the amortisation of
acquired intangibles was £1.7 million (2019:
£1.1 million). The £7.4 million of amortisation
of intangible assets is nearly entirely a result
of the recent North American acquisitions
(2019: £4.4 million). As the amortisation is
recognised outside of our adjusted1
profitability, the tax benefit on the
amortisation is also reported outside of
our adjusted1 tax charge.
The adjusted1 tax charge for the year was
£54.8 million (2019: £40.7 million), on an
adjusted1 profit before tax for the year of
£200.5 million (2019: £146.3 million). The
effective tax rate (ETR) was therefore 27.3
per cent (2019: 27.8 per cent) on an adjusted1
basis. The ETR during the year was lower than
the previous year due to the large increase
in profitability in the UK, which has lower tax
rates than the Group average, particularly
Germany and the US. The ETR is within the
full-year range that we indicated in our 2020
Interim Results, which showed an ETR of
28.1 per cent (H1 2019: 26.6 per cent).
We expect that the ETR in 2021 will remain
under upwards pressure, due to an
increasing reweighting of the geographic
split of adjusted1 profit before tax away from
the UK to Germany and the US, where tax
rates are substantially higher, and also as
governments across our primary
jurisdictions come under fiscal and political
pressure to increase corporation tax rates.
The Group Tax Policy was reviewed during the
year and approved by the Audit Committee
and the Board, with no material changes
from the prior year. We make every effort to
pay all the tax attributable to profits earned
in each jurisdiction that we operate in. We do
not artificially inflate or reduce profits in one
jurisdiction to provide a beneficial tax result
in another and maintain approved transfer
pricing policies and programmes, to meet
local compliance requirements. Virtually all
of the tax charge in 2020 was incurred in
either the UK, German or US tax jurisdictions,
as it was in 2019, with Computacenter
France, excluding the BT Services France
acquisition, now also moving into a
taxpaying position.
There are no material tax risks across the
Group. Computacenter will recognise
provisions and accruals in respect of tax
where there is a degree of estimation and
uncertainty, including where it relates to
transfer pricing, such that a balance cannot
fully be determined until accepted by the
relevant tax authorities. For 2020, the Group
Transfer Pricing policy implemented in 2013
resulted in a licence fee of £27.9 million
(2019: £25.6 million), charged by
Computacenter UK to Computacenter
Germany, Computacenter France and
Computacenter Belgium. The licence fee is
equivalent to 1.0 per cent of revenue and
reflects the value of the best practice and
know-how that is owned by Computacenter
UK and used by the Group. It is consistent
with the requirements of the Organisation
for Economic Co-operation and Development
(OECD) base erosion and profit shifting.
The licence fee is recorded outside the
Segmental results found in note 4 to the
Consolidated Financial Statements, which
analyses Segmental results down to
adjusted1 operating profit.
The table below reconciles the tax charge to the adjusted1 tax charge for the years ended 31 December 2020 and 31 December 2019.
Tax charge
Adjustments to exclude:
Exceptional tax items
Tax on amortisation of acquired intangibles
Utilisation of German deferred tax assets
Tax on exceptional items
Adjusted1 tax charge
ETR
Adjusted1 ETR
2020
£’000
52,415
715
1,695
–
–
54,825
25.4%
27.3%
2019
£’000
39,397
839
1,149
(733)
39
40,691
27.9%
27.8%
Profit for the year
The profit for the year increased by 51.8 per cent to £154.2 million (2019: £101.6 million). The adjusted1 profit for the year increased by 38.0 per cent
to £145.7 million (2019: £105.6 million) and by 36.7 per cent in constant currency2.
Exceptional and other adjusting items
The net gain from exceptional and other adjusting items in the year was £8.5 million (2019: loss of £4.0 million). Excluding the tax items noted
above, which resulted in a gain of £2.4 million (2019: gain of £1.3 million), the profit before tax impact was a net gain from exceptional and other
adjusting items of £6.1 million (2019: loss of £5.3 million).
The acquisition of BT Services France resulted in an exceptional gain of £14.0 million, which was recognised on consolidation of the subsidiary.
The gain arose because the net assets acquired for consideration of €1 totalled £14.0 million after fair value adjustments, including £27.6 million
of cash. Refer to note 18d of the Financial Statements for further information on the exceptional gain. The business acquired comprised BT’s
domestic French services operations which, on acquisition, was loss making on a stand-alone basis. The Company considers that the exceptional
gain reflects the future losses that the acquired business will incur over the medium term, as it is brought onto a sustainable footing through
a combination of upskilling employees, cross-selling into the Group’s customers, alignment with Group processes and systems, and the general
improvement of its operating activities. Where possible, future charges relating to this reconfiguration of the business will be disclosed
separately to the Group’s adjusted1 results. This will mean that, over time, the future costs incurred can be attributed against the exceptional
gain on acquisition recognised in the current year.
An exceptional loss during the year of £0.7 million resulted from the acquisition of Pivot and primarily related to fees paid to the Company’s
advisors. This cost is non-operational, unlikely to recur and is consistent with our prior-year treatment of acquisition costs on material
transactions as exceptional items. It has therefore been classified as outside our adjusted1 results.
An exceptional gain of £0.1 million related to the release of accrued costs for the French Social Plan. Whilst not material, this has been classified
outside our adjusted1 results to be consistent with where the cost was recognised in 2016, as an additional provision for the effect of
winding down the Social Plan.
In the prior year, an exceptional loss of £0.1 million was recognised, comprising costs directly relating to the acquisition of FusionStorm. A further
£0.8 million was also removed from the adjusted1 net finance expense and classified as exceptional interest costs in 2019. This related to the
unwinding of the discount on the deferred consideration for the purchase of FusionStorm.
We have continued to exclude the amortisation of acquired intangible assets in calculating our adjusted1 results. Amortisation of intangible
assets is non-cash, does not relate to the operational performance of the business, and is significantly affected by the timing and size of our
acquisitions, which distorts the understanding of our Group and Segmental operating results.
The amortisation of acquired intangible assets was £7.4 million (2019: £4.4 million), primarily relating to the amortisation of the intangibles
acquired as part of the recent North American acquisitions. The current year value includes the write-off of a number of short-term acquired
intangibles relating to the valuation of Pivot order backlogs, due to the expiration of the valued assets.
Other items within adjusted1 profit before tax
The two items below have been absorbed by the Group within its adjusted1 profit before tax result and, whilst not exceptional, are one-off in nature.
Group EPS target achievement bonus
Since 2013, the Company has had an internal ambition to exceed adjusted1 diluted EPS of £1. The Company has grown, developing its capability,
reach and reputation to the extent that the goal was achieved during 2020. The Company decided to mark the achievement with a one-off bonus,
to recognise those who have been with the Company along this journey. The bonus was given to approximately 80 per cent of employees globally.
Senior managers and those with commission-based rewards were excluded, with the focus on those longest serving. For those eligible, the award
was £200 or equivalent for an employee who had completed their first year of service, rising to £500 for those with more than seven years of service.
63
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Group Finance Director’s Review
continued
The Company does not intend to make similar payments on a regular basis but reserves the right to share the rewards of success with its
employees, if another long-term goal is achieved. The total cost to the Group of the bonus was £5.2 million, which was paid from cash reserves
prior to 31 December 2020.
North American restructuring costs
Following the acquisition of Pivot, the senior Management was amalgamated with that of the existing businesses in the US. Whilst a formal
restructuring programme is not expected to start until the rollout of the Group’s ERP systems and processes is complete throughout the
North American operation, several positions were left with an overlap of senior employees. As a result, the Company has agreed with certain
senior employees that their positions are in excess of the business’s needs and exit packages totalling $1.7 million have been accrued as at
31 December 2020.
Earnings per share
Diluted EPS increased by 50.3 per cent to 133.8 pence per share (2019: 89.0 pence per share). Adjusted1 diluted EPS increased by 36.6 per cent
to 126.4 pence per share (2019: 92.5 pence per share).
Basic weighted average number of shares (excluding own shares held) (no.’000)
Effect of dilution:
Share options
Diluted weighted average number of shares
Profit for the year attributable to equity holders of the Parent (£’000)
Basic EPS (pence)
Diluted EPS (pence)
Adjusted1 profit for the year attributable to equity holders of the Parent (£’000)
Adjusted1 basic EPS (pence)
Adjusted1 diluted EPS (pence)
2020
112,894
2,005
114,899
153,750
136.2
133.8
145,284
128.7
126.4
2019
112,514
1,655
114,169
101,655
90.3
89.0
105,654
93.9
92.5
Dividend
The Board recognises the importance of dividends to shareholders and the Group prides itself on a long track record of paying dividends and
other special one-off cash returns. However, the Group announced on 23 April 2020 that, as a result of the COVID-19 crisis, the previously proposed
2019 final dividend would not be paid.
Whilst the Group’s cash position at the time was strong and trading was in line with our expectations, we continued to explore all opportunities to
maintain cash flow and preserve cash balances, in light of the heightening uncertainty about the scale and duration of the pandemic. The Group
has approved a number of requests from customers, immaterial in aggregate, for extended payment terms and continues to look for ways to
support the short-term cash flow of smaller customers or those that have been materially affected by the impact of COVID-19. Accordingly, the
Board believed at the time of the announcement that it was prudent not to pay a final dividend in respect of 2019. Resolution 4 set out in the Notice
of Annual General Meeting 2020 was therefore not put to a vote at the AGM and the 2019 final dividend was not paid.
The Group continues to monitor the COVID-19 crisis and the resultant cash flow implications. With the strong results for the period to 30 June 2020
and the corresponding cash flow performance, the Board considered it appropriate to resume distributing cash to shareholders by returning to
the Group’s normal interim and full-year dividend cycle. The Board was therefore pleased to announce the interim dividend of 12.3 pence per
share, which was paid on Friday 23 October 2020.
Computacenter’s approach to capital management is to ensure that the Group has a robust capital base and maintains a strong credit rating,
whilst aiming to maximise shareholder value. The Group remains highly cash generative and adjusted net funds3 continue to regenerate on the
Consolidated Balance Sheet, which allows acquisitions such as FusionStorm in 2018 and Pivot in 2020, alongside a number of other small acquisitions.
If further funds are not required for investment within the business, either for fixed assets, working capital support or acquisitions, and the
distributable reserves are available in the Parent Company, we will aim to return the additional cash to investors through one-off returns of value,
as we last did in February 2018.
Dividends are paid from the standalone balance sheet of the Parent Company and, as at 31 December 2020, the distributable reserves were
approximately £268 million (2019: £165 million).
64
The Board is pleased to propose a final dividend for 2020 of 38.4 pence per share. Together with the interim dividend, this brings the total ordinary
dividend for 2020 to 50.7 pence per share, representing a 37.0 per cent increase on the 2019 total proposed dividend per share of 37.0 pence,
including the final 2019 dividend of 26.9 pence per share that was proposed but not paid as described above.
The Board has consistently applied the Company’s dividend policy, which states that the total dividend paid will result in a dividend cover of 2 to
2.5 times based on adjusted1 diluted EPS. In 2020, the cover was 2.5 times (2019: 2.5 times).
Subject to the approval of shareholders at our Annual General Meeting on 20 May 2021, the proposed dividend will be paid on Friday 2 July 2021.
The dividend record date is set as Friday 4 June 2021 and the shares will be marked ex-dividend on Thursday 3 June 2021.
Segmental reporting structure changes
During the first half of the year, Management reviewed the way it reported Segmental performance to the Board and the CEO, who is the Group’s
Chief Operating Decision Maker (‘CODM’). Subsequently, from 1 January 2020 the Group has revised where the results of certain Managed Services
contracts are reported within its operating Segments. The operating Segments remain unchanged in all other respects from those reported at
31 December 2019. The change in Segmental reporting has no impact on reported Group results.
Operational responsibility for a significant European customer was transferred from the German to the French business from 1 January 2020.
The French Senior Management targets now include the results from this customer. We have therefore restated the results for the French and
German Segments for the year ended 31 December 2019, to assist with understanding the growth in each business and to ensure year-on-year
results are comparable.
Computacenter USA performs Managed Services work for other Computacenter entities, on behalf of several key European contracts. These
revenues were originally recorded in the USA Segment, where the associated underlying subsidiary recognises the revenues in its statutory
accounts. However, to be consistent with practices across the Group, Management has reallocated these revenues to the UK, German, French
and International Segments which have responsibility for the customer contracts. This reflects better where the portfolio co-ordination and
operational responsibility lies and, therefore, where the benefits should accrue on a Segmental basis. This treatment also means that for the
Segmental analysis, Computacenter USA, within the USA Segment, is now treated similarly to the remainder of our offshore internal service
provider entities that are grouped within the International Segment. We have, therefore, restated the Managed Services revenues for the year
ended 31 December 2019 to assist with understanding the growth in each business and to ensure year-on-year comparisons reflect true
underlying growth. This has no impact on Segmental profitability, as the margins were previously shared on the same basis that the revenue
now reflects. Further, with the acquisition of Pivot on 2 November 2020, which includes a material business in Canada, the USA Segment has been
renamed as the North American Segment and is referred to as such throughout this Annual Report and Accounts.
This new Segmental reporting structure is the basis on which internal reports are provided to the CEO, as the CODM, for assessing performance
and determining the allocation of resources within the Group, in accordance with IFRS 8.25. Segmental performance is measured based on
external revenues, adjusted1 gross profit, adjusted1 operating profit and adjusted1 profit before tax. As noted below, Central Corporate Costs
continue to be disclosed as a separate column within the Segmental note.
Further details of the Segmental changes and the associated restatement of 2019 Segment information can be found in note 4 to the
Consolidated Financial Statements. All discussion within this Annual Report and Accounts of Segmental results reflects this revised structure and
the resultant prior-year restatements.
Central Corporate Costs
Certain expenses are not allocated to individual Segments because they are not directly attributable to any single Segment. These include costs for
the Board itself and related public company costs, Group Executive members not aligned to a specific geographic trading entity, and the cost of
centrally-funded strategic initiatives that benefit the whole Group.
Accordingly, these expenses are disclosed as a separate column, ‘Central Corporate Costs’, within the Segmental note. These costs are borne within
the Computacenter (UK) Limited legal entity and have been removed for Segmental reporting and performance analysis but form part of the overall
Group administrative expenses.
During the year, total Central Corporate Costs were steady at £27.1 million (2019: £27.1 million).
Within this:
• Board expenses, related public company costs and costs associated with Group Executive members not aligned to a specific geographic
trading entity were down at £6.8 million (2019: £7.1 million);
• share-based payment charges associated with the Group Executive members identified above, including the Group Executive Directors,
increased from £3.0 million in 2019 to £3.2 million in 2020, due primarily to the increased value of Computacenter plc ordinary shares; and
• strategic corporate initiatives were flat at £17.1 million (2019: £17.1 million), with spend primarily focused on projects designed to increase
capability, enhance productivity or strengthen systems which underpin the Group.
65
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Group Finance Director’s Review
continued
Cash flow
The Group delivered an operating cash inflow of £236.8 million for the year to 31 December 2020 (2019: £198.3 million inflow).
Certain COVID-19-related one-off benefits were included in the 2020 full-year cash flow and net cash positions. This includes extended free-of-
charge supplier credit with a major vendor of approximately £15.0 million as at 31 December 2020. Temporary tax payment timing benefits utilised
during the year were fully repaid as at 31 December 2020.
Our usual strong year-end net funds position was strengthened further, as a number of our customers paid ahead of normal payment cycles,
partly, we believe, where overseas customers looked to avoid sometimes negative interest rates. This has been exacerbated by a shift towards
government customers during the year, resulting in improvements in cash collection as governments, particularly in Europe, have been settling
debts as quickly as possible and well ahead of industry standard payment terms. The Group, in turn, paid a number of its suppliers early, to reduce
the temporary excess cash on the balance sheet at the year end. However, the volume of early payments from customers received in the final
days of the year was unprecedented. The Company estimates, broadly, that unforeseen receipts from customer payments in advance of the due
date exceeded the Company’s ability to pay its own suppliers early by roughly £50 million.
Capital expenditure in the year was £27.5 million (2019: £38.9 million), with the decrease primarily relating to the prior-year investment in the final
elements of the German facility and establishing a new Integration Center in Livermore, California. The spend in 2020 primarily comprises other
investments in IT equipment and software tools, to enable us to deliver improved service to our customers.
The Group continued to manage its cash and working capital positions appropriately using standard mechanisms, to ensure that cash levels
remained within expectations throughout the year. The Group had no debt factoring at the end of the year outside the normal course of business.
From time to time, some customers request credit terms longer than our standard of 30-60 days. In certain instances, we will arrange for the sale
of the receivables on a true sale basis to a finance institution on the customers’ behalf. We would typically receive funds on 45-day terms from the
finance institution, who will then recover payment from the customer on terms agreed with them. The cost of such an arrangement is borne by
the customer, either directly or indirectly, enabling us to receive the full amount of payment in line with our standard terms. The benefit to the
cash and cash equivalents position of such arrangements as at 31 December 2020 was £38.9 million (31 December 2019: £33.8 million).
Cash and cash equivalents and net funds
Cash and cash equivalents as at 31 December 2020 were £309.8 million, compared to £217.9 million at 31 December 2019. Net funds as at
31 December 2020 were £51.2 million (31 December 2019: £20.3 million). Adjusted net funds3 as at 31 December 2020 were £188.6 million,
compared to adjusted net funds3 of £137.1 million as at 31 December 2019.
Net funds as at 31 December 2020 and 31 December 2019 were as follows:
Cash and cash equivalents
Bank loans and credit facility
Adjusted net funds3 (excluding lease liabilities)
Lease liabilities
Net funds
2020
£’000
309,844
(121,194)
188,650
(137,474)
51,176
2019
£’000
217,881
(80,772)
137,109
(116,766)
20,343
For a full reconciliation of net funds and adjusted net funds3, see note 31 to the Consolidated Financial Statements.
The Group had three specific credit facilities in place during the year and no other material borrowings.
The Group drew down a £100 million term loan on 1 October 2018 to complete the acquisition of FusionStorm. This loan is on a seven-year
repayment cycle, with a renewal of the loan facility due on 30 September 2021. The Group had intended to take advantage of stronger than
anticipated cash generation to make an unplanned repayment of £20 million of this loan during the year, in addition to the unplanned repayment
of £30 million in the second half of 2019. However, the Group elected to retain the balance as cash, as part of a wider cash-preservation strategy
in the light of the COVID-19 pandemic. As at 31 December 2020, £41.6 million remained of the loan (31 December 2019: £56.0 million). Pivot has a
$225.0 million senior secured asset-based revolving credit facility, from a lending group represented by JPMorgan Chase Bank, N.A. This can be
used for revolving loans, letters of credit, protective advances, over advances, and swing line loans, and £58.4 million was drawn on the facility
as at 31 December 2020. The Group also has a specific term loan for the build and purchase of our German office headquarters and fit out of the
Integration Center in Kerpen, which stood at £20.9 million at 31 December 2020 (31 December 2019: £24.8 million).
For further information on these facilities, see note 23 to the Consolidated Financial Statements.
The Group excludes lease liabilities from its non-GAAP adjusted net funds3 measure, due to the distorting effect of the capitalised lease liabilities
on the Group’s overall liquidity position under the IFRS 16 accounting standard. There were no interest-bearing trade payables as at 31 December
2020 (31 December 2019: nil). The Group’s adjusted net funds3 position contains no current asset investments (31 December 2019: nil).
66
Revenue
2018
2019
2020
2020/19
Adjusted1 profit before tax
2018
2019
2020
2020/19
Revenue by Segment
UK
Germany
France
North America
International
Total
Adjusted1 operating profit by Segment
UK
Germany
France
North America
International
Central Corporate Costs
Total
UK
Germany
France
North America
International
Central Corporate Costs
Total
Half 1
£m
2,008.9
2,427.0
2,462.2
1.5%
Half 2
£m
2,343.7
2,625.8
2,979.1
13.5%
Total
£m
4,352.6
5,052.8
5,441.3
7.7%
Half 1
Half 2
Total
£m
52.1
53.5
74.6
39.4%
Half 1
£m
858.8
843.7
304.3
378.2
77.2
2,462.2
Half 1
£m
45.9
35.6
3.8
4.7
0.2
(12.9)
77.3
Half 1
£m
23.5
30.4
8.3
1.2
4.6
(11.9)
56.1
% Revenue
2.6%
2.2%
3.0%
2020
Half 2
£m
914.6
1,032.6
368.5
566.3
97.1
2,979.1
% Revenue
5.3%
4.2%
1.2%
1.2%
0.3%
(0.5%)
3.1%
% Revenue
2.9%
3.5%
2.8%
0.3%
4.9%
(0.5%)
2.3%
£m
66.1
92.8
125.9
35.7%
% Revenue
2.8%
3.5%
4.2%
£m
118.2
146.3
200.5
37.0%
% Revenue
2.7%
2.9%
3.7%
Total
£m
1,773.4
1,876.3
672.8
944.5
174.3
5,441.3
2019 (restated)
Half 2
£m
796.2
1,024.3
324.8
380.7
99.8
2,625.8
Half 1
£m
800.8
862.9
300.2
369.9
93.2
2,427.0
2020
Half 2
£m
44.5
77.0
9.2
9.3
3.4
(14.2)
129.2
% Revenue
4.9%
7.5%
2.5%
1.6%
3.5%
(0.5%)
4.3%
2019 (restated)
Half 2
£m
41.0
49.1
9.0
7.9
3.6
(15.2)
95.4
% Revenue
5.1%
4.8%
2.8%
2.1%
3.6%
(0.6%)
3.6%
Total
£m
90.4
112.6
13.0
14.0
3.6
(27.1)
206.5
Total
£m
64.5
79.5
17.3
9.1
8.2
(27.1)
151.5
Total
£m
1,597.0
1,887.2
625.0
750.6
193.0
5,052.8
% Revenue
5.1%
6.0%
1.9%
1.5%
2.1%
3.8%
% Revenue
4.0%
4.2%
2.8%
1.2%
4.2%
3.0%
67
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020
Group Finance Director’s Review
continued
Trade creditor arrangements
Computacenter has a strong covenant and
enjoys a favourable credit rating from IT
vendors and suppliers. Some suppliers provide
standard credit directly on their own credit
risk, whereas other suppliers decide to sell
the debt to banks, who offer to purchase the
receivables and manage collection. The
standard credit terms offered by suppliers are
typically between 30 and 60 days, whether
provided directly or when sold to a third-
party finance provider. In the latter case, the
cost of the free trade credit period is paid by
the relevant supplier, as part of the overall
package of terms provided by suppliers to
Computacenter and our competitors. The
finance providers offer extended credit
terms at relatively low interest rates.
However, these rates are always higher than
the rate at which we deposit and therefore
we do not currently use these facilities.
Capital management
Details of the Group’s capital management
policies are included in note 28 to the
Consolidated 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’s policy is not to
undertake speculative trading in financial
instruments.
The Group enters into hedging transactions,
principally forward exchange contracts or
currency swaps, to manage currency risks
arising from the Group’s operations and its
sources of finance. As the Group continues
to expand its global reach and benefit from
lower-cost operations in geographies such
as South Africa, Poland, Mexico and India,
it has entered into forward exchange
contracts to help manage cost increases
due to currency movements.
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 Group’s financial results. 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
Consolidated Financial Statements.
Interest rate risk
The Group finances its operations through a
mixture of retained profits, bank borrowings,
leases and loans for certain customer
contracts. The Group’s general bank
borrowings, other facilities and deposits are
at floating rates. No interest rate derivative
68
contracts have been entered into. The
Group’s specific borrowing facility for the
purchase of FusionStorm, and the undrawn
committed facility of £60 million, are at
floating rates. However, the borrowing
facility for the operational headquarters
in Germany is at a fixed rate.
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 cash
was maintained throughout 2020 and at the
year end was £309.8 million, with net funds
of £51.2 million after including the Group’s
three specific borrowing facilities and lease
liabilities recognised under IFRS 16. Excluding
lease liabilities, adjusted net funds3 was
£188.6 million at the year end.
Due to strong cash generation over many
years, the Group can currently finance its
operational requirements from its cash
balance, and it operates an informal cash
pooling arrangement for the majority of
Group entities. The Group has a committed
facility of £60.0 million, which was extended
in September 2020 and now has an expiry
date of 7 September 2023. The Group has
never drawn on this committed facility.
The Group has a Board-monitored policy to
manage its counterparty risk. This ensures
that cash is placed on deposit across a range
of reputable banking institutions.
Foreign currency risk
The Group operates primarily in the United
Kingdom, Germany, France and the United
States of America, with smaller operations in
Belgium, Canada, China, Hungary, India,
Malaysia, Mexico, the Netherlands, Poland,
South Africa, Spain and Switzerland.
The Group uses an informal cash pooling
facility to ensure that its operations outside
the UK are adequately funded, where
principal receipts and payments are
denominated in euros and US dollars. For
those countries within the Eurozone, the
level of non-euro denominated sales is small
and, if material, the Group’s policy is to
eliminate currency exposure through
forward currency contracts. For our US
operations, most transactions are
denominated in US dollars. For the UK,
the majority of sales and purchases are
denominated in pounds sterling and any
material trading exposures are eliminated
through forward currency contracts.
The Group has been successful in winning
international Services contracts, where
Services are provided in multiple countries.
We aim to minimise currency 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, we
eliminate currency exposure for a
foreseeable period on these future cash
flows, through forward currency contracts.
In 2020, the Group recognised a loss of
£1.9 million (2019: loss of £0.9 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.
The Group reports its results in pounds
sterling. The ongoing weakness in the value
of sterling against most currencies during
2020, in particular the euro, continued to
benefit our revenues and profitability as
a result of the conversion of our foreign
earnings. However, the exchange rates seen
in 2020 were not materially dissimilar to
those seen in 2019. The impact of restating
2019 results at 2020 exchange rates would
be an increase of approximately £49.5 million
in 2019 revenue and an increase of
£1.8 million in 2019 adjusted1 profit before tax.
Credit risk
The Group principally manages credit risk
through customer credit limits. The credit
limit is set for each customer based on its
creditworthiness, using credit rating
agencies as a guide, and the anticipated
levels of business activity. These limits are
determined when the customer account is
first set up and are regularly monitored
thereafter.
There are no significant concentrations of
credit risk within the Group. The Group’s
major customer, disclosed in note 4 to the
Consolidated Financial Statements, consists
of entities under the control of the UK
Government. The maximum credit risk
exposure relating to financial assets is
represented by their carrying value as at
the balance sheet date.
Brexit update
In the 2019 Annual Report and Accounts and
the 2020 Interim Report and Accounts, we
provided a detailed update on our positioning
from a Brexit risk and preparation
perspective. In summary, we explained that
we were in a low-risk category and that we
had made considerable efforts to reduce the
risk to our business as much as possible.
Since 1 January 2021, we believe that our risk
position and preparation has served us well.
The Brexit deal announced on 24 December
2020 was helpful for the UK generally and
removed the cliff edge risk position,
especially the avoidance of customs tariffs
on most goods shipped to and from the EU,
depending on the country of origin. We have
not yet seen, since 1 January 2021, very long
queues of lorries at UK or French ports. There
clearly have been some issues arising on
customs tariffs on UK exports to the EU
generally, where the goods are not of British
origin. However, this issue has little impact
on Computacenter as most of the products
that we sell are zero rated under WTO terms.
There are still issues unresolved from a UK
perspective, such as services and euro
denominated trading which negatively
impacts the City of London. However, we
operate in all major cities in the principal EU
countries that will benefit from this and
should be able to offset any impact.
Imports into the UK
We have seen short delays arising from issues
relating to customs checks and customs
documentation for goods coming from the
EU, which are typically one or two days and a
week with one large supplier. These have not
materially impacted our business to date.
A small number of our suppliers operate
under International Commercial Terms
similar to Carriage and Insurance Paid, which
requires Computacenter to operate as the
importer of record when they export from
the EU. This has increased the administrative
burden for us on these deliveries, although
this has limited financial impact on the UK
business as a whole.
Exports from the UK to the EU
A major part of our Brexit preparation was to
move circa 90 per cent of the business for UK
customers requiring deliveries in the EU from
Computacenter UK to Computacenter
Germany, thereby avoiding the need for
export documentation and potential border
delays. This has been very successful. We
have also implanted some export-specific
software on our Group ERP system, to ease
the administration of exports, production of
customs invoices etc. Despite this, there
have been some challenges on the remaining
10 per cent of this business in terms of
service level achievement, problems with
documentation and couriers for EU
countries. Some courier operations are not
as well prepared as they should be, which
has caused some confusion and delay.
However, we are addressing these issues
and do not expect any material impact.
Whilst Northern Ireland is part of the UK, the
invisible border in the Irish Sea, and initial
lack of clarity on how to export there, has
resulted in some issues on shipments from
Great Britain to Northern Ireland. These
issues are quite small and have largely
been resolved.
People
As noted in the 2019 Annual Report and
Accounts, we do not have many EU nationals
working in our UK business or UK nationals in
our EU businesses. We were well prepared for
this and have had no material issues.
Whilst there is limited travel expected in
2021, we are aware that UK nationals who
need to visit EU countries to work on specific
projects will require a work visa. We will be
able to make arrangements to minimise the
impact of this issue.
Data transfer regulation
As noted in our 2019 Annual Report and
Accounts we are well prepared to meet data
transfer regulations, having adopted
EU-approved standard contractual clauses
concerning data adequacy into our intra-
Group agreements in 2018 and 2019. The
Brexit deal included a form of data adequacy
clause for four months, which can be
extended by a further two months, whilst
negotiations take place on longer-term
arrangements.
Going Concern
Computacenter’s business activities,
business model, Strategic Priorities and its
performance are set out within this Strategic
Report from the inside front cover to page 76.
The financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are set out within this Group
Finance Director’s Review on pages 66 to 68.
In addition, notes 27 and 28 to the
Consolidated 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.
The Directors have, after due consideration,
and as set out in note 2 to the Consolidated
Financial Statements on page 138 of this
Annual Report and Accounts, a reasonable
expectation that the Group has adequate
resources to continue in operational
existence for a period of 12 months from
the date of approval of the Consolidated
Financial Statements, as set out on
pages 133 to 193 of this Annual Report
and Accounts.
Thus, they continue to adopt the Going
Concern basis of accounting in preparing the
Consolidated Financial Statements.
Viability Statement
In accordance with provision 31 of the UK
Corporate Governance Code, the Directors
have assessed the Group’s prospects over a
longer period than the 12 months required by
the Going Concern Statement.
Viability timeframe
The Directors have assessed the Group’s
viability over a period of three years from
31 December 2020. This period was selected
as an appropriate timeframe for the
following reasons:
• the Group’s rolling strategic review,
as considered by the Board, covers
a three-year period;
• the period is aligned to the length of the
Group’s Managed Services contracts,
which are typically three to five years long;
• the short lifecycle and constantly evolving
nature of the technology industry lends
itself to a period not materially longer than
three years;
• Technology Sourcing has seen greater
recent growth than the Group’s Services
business, increasing the revenue mix
towards the part of the business that
has less medium-term visibility and is
therefore more difficult to forecast;
• the continuing macro-economic,
diplomatic and trade environment,
following the departure of the UK from
the European Union, introduces greater
uncertainty into a forecasting period
longer than three years; and
• the prolonged impact of COVID-19, and in
particular the effect on certain of our
customers from the worsening global
economic outlook, and the current
increasing pace of change of technology
adoption as a result.
Whilst the Directors have no reason to believe
the Group will not be viable over a longer
period than three years, we believe that
a three-year period presents shareholders
with a reasonable degree of confidence,
while providing a longer-term perspective.
With regard to the principal risks set out on
pages 71 to 76, the Directors remain assured
that the business model will be valid beyond
the period of this Viability Statement. There
will continue to be demand for both our
Professional Services and Managed Services
businesses, and Management is responsible
for ensuring that the Group remains able to
meet that demand at an appropriate cost
to our customers. The Group’s value-added
product reselling Technology Sourcing
business only appears vulnerable to
69
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Additionally, the risks related to continued
disruption from the departure of the UK from
the EU on 31 December 2020 have been
reflected within our underlying business plans.
Conclusion
Based on the period and assessment above,
the Directors have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities, as they
fall due, over the three-year period to
31 December 2023.
Fair, balanced and understandable
The UK Corporate Governance Code requires
the Board to consider whether the Annual
Report and Accounts, taken as a whole, are
‘fair, balanced and understandable’ and ‘provide
the information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy’.
Management undertakes a formal process
through which it can provide comfort to the
Board in making this statement.
This Strategic Report was approved by the
Board on 15 March 2021 and was signed on
its behalf by:
MJ Norris
Chief Executive Officer
FA Conophy
Group Finance Director
Impact of risks and assessment of viability
The Plan is subject to rigorous downside
sensitivity analysis, which involves flexing a
number of the main assumptions underlying
the forecasts within the Plan. The forecast
cash flows from the Plan are aggregated
with the current position, to provide a total
three-year cash position against which the
impact of potential risks and uncertainties
can be assessed. The analysis considers
access to available committed and
uncommitted finance facilities, the ability
to raise new finance in most foreseeable
market conditions and the ability to restrict
dividend payments.
The potential impact of the principal risks
and uncertainties, as set out on pages 71
to 76, is then applied to the Plan. This
assessment includes only those risks and
uncertainties that, individually or in plausible
combination, would threaten the Group’s
business model, future performance,
solvency or liquidity over the assessment
period and which are considered to be severe
but reasonable scenarios. It also takes into
account an assessment of how the risks are
managed and the effectiveness of any
mitigating actions.
The combined effect of the potential
occurrence of several of the most impactful
risks and uncertainties is then compared to
the cash position generated throughout the
sensitised Plan, to assess whether the
business will be able to continue in operation.
For the current period, the primary downside
sensitivity relates to a modelled, but not
predicted, severe downturn in Group
revenues, beginning in 2021, due to a
worsening impact on our customers from
the COVID-19 crisis. This sensitivity analysis
models a continued market downturn
scenario for some of our customers whose
businesses have been affected by COVID-19
and a similar downturn occurring for the
remainder of our customer base.
Group Finance Director’s Review
continued
disintermediation at the low end of the
product range, as the Group continues to
provide a valuable service to customers and
vendors alike, as described on pages 18 to 21.
The Group has seen significant business
growth in the UK throughout the COVID-19
pandemic, due to the end-to-end Technology
Sourcing capability that it can deliver from its
UK Integration Center, which is a significant
differentiating factor in this market.
Prospects of the Group assessment
process and key assumptions
The assessment of the Group’s prospects
derives from the annual strategic planning
and review process. This begins with an
annual away day for the Board, where
Management presents the strategic review
for discussion against the Group’s current
and future operating environments.
High-level expectations for the following year
are set with the Board’s full involvement and
are delivered to Management, who prepare
the detailed bottom-up financial target for
the following year. This financial target is
reviewed and agreed by Management before
presentation to the Board for approval at the
December Board meeting.
On a rolling annual basis, the Board considers
a three-year business plan (the ‘Plan’)
consisting of the detailed bottom-up
financial target for the following year (2021)
and forecast information for two further
years (2022 and 2023), which is driven by
top-down assumptions overlaid on the
detailed target year. Key assumptions used
in formulating the forecast information
include organic revenue growth, margin
improvement and cost control, continued
strategic investments through the
Consolidated Income Statement, and
forecast Group effective tax rates, with no
changes to dividend policy or capital
structure beyond what is known at the time
of the forecast. The financial target for 2021
was considered and approved by the Board
on 10 December 2020, with amendments and
enhancements to the target as part of the
full Plan considered and approved by the
Board on 9 March 2021.
70
Principal Risks
and Uncertainties
OUR RISK GOVERNANCE MODEL
The Board
Nomination
Committee
Remuneration
Committee
Executive
Committee
Audit
Committee
First line of defence
Risk ownership and application
of internal controls
Country-specific Management
Group Delivery
Group Services
Group Finance
Group Information Security
Group Human Resources
Second line of defence
Third line of defence
Compliance, oversight
and assurance functions
Independent assurance
Group Internal Audit
Group Quality Management
& Assurance
Group Legal/Compliance
Group Information Assurance
Country-specific Take-On
Group Risk Committee
Group Compliance
Steering Committee
Anti-bribery & Corruption
Competition Law
Export Control
Whistleblowing
Data Protection
Environmental
Health & Safety
71
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Principal Risks and Uncertainties
continued
1. Risk overview
The risks presented below are the principal
risks that existed during 2020 as reported in
the Annual Report and Accounts 2019 and
modified during the year through the risk
identification and impact process.
Our long-term success is built on a clear
strategic direction, contractual and
operational excellence and effective
business services functions, such as
Finance, Human Resources and Legal &
Contracting, which support customer-facing
staff to fulfil their obligations effectively.
All of this is underpinned by a secure IT
infrastructure, hosting both internal and
customer platforms. Our strategic,
contractual and infrastructure risks are
largely determined by the industry we
operate in and our long-term approach to
adding value. Our financial and people risks
are defined by the wider economic
environment, the way we run our business
day-to-day and our long-term staffing
needs. While outside factors are beyond our
control, our risk management approach is
committed to managing the impact of these
influences, while controlling the internal
elements vital to our success.
2. Risk appetite
Our risk appetite is strongly influenced by
our experience in the industry sector. At an
operational level, we have a higher risk
appetite for business development where we
have experience of the risks and a lower risk
appetite where we have less experience. This
is supported day-to-day by our operating
policies and governance processes, which
include decision-making support and
authority over new contracts and contract
changes.
3. Risk culture
Risk management and governance
processes are well-established and
understood within the business and operate
at all levels. Strategic-level risks are
monitored by the Risk and Audit Committees,
as well as by the Board. Lower-level
operational risks are identified, analysed and
mitigated at a functional level on an ongoing
basis, using well-embedded processes.
72
Strategic: The strategic-level risk profile is
one of long-term risk due to technological
change, including Computacenter’s ability or
otherwise to innovate effectively, and in the
globalisation of customer demand. Although
our response continues to mature, the level
of technological change and our continuing
need to innovate to remain competitive
increases this risk over time.
Contractual/Operational: Our main focus
remains on the effective governance of
contracts, both in the pre-deal phase and in
delivery. This includes our emphasis on data
privacy. We are also extending the use of our
Service Quality Management Framework to
improve the underlying quality of sales, bid
governance and operations. Overall, we
believe the risks to the business have
reduced, due to the enhanced governance
structures put in place.
Infrastructure: Although there has been no
overall change in the impact or likelihood of
occurrence, cyber security remains at the
forefront of discussions at both the Risk and
Audit Committees and will continue to do so.
Brexit: The long-awaited EU-UK Trade and
Cooperation Agreement, which was
concluded prior to the end of the Brexit
transition period, has settled the UK’s future
trading relationship with the EU on a zero
quota/zero tariff basis, subject to certain
conditions, and has therefore reduced our
risk in this area. Given our preparation in this
area we expect that this will cease to be a
principal risk during 2021 as only immaterial
issues now remain. Further details on the
UK’s departure from the EU can be found on
pages 68 to 69 in the Group Finance
Director’s Review.
Financial: We continue to concentrate on
the fundamentals important to our business,
including the effective management of
working capital, and we see no change to
this risk.
People: Our people remain integral to the
continued success of our business. The risks
reflect the importance we place on
experience, openness and collaboration.
4. Risk identification and impact
The Group Risk Committee meets four times
per year and reviews our principal risks,
which are the barriers to meeting our
strategic goals, on an ongoing basis. This
top-down approach includes assessing
whether emerging risks are significant
enough to warrant inclusion in the Group Risk
Log. If so, the likelihood of occurrence and
potential impact are considered and the risk
is subject to regular review. The impact of
existing risks is also reviewed. The Group Risk
Log is reviewed by both the Audit Committee
and the Board. The key risks are considered
further in relation to the long-term Viability
Statement (see pages 69 to 70).
Other lower-level risks outside the principal
risks are identified and analysed in two ways.
These are:
1) Through the Group Operating Business
Risk Assessment process, which is
completed by over 100 managers across
the business. The results of this process
are reviewed by the Group Risk
Committee. This includes validating them
against the principal risks, to ensure that
all potential threats are considered.
Lower-level risks are often triggers for
crystallising principal risks, so their
careful management remains an
important consideration.
2) Via the Group Compliance Steering
Committee (see risk governance model)
which assesses reports from the
Compliance Management System for
the areas under its remit.
5. Risk trends
The overall risk landscape has changed due
to specific threats and our response to them
as discussed below. We have remained
vigilant during the transition period in
relation to the UK’s departure from the EU
and continue to monitor issues that might
impact the smooth running of our business
during the post-transition period.
Additionally, we continue to monitor the
effects of the COVID-19 pandemic for its
potential impact on our business, specifically
in relation to the health and wellbeing of our
staff, our global supply chain and in changing
customer requirements.
We use the three lines of defence model with
regards to the governance of key risks. This
includes a mapping exercise which considers
the level of assurance afforded by each of
the compliance and oversight functions,
when considering the overall level of
assurance provided over each risk.
Our four Strategic Priorities
RISK CATEGORIES:
Strategic Risks
Market shift in technology usage
Geo-political risk
Increasing globalisation of customer demand
Contractual/Operational Risks
Lack of effective pre-contract processes
Lack of effective post-contract delivery
Loss of personal data
Acquisition integration
Infrastructure Risks
Cyber threat
Integrity failure of critical systems
Brexit Risk
Brexit Risk
Financial Risk
Ineffective working capital management
People Risks
Poor staff recruitment and retention
Inadequate succession planning
Failure to ensure adequate diversity
Group risk log 2020 heat map
1: Strategic Risks
2: Contractual/
Operational Risks
3: Infrastructure Risks
4: Brexit Risk
5: Financial Risk
6: People Risks
Unchanged risk
Decreased risk
Increased risk
Strategic
Priority 1:
To lead with and grow
our Services business
Strategic
Priority 2:
To improve our
Services productivity
and enhance our
competitiveness
Strategic
Priority 3:
To retain and
maximise the
relationship with our
customers over the
long term
Strategic
Priority 4:
To innovate our
Services offerings to
build future growth
opportunities
d
o
o
h
i
l
e
k
i
L
3
1
2
4
5
6
Impact
73
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Principal Risks and Uncertainties
continued
1. Strategic Risks
Alert status
Increased due to changes in the competitive landscape.
Risks
• Market shift in technology usage, making what we do less
relevant or superfluous and we fail to invest appropriately to
defend our competitiveness
Principal impacts
• Reduced margin
• Excess operational staff
Response to risks
• Well-defined Group strategy, backed by an annual strategy
process that considers our offerings against market changes
Risk owners
• Chief Executive Officer
• Group Development Director
• Group Delivery Director
2. Contractual/Operational Risks
Alert status
Contract risk reduced due to governance enhancements.
Risks
• Lack of effective pre-contract processes, resulting in poor
design, costing and pricing
• Lack of effective post-contract delivery
Principal impacts
• Customer dissatisfaction
• Financial penalties
• Contract cancellations
• Reputational damage
Response to risks
• Mandatory governance processes relating to bids and new
business take-ons, including risk-based decision-making
assessments and new tooling
• Board oversight of significant bids
• Early Warning System and independent assurance provided by
the Group Quality Management & Assurance function over key
bids and delivery programmes
Risk owners
• Group Delivery Director
• Group Services Director
• Group Head of Legal & Contracting
74
• Geo-political risk arising from our increasingly global
operations
• Increasing globalisation of customer demand, resulting in
a changing global competitive landscape
• Contracts not renewed
• Missed business opportunities
• Group Investments & Strategy Board, which considers
strategic initiatives
• Additional measures including CEO-led country, sector and
win/loss reviews
• Loss, corruption or unauthorised disclosure of personal data
• Lack of effective acquisition integration and failure to deliver
on acquisition objectives
• Reduced margins
• Loss-making contracts
• Reduced service and technical innovation
• Regular commercial ‘deep dives’ into troubled contracts and
challenging transformation projects
• Data privacy audit programme
• Appropriate due diligence and acquisition integration plans in
place, with ongoing monitoring of key risks to ensure success
• Group Development Director
• Group Finance Director
3. Infrastructure Risks
Alert status
Unchanged.
Risks
• Cyber threat to Computacenter’s networks and systems,
arising from either internal or external security breaches,
leading to system failure, denial of access or data loss
• Cyber threats introduced by Computacenter to its customers’
networks and systems, for whatever reason
• Integrity failure of our critical systems
Principal impacts
• Inability to deliver business services
• Reputational damage
• Customer dissatisfaction
• Financial penalties
• Contract cancellations
Response to risks
• Well-communicated Group-wide information security and virus
protection policies
• Specific inductions and training for staff working on customer
sites and systems
• Specific policies and procedures for staff working behind
a customer’s firewall
• Ongoing and regular programme of external penetration testing
• Policies ensuring Computacenter does not run customer
applications or have access to customer data
• All Group standard systems built and operated on high-
availability infrastructure, designed to accommodate failure
of any single technical component
• All centrally-hosted systems built and operated on high-
availability infrastructure, with multiple levels of redundancy
• All centrally-hosted systems benefit from dual network
connectivity into core data centers designed to accommodate
loss of network service
• Standing agenda item for each meeting of the Group
• Regular review of cyber security controls and threat analysis
Risk Committee
by Computacenter’s Cyber Defence Center
Risk owner
• Chief Information Officer
4. Brexit Risk
Alert status
Reduced as the Trade and Cooperation Agreement with the EU has nullified the risk of a hard Brexit without tariff-free access to the
EU single market.
Risk
• Brexit effect on the Computacenter business. This may manifest itself as either a risk, such as a threat to the business as a result of
negative customer sentiment, forex volatility, and the effect and impact of data residency issues, or a business opportunity as existing
and potential customers establish operations in EU countries, requiring Computacenter product and Services as a result
Principal impacts
• Missed business opportunities
• Non-renewal of contracts
• Reduced revenue
• Reduced margin
Response to risks
• Potential effect of UK’s departure from the EU is subject to
ongoing review by the Group Risk and Brexit Committees. The
Executive-level committees meet regularly and review risks
and mitigations in more detail
Risk owner
• Chief Executive Officer
• Group Finance Director
• Issues that might impact the smooth running of the business,
particularly in relation to imports and exports, continue to be
monitored and managed during the post-transition period
75
STRATEGIC REPORTANNUAL REPORT AND ACCOUNTS 2020 Principal Risks and Uncertainties
continued
5. Financial Risk
Alert status
Unchanged.
Risk
• Failure to manage working capital effectively
Principal impacts
• Financial impact through bad debts, obsolete inventory and/or
other working capital movements
Response to risks
• Implementation of debt management best practice, after
centralising Europe-wide collection functions at the Budapest
finance Shared Service Center (excluding recent North
American acquisitions)
Risk owners
• Group Finance Director
6. People Risks
Alert status
Unchanged.
• Inventory management controls and monitoring
• Increasing use of direct delivery
Risks
• Failure to recruit and retain the right calibre of staff to our
talent pool, with focus on senior positions in Sales, Services
and Projects
• Inadequate succession planning or insufficient depth within
key Senior Executive positions
• Failure to ensure adequate diversity, thereby restricting the
talent we employ
Principal impacts
• Lack of adequate leadership
• Customer dissatisfaction
• Financial penalties
• Contract cancellations
• Reputational damage
Response to risks
• Succession planning in place for the top 50 managers across
the Group
• Regular remuneration benchmarking
• Incentive plans to aid retention
• Investment in management development programmes
• Regular employee surveys to understand and respond to
employee issues
• Specific diversity projects in place relating to accessibility and
wellbeing, life balance, LGBT+ and allies, future talent, focus on
women and culture
Risk owners
• Chief People Officer
• Chief Executive Officer
76
GOVERNANCE
REPORT
Chairman’s Governance Overview
Board of Directors
Corporate Governance Report
Leadership
Effectiveness
Nomination Committee Report
Accountability
Audit Committee Report
Directors’ Remuneration Report
78
80
82
82
84
86
88
90
96
117 Relations with Shareholders
118 Directors’ Report
123 Directors’ Responsibilities
77
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Chairman’s Governance
Overview
I am pleased to present
Computacenter’s Corporate
Governance Report for the year
ended 31 December 2020. This
Report outlines and explains
the Group’s governance policies
and practices and sets out how
we applied the 2018 UK
Corporate Governance Code
(‘the Code’) during the year.
The Board is
unanimous in
its view that its
strength in
depth will be
maintained by the
appointment of
Pauline Campbell.
Peter Ryan
Non-Executive Chairman
78
Dear Shareholder,
The Board believes that effective governance
practices are fundamental to the Group’s
ability to deliver long-term shareholder
value. The Board therefore supports and is
committed to the principles of corporate
governance set out in the Code, which has
applied for the year under review from
1 January 2020. The Code is published by the
Financial Reporting Council and can be found
at www.frc.org.uk.
As a company listed on the main market of
the London Stock Exchange, Computacenter
is required to review its practices against
the Code’s provisions and report to its
shareholders on its compliance with them.
The Board confirms that the Company has
complied with the Code throughout the year
and anticipates remaining compliant for the
2021 reporting period.
Board composition
It is critical that the Board has the right
composition, so it can provide the best
possible leadership for the Group and
discharge its duties to shareholders. This
includes having the right balance of skills
and experience, ensuring that all of the
Directors have a good working knowledge
of the Group’s business, and retaining the
Board’s independence and objectivity.
Minnow Powell indicated to me that, after six
years of excellent service, he was minded to
step down from the Board during 2021,
following the release of the Company’s 2021
Interim Results, if the Company had found
a suitable successor by then. I would like to
thank Minnow for his time on the Board
where, as Audit Committee Chairman, he has
worked to lift the performance of the
Company in matters of compliance, financial
reporting and governance. He has also been
a valued Independent Non-Executive Director,
offering his wide-ranging, thoughtful
contributions to the performance and
strategy of the Company.
The Board is unanimous in its view that its
strength in depth will be maintained by the
appointment of Pauline Campbell and we are
very pleased to welcome her onto the Board
with effect from 16 August 2021.
Pauline is a recently retired
PricewaterhouseCoopers (‘PwC’) Audit
Partner who brings over 30 years of
experience in the profession. She has worked
internationally across a broad range of
sectors including IT services and support
services amongst many others. Pauline also
served on the Governance Board of the UK
firm including the Public Interest Body and
the equivalent body at PwC’s Global Network,
so brings a wealth of governance experience.
Pauline’s recent and relevant financial
experience within the audit profession,
complements the skills and backgrounds
of our other Board members and will enable
the Board to continue to navigate the
strengthening regulatory environment in
which the Company operates as it continues
to grow in complexity.
In accordance with the Company’s procedure
for new Directors, Pauline will receive a full
induction, which will be tailored to her
knowledge and experience. This will include
meetings with the Chairmen of the Board and
its Committees, the Group Chief Executive
Officer (CEO) and Group Finance Director (FD).
Given her intended appointment to the
Remuneration and Audit Committees, she will
also be provided with a detailed briefing on
executive remuneration from the Group’s
Chief People Officer and presentations from
the Group’s financial senior Management
team. Pauline will also be a member of the
Nomination Committee.
Biographies of each of the Directors are set
out on pages 80 and 81.
Strategy
The Board is collectively responsible for
leading the Group and promoting its success,
within a framework of appropriate controls,
which enable risk to be assessed and
effectively managed. It is also responsible
for implementing the business model set out
on pages 16 to 17, for ensuring that the Group
has the right strategy to drive stakeholder
value, and for providing appropriate support
and challenge to the Management. The Board
dedicates a day-long session each year to
receiving strategy-related presentations
from senior Management and discussing and
shaping the Group’s strategic direction with
Management. In addition to regular
discussions on the development of the
Group’s strategy, the Board receives an
in-depth topical presentation from
Management on a specific strategic initiative
at every Board meeting.
Board effectiveness
An internal evaluation of the Board and its
Committees took place during the year.
Further details of the process and the
findings can be found on pages 84 to 85.
After carefully considering its findings,
I am satisfied that the Board continues to
function effectively and that its current
constitution and range of skills are
appropriate for protecting and promoting
the long-term interests of the Group and
the Company’s shareholders.
Shareholder engagement
The Board remains committed to
communicating with the Company’s
shareholders and, where appropriate,
submitting its views for consultation and
feedback. Further detail regarding
engagement with shareholders can be
found on page 117.
Peter Ryan
Non-Executive Chairman
15 March 2021
I also remain satisfied that the Board’s
members, and in particular the Non-
Executive Directors, have sufficient time
to undertake their current Board and
Committee roles. I will continue to assess
these judgements to ensure they remain
the case.
In accordance with the 2018 Code, all of the
Directors will stand for re-election at the
2021 AGM.
Succession planning
The Board continues to focus at length on
succession planning, which remains
particularly important given the tenure of
the current Executive Directors. Prior to the
date of this report, the Board reviewed the
succession plans for both the Executive and
Non-Executive Directors. It also received
a presentation from the Group’s Chief
People Officer on how the Group manages
and develops talent immediately below
Board level.
Governance framework
The Board delegates a number of its
responsibilities to Committees, so it can
carry out its functions effectively. A diagram
of the Board governance structure is set out
below. As part of its ongoing review of the
Group’s governance procedures and
framework, the Board reviewed the terms
of reference for each of these Committees.
A number of the Group’s policies were also
reviewed and amended during the year.
The detail and format of information that
Management provides to the Board continues
to develop.
Board Committees
Board
Audit Committee
Nomination
Committee
Remuneration
Committee
Board visits
To help develop and update the Directors’
knowledge of the Group’s operations, the
Board regularly visits our offices overseas.
Unfortunately, due to COVID-19, the Board
was not able to visit any offices overseas
during the year. The Board held a virtual
meeting where it received a presentation
from the French Managing Director. This
focused on the COVID-19 impact on the
macroeconomic environment in Europe,
the integration plan for the BT Services
acquisition and key priorities for the French
business going forward to 2022.
Diversity
The Board recognises the benefits that
diverse skills, experience and points of view
can bring to an organisation, and how it may
assist the Board’s decision making and
effectiveness. Appointments to the Board
have been primarily based on merit and the
Nomination Committee has not therefore
previously set any measurable targets in this
area. The Committee has assessed this
approach during the year and reviewed the
composition of the Board and the tenure of
the Directors, against the background of
recent developments including the Sir John
Parker review on ethnic diversity and the
Hampton-Alexander review on gender
diversity. The Committee recognises that
improving the diversity of both the Board and
senior Management will further align both
bodies with the wider representation seen
within the Company’s workforce. Whilst the
search for any new Non-Executive Director
is conducted within this frame of reference,
the final selection of a candidate will always
be made on the individual merit of the
candidate. As at 31 December 2020, the
Board had two female Non-Executive
Directors, Ros Rivaz and Ljiljana Mitic,
representing 22.2 per cent of the total Board
membership. This is in line with the
representation as at 31 December 2019.
79
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Board of Directors
The Board
benefits from
the experience
and institutional
knowledge of
both the Executive
Directors, who
have each
accumulated
well over 30 years
of service with
the Company,
and the Founder
Non-Executive
Directors, who
formulated and
grew the culture
of the Company
from its inception.
Peter Ryan
Non-Executive Chairman
80
Peter Ryan
Non-Executive Chairman and Chairman
of the Nomination Committee
Mike Norris
Chief Executive Officer
Committee membership: A, N, R
Board member attendance: 8/8
Peter has, since 1980, had a successful
international career in technology
encompassing all dimensions of the industry
including software, services, systems
integration, outsourcing and infrastructure.
Over the last 10 years, Peter has held roles
such as Chief Sales Officer with Hewlett
Packard Enterprise, Chief Client Officer at
Logica plc and Executive Vice President,
Global Sales and Services with Sun
Microsystems Inc. Peter is also Chairman of
privately held Ocean Technology Group.
Board member attendance: 8/8
Mike 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.
Following appointments in senior roles, 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.
Philip Hulme
Founder Non-Executive Director
Tony Conophy
Group Finance Director
Board member attendance: 8/8
Board member attendance: 8/8
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 was
previously a Vice President and Director
of the Boston Consulting Group.
Tony has been a member of the Chartered
Institute of 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.
Peter Ogden
Founder Non-Executive Director
Board member attendance: 8/8
Peter founded Computacenter with Philip
Hulme in 1981 and was Chairman of the
Company until 1998, when he became a
Non-Executive Director. Prior to founding
Computacenter, he was a Managing Director
of Morgan Stanley and Co.
Minnow Powell
Non-Executive Director and Chairman
of the Audit Committee
Ros Rivaz
Senior Independent Non-Executive Director
and Chair of the Remuneration Committee
Committee membership: A, N, R
Board member attendance: 8/8
Committee membership: A, N, R
Board member attendance: 8/8
Minnow was a Non-Executive Director and
Chairman of the Audit Committee of Superdry
Plc from 2012 to 2019. He was a Director and
chaired the Audit Committee of Tui Travel Plc
from 2011 to 2014 and was a member of the
Supervisory Board of Tui AG from December
2014 to February 2016. Minnow spent
35 years with Deloitte where he became
a Partner in 1985. Minnow’s audit client
portfolio included companies within the
same sector, and with similar business
models, as Computacenter. He is a Chartered
Accountant and was a member of the
Auditing Practices Board for six years.
Ros was appointed as the Group’s Designated
Non-Executive Director for Workforce
Engagement in 2017. Ros is a Senior
Independent Non-Executive Director at
Victrex plc. Ros is Chair of the Nuclear
Decommissioning Authority and a Non-
Executive Director of the Ministry of Defence
– Defence Equipment and Support Board,
where she is a member of the Remuneration
and Nomination Committees and is a
Non-Executive Director at Luxembourg-
based Aperam SA. She was a Non-Executive
Director of ConvaTec plc, RPC Group plc, CEVA
Logistics AG, Rexam plc and Deputy Chair of
the Council of the University of Southampton
for 10 years. Ros was previously Chief
Operating Officer for Smith & Nephew plc and
held senior management positions in global
companies including Exxon, Diageo, ICI and
Tate & Lyle Group.
Dr. Ljiljana Mitic
Independent Non-Executive Director
Rene Haas
Independent Non-Executive Director
Committee membership: A, N, R
Board member attendance: 8/8
Committee membership: A, N, R
Board member attendance: 8/8
Ljiljana has more than 25 years’ experience
in the IT industry. She was Global Head of
financial services and a member of the
executive committee at Atos SE, following
its takeover of Siemens IT Solutions and
Services GmbH, where she headed the
worldwide banking and insurance sales
business. Ljiljana has also held senior roles at
Hewlett-Packard and WestLB AG. Since 2016,
she has focused on technology start-ups as
a Senior Partner of Impact51 AG. Ljiljana is a
non-executive director of Grenke AG, a global
financing partner for small and medium-
sized companies.
Rene is a US national. He has over 30 years’
experience in executive and general
management, marketing and sales. He is
currently a Group President of Arm Limited,
the world leader in semiconductor IP and
provider of IoT device and data management
platforms. Rene leads Arm’s Intellectual
Property Group and is an Executive
Committee Member. Prior to his current role,
Rene was, amongst other appointments,
Chief Commercial Officer and Executive Vice
President Sales and Marketing at Arm and
spent seven years as Vice President and
General Manager Computing Products at
NVIDIA Corporation.
Committee membership key
A – Audit Committee
N – Nomination Committee
R – Remuneration Committee
81
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 When assessing and monitoring the
Company’s culture, the Board benefits from
the experience and institutional knowledge
of both the Executive Directors, who have
each accumulated well over 30 years of
service with the Company, and the Founder
Non-Executive Directors, who formulated
and grew the culture of the Company from its
inception. Whilst the knowledge of these four
Board Members is invaluable in articulating
the culture that the Company strives for,
a number of other activities have been
conducted throughout the year, to support
the Board’s overall assessment of the
Company’s culture and the monitoring of
its development.
The Board, through the Audit Committee,
receives regular reports on any
whistleblowing events that would indicate
a breach of the Company’s culture, and
monitors the resolution of identified issues.
The CEO monitors the implementation of
various sales force pay plan initiatives,
to ensure that they enhance the behaviours
demonstrated by this key community and
that these behaviours remain aligned with
the Company’s culture and strategy. During
the due diligence process for the Company’s
acquisitions in 2020, the cultural fit of the
people in the acquired entities was one of the
Board’s key considerations. The cultural fit
was assessed as being close and the Board
will continue to monitor it, recognising it will
be one of the drivers, and measures, of the
acquisitions’ continued success.
LEADERSHIP
The role of the Board
The Board is responsible for the Group’s
management and performance, and for
providing effective leadership to it. There is
a schedule of Matters Reserved for the Board,
which includes considering and approving,
amongst other things, acquisitions, major
capital expenditure, Group strategy and
budgets, the Group’s Consolidated Financial
Statements and its dividend policy. This
schedule is reviewed annually as a standing
Board agenda item and it was updated
during 2020. It can be found on our website
at investors.computacenter.com.
Day-to-day management and operational
activities are delegated to the Group
Executive Committee including, amongst
others, the Executive Directors. Other
Board-level matters are delegated to the
Nomination, Audit and Remuneration
Committees, details of which can be found
on pages 86, 90 and 96 respectively. The
Terms of Reference for each Committee can
be obtained from our website, investors.
computacenter.com, or from the Company
Secretary, upon request. The composition
of each Committee as at 31 December 2020
appears on pages 86, 90 and 105, as do
reports from the Chairman of each
Committee setting out the primary
responsibilities of their respective
Committee and its main activities
during the year.
The Board plays a key role in discussing,
reviewing and approving the Group’s
Strategic Priorities. By reviewing the
business plans and budgets submitted by
the Executive Directors and senior
Management, it ensures that adequate
resources are in place to meet these aims.
The Board reviews the performance of the
Executive Directors and Group Executive
Management against targets relating to
these agreed objectives, including a monthly
review of the financial performance of each
of the Group’s Segments.
Corporate Governance
Report
82
Upon joining the Board, all Directors receive
a comprehensive induction programme
organised by the Company Secretary,
tailored to their specific background and
requirements. New Directors receive an
induction pack which contains information
on the Group’s business, its structure and
operations, Board procedures, corporate
governance matters and details regarding
Directors’ duties and responsibilities. All new
Directors are introduced to the Group’s
Executive Management team. New Directors
are also required to take advantage of
opportunities to meet major shareholders.
The Chairman regularly liaises with each
Director to discuss and agree their training
and development needs. The Board is
confident that all of its members have the
knowledge, ability and experience to perform
the functions required of a director of
a listed company.
Division of responsibilities
The roles of the Chairman and Chief
Executive Officer (CEO) are separate and
their responsibilities are clearly set out in
writing, reviewed annually and approved
by the Board. They are available for
inspection on the Company’s website
at investors.computacenter.com.
In summary, the Chairman’s role is to lead
and manage the Board, and to help facilitate
the Board’s discussion of the Group’s
strategy. The Chairman actively encourages
contributions from all Directors and is
responsible for ensuring constructive
interaction between the individual members
of the Board. The Chairman is also
responsible for setting the Board’s agenda
and ensuring that sufficient time is available
for discussion of all agenda items and, in
particular, strategic issues. The CEO is
responsible for the day-to-day management
of the Group’s operations and for the proper
execution of strategy, as set by the Board.
The Composition of the Board
The membership of the Board as at
31 December 2020 is set out on pages 80 to
81. On that date, the Board included seven
Non-Executive Directors and two Executive
Directors. The Directors’ attendance at Board
and Committee meetings is set out on pages
80, 81, 86, 90 and 105.
The Board has considered the independence
of each Director, taking into account the
guidance provided by the 2018 Code. The
Chairman, Peter Ryan, was considered by the
Board to meet the independence criteria set
out in the Code on appointment, and each of
Minnow Powell, Ros Rivaz, Ljiljana Mitic and
Rene Haas are considered by the Board to be
independent in their character and judgement.
Phillip Hulme and Peter Ogden, the Founder
Non-Executive Directors, are not considered
to be independent, having started the
Company in 1981 and remained on the Board
in either an Executive or Non-Executive
capacity since that time.
There is no dominant individual or group
of individuals on the Board influencing
its decision-making and the Board is
comfortable that each Director makes
a valuable contribution to the Board.
Appointments to, and development of,
the Board
The Nomination Committee leads the
process for Board appointments. Further
detail on the Committee’s role, membership
and work during the year is set out on pages
86 to 87.
Non-Executive Directors are appointed to
the Board for an initial three-year term, the
renewal of which is timed to co-terminate
at the close of an Annual General Meeting.
The Executive Directors are appointed for
a rolling 12-month term. The terms and
conditions of appointment of all Directors
are available for inspection at the Company’s
registered office and at each AGM.
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
2018 Code, all Directors should be subject to
election or re-election at the Company’s next
AGM on 20 May 2021. All Directors will then
be subject to election or re-election at each
AGM thereafter. If the shareholders do not
elect or re-elect a Director, or a Director is
retired from office under the Articles, the
appointment terminates immediately and
without compensation.
Senior Independent Director
Ros Rivaz is the Senior Independent Director.
She acts as a sounding board for the
Chairman and, where necessary, as an
intermediary between the Chairman and
other Directors. She is available to take
representations from shareholders who
do not want to raise their issue with the
Chairman. Ros also leads the annual
appraisal of the Chairman’s performance,
in consultation with the other Non-Executive
Directors and without the Chairman being
present. The feedback from this appraisal
is discussed at a subsequent Board meeting.
The Board’s key activities during the year
The Board held nine scheduled meetings
during the year, to deal with the standing
items on its agenda and matters arising,
including reviewing and discussing any
information provided to it by senior
Management. The Board views this as
sufficient to discharge its duties effectively.
The Chairman and Non-Executive Directors
also met twice during the year, without the
Executive Directors being present. In 2020,
the Board considered:
Regular items
• Terms of Reference for each of
its Committees;
• Annual and Interim Reports;
• dividend policy;
• reports from the Committee Chairmen
on the Committees’ key activities;
• Matters Reserved for the Board and
Delegated Class Transactions review;
• role of the Chairman, CEO and Senior
Independent Director;
• gender pay gap reporting;
• diversity and inclusion;
• the annual budget and three-year plan;
• the Viability Statement;
• employee and other stakeholder
engagement;
• the community and the environment
• the culture of the Group;
• cyber security;
• cash deposit strategy;
• Group insurance coverage;
• market abuse regulations;
• Management’s strategic planning
and execution;
• The performance of the Group and
Management; and
• Executive succession planning.
83
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 EFFECTIVENESS
Time commitment
The Non-Executive Directors’ letters of
appointment set out the expected time
commitment required to execute their
duties. Although the nature of the roles
makes it difficult to be specific about the
maximum time commitment, a commitment
of up to two days per month is expected,
including attendance at and preparations for
regular Board meetings. In certain
circumstances, for instance when the
Company is engaged in acquisitions,
restructuring or other corporate transactions,
there may be additional Board meetings and
Non-Executive Directors are expected to
attend these where possible.
There has been no increase in the
Chairman’s significant external
commitments during the year, which would
affect the time he has to fulfil his role. In light
of the internal Board evaluation completed
for 2020, the Board is satisfied that each
Director is able to allocate sufficient time
to the Company to discharge his or her
responsibilities effectively.
Provided the time commitment does not
conflict with the Director’s duties to the
Company, the Board may authorise the
Executive Directors to take Non-Executive
positions in other companies and
organisations, as this should broaden their
experience. The Board would not agree to
a full-time Executive Director taking on more
than one Non-Executive Directorship of
a FTSE 100 company or the Chairmanship
of such a company. No such positions have
been taken by the Executive Directors.
Information and support
All Directors receive appropriate
documentation in advance of each Board
and Committee meeting. This includes
detailed briefings on all matters, to enable
Directors to discharge their duties
effectively. Individual Directors can obtain
independent professional advice, at the
Company’s expense, where they believe it is
necessary to discharge their responsibilities.
The Company Secretary ensures that the
Board Committees are provided with
sufficient resources to undertake their duties.
Where Directors have concerns which cannot
be resolved, whether about the running of
the Company or a proposed action, their
concerns will be recorded in the Board
minutes. On resignation, a Non-Executive
Director would be required to provide a
written statement to the Chairman, for
circulation to the Board, if they had any
such concerns.
The Company Secretary advises the Board
on all corporate governance matters and
advises the Chairman to ensure that all
Board procedures are followed. All Directors
have access to the advice and services of the
Company Secretary. The appointment or
removal of the Company Secretary requires
Board approval.
Evaluation
In accordance with the requirements of the
2018 Code, the Board carries out a review of
the effectiveness of its performance and
that of its Committees and Directors each
year. Between December 2020 and January
2021, the Company Secretary carried out an
internal evaluation of the Board and each of
its Committees. The review looked at key
areas of responsibility including strategy,
decision making, composition and dynamics,
leadership, talent development and
succession planning. The Board also
reviewed the balance of skills and diversity.
Corporate Governance Report
continued
Additional items
• COVID-19 impacts and mitigations;
• Pivot and BT acquisitions;
• other acquisition and disposal
opportunities;
• integration of recent acquisitions;
• IT project updates;
• corporate governance changes;
• General Data Protection Regulation;
• significant new Managed Services bids;
• significant in-life Managed Services
contract reviews; and
• planning for the United Kingdom exiting
the European Union.
Insurance and indemnities
The Company arranges insurance cover in
respect of legal action against the Directors
and, to the extent allowed by legislation, has
issued an indemnity to each Director against
claims brought by third parties.
84
The review took the form of a series of
tailored online questionnaires, covering the
Board and each Committee. The Chairmen of
the Board and the Committees were able to
review and shape both the questionnaires
and the list of non-Board respondents,
to make best use of the process. The
questionnaire responses were collated and
analysed before inclusion in a report to the
Board. In February 2021, the Company
Secretary presented this report to the Board
and led a discussion of the key findings and
the implications for the Board’s development.
The evaluation found there to be open and
constructive dialogue between Board
members and a sound and challenging
relationship between Non-Executive and
Executive Directors. The Board is satisfied
that there is a clearly articulated strategy
and a good process for managing risk.
An action plan, that builds on findings from
both this evaluation, and measures taken as
a result of the previous evaluation, has
therefore been drawn up, against which
progress will be monitored regularly.
The Board is required by the Code to conduct
an externally facilitated evaluation every
three years. This was last carried out
between December 2019 and January 2020.
The Board anticipates that its next externally
facilitated evaluation will be conducted over
the period December 2022 to January 2023.
The Senior Independent Director, Ros Rivaz,
reviewed the Chairman’s performance with
input from the other Non-Executive
Directors, and the feedback was discussed
formally at the following Board meeting.
85
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Nomination Committee
Report
With the
appointment of
Pauline Campbell
it is expected
that the Board
will be compliant
with the provisions
of the Hampton-
Alexander
review with one-
third female
representation
on the Board.
Peter Ryan
Chairman of the Nomination Committee
86
Current members
1. Peter Ryan (Chairman)
2. Rene Haas
3. Ljiljana Mitic
4. Minnow Powell
5. Ros Rivaz
Membership and attendance
The members of the Nomination Committee
are the independent Non-Executive Directors
and the Chairman of the Board. Further detail
on the Committee’s membership and
attendance at its meetings can be found
directly above. However, the Committee
seeks input from all the Directors and
involves the Board when performing its key
responsibilities.
The Company Secretary is the secretary to
the Committee.
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, and ensuring
that any such process is formal and
transparent;
• ensuring that the Board and its
Committees have the right balance of
skills, knowledge, experience and diversity
to enable each to discharge its duties and
responsibilities effectively;
• reviewing whether to recommend
a Director for re-election at the
Company’s AGM;
• reviewing whether each Director has
sufficient time to discharge his or her duty
to the Company and its shareholders;
• succession planning for the Board and
Senior Executives of the Group; and
• reviewing the membership of the Board’s
Committees.
The Committee’s full terms of reference are
available on the Company’s website at
investors.computacenter.com.
Role
Non-Executive Chairman
of the Board
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Attendance
record
2/2
2/2
2/2
2/2
2/2
Main activities of the Committee in 2020
The Nomination Committee met twice during
2020 and its work included the following:
Succession planning
Developing future leaders and successor
candidates is central to maintaining a
culture that builds long-term customer
relationships. Succession is also one of the
Company’s principal risks, as disclosed on
pages 71 to 76 of this Annual Report and
Accounts. The Committee therefore focuses
on effective succession planning, to ensure
Computacenter’s future prosperity. Whilst
internal talent development is primarily
Management’s responsibility, the Committee
has reviewed Management’s pipeline of
executive talent, both for emergency use
and its long-term potential.
In response to the 2019 external evaluation
of the Committee, the Committee has
extended its oversight of succession
planning beneath the Executive level. The
Committee has therefore reviewed the
candidate pools and development plans that
support the Executive Directors in planning
succession for the Group Executive and
fostering talent growth and accumulation
at this level.
The Committee reviews the Board’s
structure, including the composition of the
Directors’ skills and diversity. As part of
this process, the Chairman has regular
conversations with Board members to
assess how long they wish to remain on the
Board and their career plans. This ensures
the Board will be able to respond quickly
when a Director decides to stand down,
to avoid an adverse impact on Board
composition and to enable continuous
compliance with Provision 11 of the Code.
As at 31 December 2020, the Computacenter
Board had two female Non-Executive
Directors, Ros Rivaz and Ljiljana Mitic,
representing 22.2 per cent of the total Board
membership, and no Directors that identified
as being from an ethnic minority background.
With the appointment of Pauline on 16 August
2021 and the retirement of Minnow on
30 September 2021, it is expected that the
Board will be compliant with the provisions
of the Hampton-Alexander review with
one-third female representation on the
Board prior to 31 December 2021.
Female representation in the first layer of
management below Board level, including
the Company Secretary, has remained
unchanged in absolute terms but risen from
15.4 per cent at 31 December 2019 (two out
of 13) to 16.7 per cent as at 31 December
2020 (two out of 12). The number of women
directly reporting to the first layer of
management below Board level, including
the Company Secretary, has risen in absolute
numbers from 24 out of 91 (26.3 per cent) in
2019 to 31 out of 121 (25.6 per cent) in 2020.
The percentage decline over this period was
due to the acquisitions, which increased the
overall size of this management layer but
contained a lower proportion of female
representation than the existing Group.
Peter Ryan
Chairman of the Nomination Committee
15 March 2021
Performance of the Committee
During the year, the Company Secretary
facilitated an internal review of the
Committee, according to its Terms of
Reference. The results have been analysed
and, in response to some of the observations
made, the Committee will look to continue to
enhance the Committee’s understanding of
succession planning through the wider
management structure beneath the Group
Executive Management team. This will
include ensuring that appropriate steps are
taken to develop internal candidates for CEO
and FD succession. The Committee will
continue to ensure that diversity and
inclusion remain a key input when considering
these plans. The Committee will also
continue to improve its own succession
processes and policies for Board and
Committee appointments. Further detail
on how the Committee evaluation was
conducted is disclosed on pages 84 to 85.
Election and re-election of Directors
The Committee reviewed in detail the
performance of the Directors who are
standing for re-election at the Company’s
2021 AGM. The results of the Company’s
most recent Board evaluation process
were considered, alongside each
individual’s contribution.
Following this review the Committee
recommended that each of the Directors on
the Board as at 31 December 2020 be put
forward for re-election at the 2021 AGM.
Diversity
As discussed in the Chairman’s Governance
Overview, the Board recognises the benefits
of diversity and the Committee has reviewed
the composition of the Board and the tenure
of its members, against the background
o1ecent developments including the
Sir John Parker review on ethnic diversity
and the Hampton-Alexander review on
gender diversity.
Board appointment
Minnow Powell indicated to the Chairman
that after more than six years of service,
he was minded to step down from the Board
following the release of the Company’s 2021
Interim Results, if the Company had found
a suitable successor by then.
The Nomination Committee appointed
Russell Reynolds to search for an
Independent Non-Executive Director to fill
the upcoming vacancy. Russell Reynolds is
a global leader in assessment, recruitment
and succession planning for boards of
Directors. It has no connection to the
Company other than to provide this service
and was appointed due to prior positive
experiences of the firm, during recent
Non-Executive Director appointments.
In conjunction with the Nomination
Committee, Russell Reynolds developed a
candidate specification that highlighted the
necessary areas of competence to join the
Board. The most important of these included
a strong track record of recent and relevant
financial experience, preferably within
Computacenter’s sector and including either
prior service as an audit committee chair or
as an audit partner within a large international
auditing practice. The candidate was also
required to demonstrate the communication
skills and personal characteristics to ensure
a cultural fit for the Company.
Having identified a suitable individual from a
shortlist of candidates, the Board confirmed
the appointment of Pauline Campbell at
a Board meeting held on 9 March 2021. The
Chairman noted that Pauline’s recent and
relevant financial experience, as a recently
retired PwC Audit Partner who brings over
30 years of experience in the profession,
complemented the skills and background
of the other Board members.
Prior to formally recommending her
appointment to the Board, the Committee
considered and agreed that Pauline would
be independent in character and judgement,
as defined under Provision 10 of the 2018 UK
Corporate Governance Code. Pauline was
also appointed as Chair-elect of the Audit
Committee and a member of the
Remuneration and Nomination Committees.
It is intended that Pauline will succeed
Minnow as Audit Committee Chair following
Minnow’s retirement from the Board on
30 September 2021.
87
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Nomination Committee Report
continued
ACCOUNTABILITY
Financial and business reporting
The Directors are required to include the
following in this report, under the Code.
Please see:
• page 70 for the Board’s statement on the
Annual Report and Accounts being fair,
balanced and understandable and
providing the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy;
• page 69 for the statement on the status
of the Company and the Group as a
Going Concern;
• the Strategic Report from the inside front
cover to page 76, for an explanation of the
Group’s business model and the strategy
for delivering the Group’s objectives; and
• the Risk Management section below for
confirmation that the Directors have
carried out a robust assessment of the
principal risks facing the Group, including
those that would threaten its business
model, future performance, solvency
or liquidity.
Risk management
The Board has carried out a robust
assessment of the principal risks facing the
Group, including those that threaten its
business model, future performance,
solvency or liquidity. Please refer to pages 71
to 76 for further information on the Group’s
Principal Risks and Uncertainties, including
how they are being managed and mitigated.
Executive and senior Management have
primary responsibility for identifying and
managing the risks the Group faces.
A comprehensive risk management
programme has been developed and is
monitored by the Group Risk Committee,
which is chaired by the Group Finance
Director and whose members include the
Group Head of Internal Audit and Risk and
senior operational managers from across
the Group. Throughout the year each meeting
has been attended by at least one
Independent Non-Executive Director as a
guest of the Chairman of the Committee.
The Board sets the Group’s risk appetite and,
through the Audit Committee, reviews the
operation and effectiveness of the Group’s
risk management activities. The Board
periodically reviews the Group’s strategic
risks and its key mitigation plans and,
through the Audit Committee, receives
regular reports from the Group Risk
Committee. Through the Group Risk
Committee, the Board receives updates from
the Group Planning for the United Kingdom
Exiting the European Union Committee.
88
Prior to the agreement of a trade deal with
the EU, these updates covered the Group’s
response to the risk of the UK failing to agree
a trade deal before the transition period
ended on 31 December 2020. Since the trade
deal was agreed, the Committee provides
updates on the Group’s ability to export to
and import from the EU, keeping abreast of
developing practice and any issues that
may arise.
As a sales-led and customer-focused
organisation, effective risk management
processes are vital to the Group’s continued
success. Therefore, the Board continues to
apply a robust risk management and
governance model to provide assurance
over the principal risks that might affect the
achievement of the Group’s Strategic
Priorities. These Strategic Priorities are
focused on improving the Services business
and maintaining the longevity of the Group’s
customer relationships, which in turn rely
heavily on the contribution made by the
Group’s customer-facing staff and those
involved in innovation and design. The
Group’s risk management approach
recognises this, ensuring that risks are
identified and mitigated at the appropriate
level, leaving individuals empowered to make
their vital contributions.
The Group’s model uses the well-defined
three lines of defence methodology:
• The first line of defence consists of
operational management, who own the
risks and apply the internal controls
necessary for managing risks day-to-day.
• The second line of defence comprises
functions such as internal compliance and
assurance, which offer guidance,
direction, oversight and challenge at the
appropriate level.
• The third line of defence, provided by Group
Internal Audit, gives an independent view of
the effectiveness of the risk management
and internal control processes. It reports
to the Audit Committee to ensure
independence from Management.
The Board reviews the operational
effectiveness of the risk management model
by directing the reinforcement of the
processes that underpin it and by making
sure it is embedded across all levels of the
organisation. For example:
• The Schedule of Matters Reserved for the
Board ensures that the Directors properly
address all significant factors affecting
Group strategy, structure, financing
and contracts.
• The Board and Executive Committee
consider the principal risks, which are
the barriers to achieving the Board’s
Strategic Priorities.
• The Group Risk Committee challenges
the effectiveness of the principal
risk mitigations.
• The Group Risk Committee considers each
principal risk in-depth at least once a year,
by receiving reports from the risk owner.
• The Group Risk Committee’s deliberations,
along with the current status of each
principal risk, are reported to the Audit
Committee and the Board.
• The principal risk list is reviewed once a
year and leverages a bottom-up annual
operational risk review, where operational
management identify their everyday risks.
• The Group Compliance Steering Committee
assesses observance of laws and
regulations, and reports to the Group
Risk Committee.
• The bid governance process reviews bids
or major changes to existing contracts,
and aligns with the Group’s risk appetite
and risk management process.
• The Group Planning for the United Kingdom
Exiting the European Union Committee
assesses the latest position, as described
above, and identifies mitigating activities
for the Group, to reduce any short-term
disruption to its activities.
The model and process comply fully with the
UK Corporate Governance Code and the
Financial Reporting Council’s Guidance on
risk management, internal control and
related financial and business reporting.
There were several enhancements to the
risk framework and processes over the last
year, including:
• Changes to the method in which risk
owners report to the quarterly meetings
of the Group Risk Committee, to ensure
they consider risk appetite, non-financial
risks and potential risk triggers.
• While all principal risks are reviewed at
least annually by the Group Risk
Committee, higher-level risks are
considered more frequently. Contract
risks, cyber risk and data privacy are
reviewed bi-annually while acquisition
integration risk is considered at
each meeting.
• The Compliance Steering Committee, which
reports to the Group Risk Committee, has
rolled-out a Compliance Management
System during 2020 to assess risk and
compliance more thoroughly.
• We continue to monitor the effects of the
COVID-19 pandemic for its potential impact
on our business, specifically in relation to
the health and wellbeing of our employees,
our global supply chain and in changing
customer requirements.
The Group has detailed business interruption
contingency plans for all key sites. These are
regularly tested, in accordance with an
agreed schedule.
Internal control
The Board has overall responsibility for
maintaining and reviewing the Group’s
systems of internal control, and ensuring
that the controls are robust and enable 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 information used
in the business and for publication is reliable.
This system of control is designed to reduce
the risk of failure to achieve business
objectives to a level consistent with the
Board’s risk appetite, rather than eliminate
that risk, and can provide reasonable, but
not absolute, assurance against material
misstatement or loss.
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. In the Board’s opinion, the Group
complied with the Code’s internal control
requirements throughout the year. Where
material weaknesses or opportunities for
improvement are identified, changes are
implemented and monitored.
All systems of internal control are designed
to identify continuously, evaluate and
manage significant risks faced by the Group.
The key elements of the Group’s controls are
detailed below.
Responsibilities and authority structure
As discussed above, the Board has overall
responsibility for making strategic decisions.
There is a written schedule of Matters
Reserved for the Board.
The Group Executive Committee meets
formally on a quarterly basis and, more
informally, on a fortnightly basis, to discuss
day-to-day operational matters. With the
Group Operating Model in place across all of
the Group’s main operating entities, ultimate
authority and responsibility for operational
governance sits at Group level.
The Group operates defined authorisation
and approval processes throughout its
operations. Access controls continue to
improve, where processes have been
automated to secure data. The Group has
developed management information
systems to identify risks and enable the
effectiveness of the systems of internal
control to be assessed. Linking employee
incentives to customer satisfaction and
profitability reinforces accountability
and encourages further scrutiny of costs
and revenues.
Proposals for capital expenditure are
reviewed and authorised, based on the
Group’s procedures and documented
authority levels. The cases for all investment
projects are reviewed and approved at
divisional level. Major investment projects are
subject to Board approval, and Board input
and approval is required for all merger and
acquisition proposals.
Planning and reporting processes
Each year, senior Management prepares or
updates the three-year strategic plan, which
the Board then reviews. The comprehensive
annual budgeting process is subject to Board
approval. Performance is monitored through
a rigorous and detailed financial and
management reporting system, through
which monthly results are reviewed against
budgets, agreed targets and, where
appropriate, data for past periods. The results
and explanations for variances are regularly
reported to the Board and appropriate action
is taken where variances arise.
Management and specialists within the
Finance Department are responsible for
ensuring that the Group maintains
appropriate financial records and processes.
This ensures that financial information is
relevant and reliable, meets applicable laws
and regulations, and is distributed internally
and externally in a timely manner.
Management reviews the Consolidated
Financial Statements, to ensure that the
Group’s financial position and results are
appropriately reflected. The Audit Committee
reviews all financial information that the
Group publishes.
Centralised treasury function
The Board has established and regularly
reviews key treasury policies, which cover
matters such as counterparty exposure,
borrowing arrangements and foreign exchange
exposure management. The Group Treasury
Function manages liquidity and borrowing
facilities for customer-specific requirements,
ongoing capital expenditure and working
capital. The Group Treasury Function reports
to the Group Finance Director, with regular
reporting to the Audit Committee.
The Group Treasury Committee enhances
Management oversight. It is chaired by the
Group Finance Director and also comprises
the Group Financial Controller, the Group
Head of Financial Reporting and the Group
Head of Tax and Treasury. It is responsible
for the ongoing review of treasury policy and
strategy, and for recommending any policy
changes for Board approval. The Committee
approves, on an ad hoc basis, any treasury
activities which are not covered by existing
policies or which are Matters Reserved for
the Board, and also monitors hedging
activities for effectiveness.
Quality and integrity of employees
The Group’s rigorous recruitment procedures
ensure that new employees are of a suitable
calibre. Management continuously monitors
training requirements and ongoing
appraisals ensure that required standards
are maintained across the Group. Resource
requirements are identified by managers
and reviewed by senior Management.
Compliance policies
The Group has a number of compliance
policies, including those relating to the
General Data Protection Regulation, Business
Ethics and Anti-bribery and Corruption. Any
breach of these policies by an employee is
a disciplinary matter and is dealt with
accordingly. The internal control regime is
supported by a whistleblowing function, which
is now operated by an independent third party.
The Compliance Steering Committee
supervises compliance-related activity and
issues across the Group and supports the
Group Risk Committee in that regard.
Audit Committee and the auditor
For further information on the Company’s
compliance with the Code provisions relating
to the Audit Committee, Group auditor and
Internal Audit, please refer to the Audit
Committee report on pages 90 to 95.
89
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Audit Committee Report
The Committee,
as a whole, has
competence
relevant to the
sector in which the
Company operates.
Minnow Powell
Chairman of the Audit Committee
90
Current members
1. Minnow Powell (Chairman)
4. Rene Haas
3. Ljiljana Mitic
2. Ros Rivaz
Role
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Attendance
record
4/4
3/4*
4/4
4/4
*
Rene was unable to travel from the USA to attend the meeting of the Audit Committee on the morning of 14 May 2020 due to
COVID-19 travel restrictions, and could not join by video conference due to incompatible time zones with a suitable alternative
date unable to be found. Rene had a briefing call with the Chairman prior to the meeting to discuss the agenda and papers
ensuring that his views were able to be considered.
Composition of the Committee
As at 31 December 2020, the Audit Committee
(the ‘Committee’) comprised the four
Independent Non-Executive Directors. All
members are considered to be appropriately
qualified and experienced to fulfil their role
and allow the Committee to perform its
duties effectively. For the purposes of Code
provision 24, one member of the Committee,
Minnow Powell, is considered to have recent
and relevant financial experience. The
Committee notes the requirements of the
Code and confirms that, having considered
the requirements against feedback provided
through the Board and Committee
effectiveness review, the Committee, as
a whole, has competence relevant to the
sector in which the Company operates.
Further details of specific relevant
experience can be found in the Directors’
biographies on pages 80 to 81.
Meetings of the Committee
The Committee met four times during 2020.
Meetings are attended routinely by the
Chairman of the Board, Group Finance
Director, Group Head of Financial Reporting,
Group Head of Internal Audit & Risk
Management and the external auditor. The
Company Secretary acts as Secretary to the
Committee. The meetings cover a standing
list of agenda items, which is based on the
Committee’s Terms of Reference, and
consider additional matters when the
Committee deems it necessary.
In addition to the Committee meetings, I also
met privately on occasion with members of
Management during the year, to discuss the
risks and challenges faced by the business as
well as accounting and reporting matters and,
importantly, how these are being addressed.
On two occasions during the year, the
Committee met separately with the external
auditor and the Group Head of Internal Audit
& Risk Management, without Management
present. From time to time, I also attend
meetings of the Group Risk Committee.
Prior to each meeting of the Committee,
I meet separately with those presenting
papers to the Committee, to ensure the
papers are of sufficient quality and rigour.
I am satisfied that the flow of information to
the Committee is appropriate and provided
in good time, to allow members to review
matters due for consideration at each
Committee meeting. I am also satisfied that
meetings were scheduled to allow adequate
time to enable full and informed debate.
Principal responsibilities of the Committee
The Committee’s main responsibilities during
the year, as set out in the Code, were to:
• monitor the integrity of the Company’s
Financial Statements and any formal
announcements relating to the Company’s
financial performance, and to review
significant financial reporting judgements
contained in them;
• provide advice (where requested by the
Board) on whether the Annual Report and
Accounts, taken as a whole, is fair,
balanced and understandable, and
provides the information necessary for
shareholders to assess the Company’s
position and performance, business
model and strategy;
• review the Company’s internal financial
controls and internal control and risk
management systems;
• monitor and review the effectiveness
of the Company’s Internal Audit function,
including approving the internal audit plan;
• make recommendations to the Board
about the appointment, reappointment
and removal of the external auditor,
and, where necessary, conduct the
tender process;
• approve the external auditor’s
remuneration and terms of engagement;
• review and monitor the external auditor’s
independence and objectivity;
• review the effectiveness of the external
audit process, taking into consideration
relevant UK professional and regulatory
requirements;
• develop and implement policy on engaging
the external auditor to supply non-audit
services, ensure there is prior approval of
non-audit services, consider the impact
this may have on independence, take into
account the relevant regulations and
ethical guidance in this regard, and report
to the Board on any improvement or action
required; and
• report to the Board on how it has
discharged its responsibilities.
Immediately following each Committee
meeting, I report to the Board on the
Committee’s activities and how it is
discharging its responsibilities as set out
in its Terms of Reference, which can be
found on the Company’s website at
investors.computacenter.com.
Activities of the Committee
The Committee’s activities during the year,
which are based on its Terms of Reference,
are set out below:
Key judgements and current financial
reporting standards
The Committee reviewed the integrity of the
Group’s Consolidated Financial Statements
and, in doing so, considered the following key
judgements. In reviewing these matters, the
Committee also took account of the views of
the external auditor, KPMG LLP.
Professional Services and Managed
Services contract accounting
The Committee continued to focus on
Services contract accounting during the
year. It received an update at each meeting
from Management on a number of contracts
across the Group’s major geographies.
These contracts were highlighted due to
performance being lower than anticipated at
the bid stage or because there were complex
revenue recognition elements to the
contract. In addition to reviewing the
assumptions at a point in time, the
Committee reviewed when information
underpinning the judgements changed and
the reasons for the change. The Committee
noted that the number of difficult contracts
which were under review declined during
the year.
The Committee remains satisfied with the
revenue recognition accounting judgements
but will continue to monitor the performance
of difficult contracts, in part to ensure
that Management continues to address
material lessons learnt from the execution
of these contracts.
Technology Sourcing revenue recognition
and ‘bill and hold’ cut-off procedures
Given the level of sales around year end,
the Audit Committee supported the auditor’s
approach to increasing its testing of
Technology Sourcing revenue cut-off,
particularly in regard to ‘bill and hold’
arrangements where customers purchase
inventory that remains in our Integration
Centers following revenue recognition. We
encouraged Management to continue to
review and improve ‘bill and hold’ procedures.
The Committee was pleased to note that no
significant errors were found as a result of
the auditor’s work in this area at year end.
Acquisition accounting
During 2020, the Group acquired Pivot, a
large Technology Sourcing reseller in the USA
and Canada, and a portion of the BT Services
French business. The Committee reviewed
the acquisition accounting judgements,
including the valuation of acquired intangible
assets, and the differences between the
provisional fair values and the book values
at acquisition.
During 2019, the Group acquired PathWorks
GmbH (‘PathWorks’), a small Technology
Sourcing reseller in Switzerland, and
reacquired RDC in the UK, a former subsidiary
of the Group which was sold in February 2015.
The initial accounting for the acquisitions
was only determined provisionally at the
end of the 2019 reporting period and the
Committee reviewed the final position close
to the anniversary of the acquisition. The
accounting for the acquisitions is now
complete. There were no material changes
to the fair values or the book values at
acquisition for either entity.
Valuation of acquired intangible assets
An independent accounting firm produced
a report on the valuation of intangible assets
within Pivot. The Committee considered the
resultant valuation and Management’s
associated review. The Committee
considered the intangible assets identified
and the potential assets disregarded for
valuation. The Committee also reviewed the
valuation methodologies used for allocating
the purchase price and the valuation
outcomes that appropriately valued the
customer relationships and order backlog,
leaving an indicative residual goodwill of less
than 50 per cent of the enterprise value.
The Committee noted the principal reason
for the acquisition was to acquire a further
Technology Sourcing business, giving the
Group a larger base from which to grow in
the US, rather than building such a business
from scratch and generating the vendor
accreditations, customers and sales team
required. The Committee regarded the
intangible assets valuation for customer
relationships acquired as consistent with the
initial information provided to the Committee
pre-acquisition, which considered the
number of significant long-term customers
within Pivot as one of the value drivers of the
potential acquisition. The Committee also
regarded the intangibles to which no values
should be attributed as appropriate,
including the value of the workforce.
An independent accounting firm produced a
report on the valuation of intangible assets
within BT Services France. The Committee
considered the report and Management’s
associated review. The Committee
considered the intangible assets identified
and the potential assets disregarded for
valuation. The Committee also reviewed the
valuation methodologies used for allocating
the purchase price and the valuation
outcomes that appropriately valued the
customer relationships for maintenance
customers. The Committee considered that
the limited value of intangible assets
identified was consistent with its
understanding of the basis on which the
Company made this investment, which was
to broaden the Group’s Managed Services
offering in France, particularly within the
network and infrastructure lines of business.
The Committee noted the difficult recent
history of the business and the terms of the
transaction, which left material amounts of
cash within the business for Management to
use to bring the business to an acceptable
level of profitability, and which resulted in
a material exceptional gain on acquisition
recognised in the Consolidated Income
Statement. The Committee concluded that
Management’s view was appropriate.
Review of Accounts by the Financial
Reporting Council
The Company received a letter from the
Financial Reporting Council requesting
further information and clarification of the
disclosures regarding the range of potential
outcomes in relation to contract provisions,
as contained within note 3.1.1 of the 2019
Annual Report and Accounts. On reflection,
and prompted by the letter, the Company
does not now consider that the outcomes of
any of the ‘difficult’ contracts identified and
provided for as at 31 December 2019
contained assumptions that were
sufficiently sensitive to affect the provision
materially. Accordingly, we have now
concluded that the ‘difficult’ contract
provisions need not have been included as a
critical estimate, as defined under IAS 1.125
as a ‘major source of estimation uncertainty’,
in the 2019 Annual Report and Accounts but
arose from a continuation of the disclosure
made in earlier years.
We acknowledge that the FRC’s review was
based solely on the 2019 Annual Report
and Accounts and did not benefit from
detailed knowledge of the business or
an understanding of the underlying
transactions entered into, although it was
conducted by staff who understand the
relevant legal and accounting framework.
We note that the matter was concluded
quickly through a limited exchange of
correspondence and that, alongside several
specific suggested areas for improvement
91
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Audit Committee Report
continued
from which the 2020 Annual Report and
Accounts now benefits, a specific disclosure
change has been made in the year to
31 December 2020 to remove ‘difficult’
contract provisions from being a critical
estimate, as these are no longer considered
such by Management.
Risk of impairment of FusionStorm goodwill
and acquired intangible assets
The Committee considered Management’s
review of the value of goodwill and acquired
intangibles in the FusionStorm cash
generating unit (‘CGU’). This review assessed
factors which could affect the recoverability
of these assets and whether they could give
rise to an impairment. Management’s review
noted the inherent uncertainty involved in
forecasting and discounting future cash
flows, which are the basis of the assessment
of the value-in-use.
The Committee reviewed Management’s
assumptions, which are based on the Board’s
approved budget for 2021 and the Plan for
2022 and 2023, noting that FusionStorm
would be integrated with Pivot to form a new
CGU being Computacenter USA. This included:
• assessing the discount rates used in the
cash flow forecasts;
• referencing the discount rates used by
comparable companies;
• comparing the projected growth rates to
externally derived data; and
• reviewing sensitivity analysis on the
assumptions noted above.
The Committee also reviewed the adequacy
of the Group’s disclosures in respect of
goodwill, including the sensitivity of the
outcome of the impairment assessment to
changes in key assumptions, and the
disclosure of key estimates and judgements
related to the carrying amount. The
Committee considered that the carrying
value of the goodwill and acquired intangible
assets remains appropriate.
Segmental information
As reported in the 2020 Interim Report, in the
first half of the year Management reviewed
the way Segmental performance is reported
to the Board and the Chief Executive Officer,
who is the Group’s Chief Operating Decision
Maker (‘CODM’). This followed an analysis of
where the results of certain Managed
Services contracts were reported within its
operating Segments. As a result of this
analysis, the Committee endorsed a revised
segmental reporting structure, which the
Board adopted. The Committee reviewed the
analysis used to identify the new Segments,
in accordance with IFRS 8 Operating
Segments, and noted that the rationale
appeared appropriate for:
92
• reflecting the transfer of operational
responsibility for a significant European
customer from the German business to
the French business; and
• aligning the reporting of Managed Services
work, performed by Computacenter USA
on behalf of other Computacenter entities
for several key European contracts, with
practices across the Group, by reallocating
these revenues from the USA Segment to
the UK, German, French and International
Segments, which are responsible for the
customer contracts.
The Committee was satisfied that the new
Segmental reporting structure was the basis
on which internal reports are to be provided
to the Chief Executive Officer, as the CODM,
for assessing performance and determining
the allocation of resources within the Group.
The Committee noted that the change in
segmental reporting has no impact on
reported Group numbers and, to enable
comparisons with prior period performance,
it reviewed the historical segmental
information for the periods ended 30 June
2019 and 31 December 2019, which were
restated in accordance with the revised
segmental reporting structure.
Exceptional and other adjusting items
The Committee considered the nature and
quantum of items disclosed as exceptional
or as other adjusting items outside of
adjusted1 profit before tax in the Group’s
2020 Annual Report and Accounts. The
Committee noted an exceptional gain during
the year of £14.0 million, directly relating
to the acquisition of BT Services France.
The Committee noted that Management
continued to exclude the amortisation of
acquired intangible assets, and the tax
effect thereon, in calculating adjusted1
results and that this charge had materially
increased with the acquisition of
FusionStorm and Pivot. The Committee
agreed with Management’s view that
amortisation of intangible assets is
non-cash and is significantly affected by the
timing and size of acquisitions, which affects
understanding of the Group and segmental
operating results.
The Committee also considered the
presentation of adjusted1 profit in the first
half of the Annual Report and Accounts, after
taking account of the European Securities
and Markets Authority Guidelines on
Alternative Performance Measures, which
promote the usefulness and transparency
of such measures. The Committee remains
satisfied with the reconciliation between
statutory and adjusted1 measures that the
Group has presented since the 2015 Interim
Report, and the level of disclosure which
explains both the differences between these
measures and the reasons for the
differences. The Committee concluded that
the presentation of adjusted1 profit provided
clarity on performance and had sufficient
equal prominence with statutory profit.
Going concern basis for the Consolidated
Financial Statements
The Committee provides input to the Board’s
assessment of whether it is appropriate for
the Group to adopt the going concern basis
in preparing Consolidated Financial
Statements, at both the half year and full
year. To do so, the Committee considered the
Group’s financial plans and its liquidity,
including its cash position and committed
bank facilities. It also considered the Group’s
financing requirements in the context of
available committed facilities, including one
of £60 million that was renewed for a further
three years and was not drawn down during
the year, and reviewed Management’s
forecasts concerning trading performance,
which had been discussed and approved at
the 10 December 2020 Board meeting. The
Committee reviewed the extended Going
Concern disclosures included within the
‘basis of preparation’ note to the Financial
Statements in the Annual Report & Accounts
and the supporting models that included
sensitivity analyses that model a severe but
plausible downside from a continued market
downturn scenario for some of our
customers whose businesses have been
affected by COVID-19 and a similar downturn
occurring for the remainder of our
customer base.
The Committee also noted the Code
requirement for the Directors to state
whether they consider it appropriate to
adopt the going concern basis of accounting
for a period of at least 12 months from the
date of approval of the Group’s 2020
Consolidated Financial Statements. Following
its considerations, the Committee was
satisfied that the going concern basis of
preparation continues to be appropriate and
recommended its adoption to the Board.
The statement and explanation from the
Directors can be found within the Strategic
Report on page 69 and the Basis of
Preparation with the Notes to the
Consolidated Financial Statements on
page 138.
Viability Statement
The Code requires the Directors to explain in
the Annual Report and Accounts how they
have assessed the prospects of the Group,
taking into account the Group’s current
position and principal risks, over what period
they have done so and why they consider
that period to be appropriate. The Directors
are further required to state whether they
have a reasonable expectation that the
Group will be able to continue in operation
and meet its liabilities as they fall due over
the assessment period they have chosen,
drawing attention to any qualifications or
assumptions as necessary. This requirement
is known as a Viability Statement.
Following its review of Management’s
proposals, the Committee continues to
recommend to the Board that it sets the
period of assessment for the Viability
Statement at three years, given the nature of
the Group’s business model and its strategic
time horizon. The Committee and Board also
reviewed Management’s financial forecasts
for the three-year period, and challenged the
process undertaken and assumptions made
by the Group’s Risk Committee, in assessing
how those forecasts would be affected by a
realistic concurrence of the Group’s principal
risks. The Committee also considered
additional contingencies within the forecast,
due to a downside sensitivity scenario that
relates to a modelled, but not predicted,
severe downturn in Group revenues,
beginning in 2021, due to a worsening impact
on our customers from the COVID-19 crisis.
This sensitivity analysis models a continued
market downturn scenario for some of our
customers whose businesses have been
affected by COVID-19 and a similar downturn
occurring for the remainder of our customer
base. As a result, the Committee
recommended to the Board that it could
make the statement required for the
assessment period without qualification.
The statement and explanation from the
Board can be found within the Strategic
Report on pages 69 to 70.
Parent Company investment in subsidiaries
carrying value
Investments in subsidiaries are the primary
asset on the Parent Company Balance Sheet.
The Committee considers the carrying value
of these investments annually or when an
indicator of impairment is identified, as any
impairment of these investments would
reduce the Company’s distributable
reserves. Management presented analysis to
the Committee to support the carrying value
of the investments in subsidiaries held by
the Parent Company, including assessing
the cash flow forecasts and future trading
assumptions of each subsidiary. No
impairment of carrying value in the
investment in subsidiaries was identified
during the year and the Committee remains
satisfied that the carrying value of each
subsidiary remains appropriate.
Other significant activity
During the year, the Committee reviewed:
• its Terms of Reference against the Code
and the Guidance for Audit Committees,
following which the Terms of Reference
were approved by the Board;
• the Company’s distributable reserves,
prior to the declaration of both the interim
and final dividends in respect of the
reporting period;
• reports on the capability of the Finance
Shared Service Center in Hungary;
• policies, processes and controls relating
to the Group’s tax and treasury functions
and the Company’s Tax Strategy, which can
be found on the Company’s website:
Computacenter.com;
• the trade receivables control environment,
to assess the heightened risk of customer
defaults due to the COVID-19 pandemic and
the associated collection risk;
• ongoing integration plans for the recent
acquisitions, including the provision of the
Group’s Enterprise Resource Planning
systems and the wider internal control,
risk management and compliance
frameworks, including items such as
whistleblowing and GDPR;
• review of the Institute of Internal
Auditors Code of Practice for Corporates,
its application within the Company
and resultant changes to the Internal
Audit charter;
• enhancements to personnel sensitive
data deletion routines;
• reports from the Group Information
Assurance (‘GIA’) function on its role and
how it fits into the overall control
structures of the Company, as a key part
of the ‘second line of defence’ within the
risk management framework. GIA also
reported on the programme of
enhancements for the Cyber Defence
Center and cyber security;
• export controls compliance;
• reimplementation of whistleblowing; and
• regular updates on major Group internal
governance enhancement initiatives,
including the remit of the Compliance
Committee.
Having been requested to do so by the
Board in accordance with Code provision 27,
the Committee also advised the Board on
whether the Annual Report and Accounts,
taken as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
The Committee sought assurance as to the
review procedures performed by
Management, to support and provide
assurance to the Board in making this
statement. These include clear guidance
issued to all contributors to ensure a
consistent approach and a formal review
process, to ensure that the Annual Report
and Accounts are factually correct and
include all relevant information. Following
a review, the Committee advised the
Board that appropriate procedures had
been applied.
Performance of the Committee
No major matters were raised in the
internally facilitated annual evaluation of the
Committee’s performance. Refer to pages 84
to 85 for further details on the evaluation
carried out.
The effectiveness of internal controls and
of the risk management framework
On behalf of the Board, the Committee is
responsible for overseeing the effectiveness
of the Group’s systems of internal control
and the risk management framework. The
Group Risk Committee (‘GRC’) meets each
quarter to review the key risks facing the
business. These are identified, and their
likelihood and impact are assessed, within
the Group’s ‘Risk Heat Map’. They are then
reviewed in conjunction with accompanying
risk mitigation plans. The GRC minutes, or
a summary thereof, are circulated to the
Committee for review, with any matters of
note highlighted and explained to the
Committee by the GRC Chairman. This
includes an analysis of how the Group’s
exposure to these risks may have moved
during the previous three months and how
mitigations to the risks have been
introduced or developed, and also provides
the GRC’s assessment of the effectiveness
of the process. To assist the Board, the
Committee monitors the risk management
processes and reports from Internal Audit.
The Committee continues to monitor
implementation of agreed improvements,
with an emphasis on improving the
compliance and control environment within
FusionStorm and controls around data
deletion in respect of our people. The
Committee received the results of an annual
survey, where all members of the Group
Executive and other key senior Management
conduct a controls self-certification exercise
and the control environment is reviewed
and graded.
Compliance Steering Committee
The Compliance Steering Committee (‘CSC’)
reports to the GRC. It meets quarterly, two
weeks before the GRC, and is chaired by the
Group Compliance Manager. The Group Head
of Legal & Contracting, the Chief People
Officer, the Group Data Protection Officer,
the Group Head of Internal Audit & Risk
Management and the Company Secretary
make up the rest of the CSC. The CSC
93
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Audit Committee Report
continued
determines which areas of law or regulation
apply to the Group, assigns these to
members of Management and identifies
levels of compliance and associated risk,
with the aim of ensuring that these are
appropriate to the Group. Critical areas
within the CSC’s remit include Anti-bribery
and Corruption, whistleblowing, data
protection and export control.
During the year, the Committee reviewed the
CSC’s progress with bringing the entities
acquired by the end of 2019 into the Group’s
compliance framework, noting with
satisfaction that the work was now
complete, with follow-up visits from Internal
Audit to FusionStorm confirming the efficacy
of the implementation. During 2021, the
Committee will look to the CSC to replicate
this progress with the entities acquired in
November 2020.
Whistleblowing
The Committee confirms that it is satisfied
that, as at the date of this report,
arrangements are in place to ensure that
employees are able, in confidence, to raise
concerns about possible improprieties in
financial and other matters, and for the
proportionate and independent investigation
of such concerns, including appropriate
follow-up action. During the year, no
incidents were reported to the Committee.
As at the date of this report, all of the Group’s
operating entities, including the recent
acquisitions of Pivot and BT Services France,
had access to the same whistleblowing
platform, or, for Pivot a similar platform
judged to be appropriate.
The effectiveness of the Internal
Audit function
The Group has an Internal Audit function
which reports to me, as Chairman of the
Committee, and also has direct access to
the CEO. Its key objectives are to provide
the Board, the Committee and senior
Management with independent and objective
assurance on risks and the related
mitigating controls, and to assist the Board
in meeting its corporate governance and
regulatory responsibilities. A formal audit
charter guides the function’s work and
procedures, and was updated during
the year.
The Board, through the Committee, has
directed the Internal Audit department’s
work towards areas of the business that
are considered to be the highest risk.
The Committee approves a rolling audit
programme, ensuring that all significant
areas of the business are independently
reviewed over, approximately, a four-year
94
period. The programme and the audit
findings are assessed continually, to ensure
they take account of the latest information
and, in particular, the results of the annual
review of the effectiveness of internal
control and any shifts in the focus areas
of the various businesses.
Each year, the Committee reviews the
effectiveness of the Internal Audit
department and the Group’s risk management
programme. The formal review typically
consists of an evaluation of Internal Audit’s
activities by members of the Committee and
managers across the business who have
been subject to audit during the year. The
assessment normally covers areas such as
departmental organisation, business
understanding, skills and experience,
communication and performance. The
results were positive with no significant
areas for improvement identified.
The Committee received an update from the
Group Head of Internal Audit & Risk
Management at each meeting during the
year, other than in May 2020, as Internal Audit
was furloughed for a short time. The updates
covered current audit activities and the
results of completed audits. I met the Group
Head of Internal Audit & Risk Management on
a number of occasions during the year, to be
updated on the function’s activities. The
Committee kept Internal Audit’s staffing
levels under review throughout 2020 and
Management has recruited a new resource
in the US and strengthened the resource in
France, both following the acquisitions.
The Committee has challenged and approved
the Internal Audit plan and the mapping of
that plan to the Group’s principal risks and
related mitigating controls, as set out on
pages 71 to 76. The plan is kept under review
to reflect the changing needs of the business
and to ensure that new and emerging
business risks are appropriately considered
within it. This includes reviewing and
providing assurance to the Committee
regarding the effectiveness of controls over
bid management and contract reporting
and the control environment of material
acquired entities.
The integrity of the Group’s relationship
with the auditor and the effectiveness
of the external audit process
External audit
The Committee oversees the Group’s
relationship with its auditor and makes
recommendations to the Board concerning
the appointment, reappointment and
remuneration of the auditor.
Reappointment of the auditor
Following a review of the external auditor’s
effectiveness and further Committee
discussions, the Committee has
recommended to the Board that it propose
the reappointment of KPMG LLP as the
Group’s auditor, for approval by the
Company’s shareholders at its 2021 AGM.
KPMG LLP was first appointed as the Group’s
auditor with effect from May 2015, following
a competitive tender process. The
Committee will continue to review the
performance of KPMG LLP, as set out below,
on an annual basis.
Rotation of lead audit engagement partner
The lead audit engagement partner for the
year ended 31 December 2020 was Mr David
Neale, who completed his first year in this role.
Mr Neale replaced Mr Tudor Aw, following
Mr Aw’s full five-year lead audit engagement
partner rotation, which ended with the
completion of the audit for the year ended
31 December 2019.
During the reporting period, the Company
complied with The Statutory Audit Services
for Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Committee Responsibilities)
Order 2014.
Effectiveness of the external audit process
The Committee places great importance on
ensuring a high-quality and effective
external audit process. When conducting the
annual review, the Committee considers the
performance of the auditor as well as its
independence, compliance with relevant
statutory, regulatory and ethical standards,
and objectivity.
The Committee reviewed the effectiveness
and quality of the external audit process by:
• reviewing the audit plan, including
identified significant risks and monitoring
changes in response to new issues or
changing circumstances;
• reviewing the planned audit hours of each
component, including hours by audit area
and on IT controls;
• reviewing the audit scope with the lead
audit engagement partner, to ensure
adequate coverage of full-scope audit
components over the Group’s operations.
This included KPMG LLP’s specified
procedures as set out for the incumbent
auditor, EY LLP, of Pivot, on both the
acquisition opening balance sheet
and for the two-month period ended
31 December 2020;
Auditor’s remuneration:
– Audit of the Financial Statements
– Audit of subsidiaries
Total audit fees
Audit-related assurance services including the review of the Interim Report and Accounts
Taxation compliance services
Other assurance services
Other non-audit services
Total non-audit services
Total fees
• understanding the materiality thresholds
adopted by KPMG LLP at each reporting
period, for both the audit of the Group and
its key audit components;
• attending KPMG LLP’s annual ‘Academy
Day’ audit planning workshop, which was
attended by senior members of the
worldwide audit team and senior finance
managers from across the Group;
• receiving reports on the results of the
audit work performed; and
• considering the report of the FRC’s Audit
Quality Review Team on KPMG LLP.
The Committee reviewed the audit plan for
the acquired entities for the part-year ended
31 December 2020 with KPMG LLP, to ensure
audit coverage was appropriate.
The Committee reviewed the year-end report
to the Committee and discussed it with the
lead audit engagement partner. The
Committee further reviewed the
effectiveness of the external audit process
by means of a questionnaire, which was
completed by key stakeholders and relevant
Group Management. The matters covered by
the questionnaire included the KPMG LLP
employees that comprise the audit team,
including their understanding of the business
and its audit risks, their degree of scepticism
and challenge, and their competency. The
results were discussed as a specific agenda
item at the Committee meeting immediately
following the completion of the
questionnaire process, and actions
requested by the Committee to enhance
effectiveness were followed up and continue
to be monitored as appropriate.
Auditor independence
The Committee places considerable
importance on ensuring the continuing
independence of the Group’s auditor. This
topic is reviewed at least annually with the
auditor, which confirms its independence
to the Committee twice a year.
In addition to the above, the Company paid
£159,000 to Ernst & Young LLP to perform
audit procedures on the opening balance
sheet and sufficient year-end procedures
for local statutory purposes and to meet the
requirements as a component auditor on
the Group audit, reporting to KPMG LLP.
Non-audit services
To help maintain the auditor’s independence,
the Committee has a policy regarding the
scope and extent of non-audit services
provided by the Group’s auditor, which is
summarised below.
The auditor is appointed primarily to report
on the annual and interim Consolidated
Financial Statements. The Committee places
a high priority on ensuring that the auditor’s
independence and objectivity is not
compromised either in appearance or in fact.
Equally, the Group should not be deprived of
expertise where it is needed and there may
be occasions where the external auditor is
best placed to undertake other accounting,
advisory and consultancy work, in view of its
knowledge of the business, as well as
confidentiality and cost considerations.
Under the Committee’s non-audit services
policy, the Group auditor should not be
engaged to undertake work which
constitutes a prohibited non-audit service,
as defined under provision 5.167 of the FRC’s
Ethical Standard. Any other non-audit service
(a ‘Permitted Service’) must, to the extent
that it is not viewed as ‘trivial’, be approved
in advance by the Committee.
In each case where the Group auditor is
authorised to perform a Permitted Service,
the Committee will assess threats to the
auditor’s independence and the proposed
safeguards to be applied when such services
are carried out. It will also document what
action was taken by the Group auditor,
including appropriate safeguards where
2020
£’000
65
1,138
1,203
62
–
4
–
66
1,269
2019
£’000
60
829
889
62
1
7
–
70
959
necessary, to ensure that its independence
was not compromised as a result of
performing the Permitted Service. The
Committee will consider alternative suppliers
and competitive tenders and then discuss
and document why it viewed the Group
auditor as the most appropriate party to
perform the Permitted Service.
The Committee monitors compliance
with this policy by monitoring the level of
non-audit work provided by the external
auditor, resulting in non-audit fees being
5.5 per cent of KPMG LLP’s overall audit fee
during 2020 (2019: 7.9 per cent), as set out
above. The Group auditor will, in no
circumstances, undertake non-audit
services for the Group to the extent that the
total fee payable by the Group to its auditor
exceeds 70 per cent of the average annual
statutory fee payable by the Group over the
last three consecutive years. The Group
ceased using the Group’s auditor for all
taxation services within the EU during 2017.
During the year, KPMG LLP provided only trivial
non-audit services to the Group. Any trivial
non-audit services provided were subject to
KPMG LLP’s review of the impact on its own
independence against the Group’s non-audit
services policy. None of the trivial
engagements constituted a prohibited
non-audit service and the Committee was
satisfied that the independence of KPMG LLP,
as Group auditor, was not affected.
Minnow Powell
Chairman of the Audit Committee
15 March 2021
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GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration
Report
We will continue to
discuss and review
the executive
remuneration
strategy to ensure
that it remains
current over the
three-year life of
the Directors’
Remuneration
Policy.
Ros Rivaz
Chair of the Remuneration Committee
96
ANNUAL STATEMENT FROM THE CHAIR
OF THE REMUNERATION COMMITTEE
Dear Shareholder,
On behalf of the Board, I am pleased to present
the Directors’ Remuneration Report for the
financial year ended 31 December 2020.
The report is split into three sections:
• this Annual Statement.
• the Annual Report on Remuneration on
pages 105 to 116, which includes
information concerning the amount paid
to the Executive and Non-Executive
Directors in respect of 2020 and details of
how the Policy will be implemented in 2021,
which will be subject to an advisory vote by
shareholders at the Company’s 2021 AGM.
• a summary of the Directors’ Remuneration
Policy, which was subject to a binding vote
by shareholders at the Company’s Annual
General Meeting held on 14 May 2020, has
been included on pages 100 to 104 so that
shareholders can refer to this easily when
reviewing the Annual Report on
Remuneration.
The Committee believes that the amount
paid to the Executive Directors should be
clearly linked to their performance and the
value delivered to shareholders.
Remuneration for the Group Chief Executive
Officer (CEO) and Group Finance Director (FD)
is heavily weighted towards variable pay,
principally based on the achievement of
stretching financial targets set by the
Committee. This variability of award
outcomes is set out on page 114 (CEO pay
history). The Committee monitors closely
the link between the amount paid to the
Executive Directors, their performance and
the value delivered to shareholders and how
this relates to the broader workforce. The
Committee considers that the remuneration
arrangements promote the Company’s
long-term success within a suitable risk
framework, are suitably aligned to
shareholder interests and that the actual
remuneration earned by the Executive
Directors continues to be a fair reflection
of their individual and the Group’s overall
performance. The Committee is therefore
comfortable that the Policy has operated as
intended. The Board remains committed to
retaining a remuneration framework which
is simple, transparent and can be understood
by all of the Group’s stakeholders.
Share ownership by Executive Directors is
considered to be a key principle to support
shareholder alignment. The CEO and FD both
have a significant interest in Computacenter
shares, with holdings equivalent to
approximately 49 and 125 times salary
respectively, which is significantly above our
minimum shareholding policy. This ensures
that there is a material alignment of
interests between the Executive Directors
and shareholders. In the Policy approved
at the 14 May 2020 AGM, we also introduced
a post-cessation of employment
shareholding policy.
Business context – the year under review
2020 was a year of unprecedented change,
as the COVID-19 pandemic created a
challenging global economic environment
and significant market volatility. In this
context, Computacenter’s Executive team
have ensured that the business remained
well-managed and continued to deliver on
the Group’s strategy, generating growth,
supporting our employees and delivering to
our customers during a period of increased
demand over the year.
At the start of the year, decisions were taken
to protect the business in light of the
heightened macro-economic uncertainty. This
included the limited use of national employee
retention schemes and withdrawal of the
final dividend in respect of 2019. Whilst the
Group’s cash position at the time was strong
and trading was in line with our expectations,
we continued to explore all opportunities to
maintain cash flow and preserve cash
balances, in light of the heightening
uncertainty about the scale and duration of
the macroeconomic impact of COVID-19. The
Group had received and approved a number
of requests from customers for extended
payment terms and continued to look for ways
to support the short-term cash flow of smaller
customers or those that had been materially
affected by the impact of COVID-19.
Accordingly, the Board believed at the time of
the announcement that it was prudent not to
pay a final dividend in respect of the financial
year ended 31 December 2019.
In recognition of these actions, as
announced in April 2020, Mike Norris, CEO, and
Tony Conophy, FD, informed the Committee of
their decision to voluntarily reduce their base
salary to zero for the period from 1 April 2020
until 30 June 2020. Philip Hulme and Peter
Ogden also waived their basic fees due to
them as Founder Non-Executive Directors
from 1 April 2020 until 31 December 2020.
As the extent of the Group’s performance
and resilience through the second quarter
became known, we reassessed our
participation in the employee retention
schemes. The Group made no further claim
on the UK Job Retention Scheme following the
first monthly claim made for April 2020, and
has subsequently repaid the sums received
from the UK Government for April.
The Board recognises the importance of
dividends to shareholders and the Group
prides itself on a long track record of paying
dividends and other special one-off cash
returns. We have resumed our dividend and
paid an interim dividend on 23 October 2020,
which was in line with the Group’s normal
policy that the interim dividend will be
approximately one-third of the previous
year’s full dividend. Our proposed 2020 full
year dividend is 37.1 per cent higher than the
originally proposed 2019 full year dividend.
In terms of overall performance, the Group
has delivered very strong performance
across all its core geographical markets
whilst supporting employees, customers
and other stakeholders and completing
two acquisitions.
The Group has been led by the UK with strong
growth in Technology Sourcing, particularly
in financial services and the Public Sector.
Germany has seen continued growth in its
Services business, with Professional Services
again underpinning this performance, which
has more than offset a slight decline in
Technology Sourcing due to a marked
slowdown in its core industrial customer
base. We have again seen strong growth and
improving margins in Germany, driven by the
Public Sector in Technology Sourcing and
a Professional Services business operating
at full capacity. The French business was
among the most impacted by COVID-19,
due to its customer mix and the French
macroeconomic environment, so it is pleasing
that it returned such a positive result whilst
dealing with material slow-downs at its
largest customers and the loss of its biggest
Managed Services contract. The North
American Segment has performed well in its
first full year comparison of its enlargement,
following the fourth quarter of 2018, and
looks to reach new levels of performance
following the acquisition of Pivot.
As a whole, Technology Sourcing margins
have remained strong whilst Services
margins have improved materially,
contributing to an increase in profit,
following a small increase in overall Group
revenue excluding the impact of acquisitions.
Overall, Group adjusted1 profit before tax
increased by 37.0 per cent during 2020, our
adjusted net funds3 significantly increased
whilst funding the acquisition of Pivot
Technology Solutions, Inc. from cash
reserves, and we have made additional cost
savings during the year as the impact of
COVID-19 has reduced our discretionary
spend on contractors and travel.
Computers for Kids initiative to provide new
and refurbished donated laptops to schools
across the UK, utilising our laptop wiping and
recommissioning services via our dedicated
subsidiary, RDC. The Group has donated
laptops to the initiative but, more
importantly, is recommissioning all donated
laptops on a not-for-profit basis at its
dedicated IT recycling centre in Braintree,
Essex, via its subsidiary RDC, which
specialises in repurposing IT equipment.
Our shareholders have enjoyed significant
returns when compared to the wider market.
During 2020, shareholders have seen a
return of circa 39 per cent on the value
of their investment through share price
appreciation and dividends, and shareholder
value has more than doubled over the
three-year period from 2018 to 2020.
Further details can be found on page 113.
Remuneration outcomes
The Committee reviewed performance
against the conditions set for the potential
bonus opportunity in 2020. These
performance conditions included profit,
Services contribution growth, Group cash,
cost savings and personal objectives.
Financial performance is measured on a
constant currency2 basis. Performance
against profit, Services contribution growth,
cash and the cost measure in each case
exceeded the maximum target set by the
Committee, resulting in a full payout for
these elements. The personal objectives
measures partially paid out.
The Committee considered the formulaic
outturns in the context of the current external
environment, wider Company and individual
performance, the shareholder experience,
the customer experience and the treatment
of employees throughout the rest of the
Group. The Committee was mindful of the
cancellation of the 2019 dividend and limited
use of furlough in the year. However this was
counterbalanced by a number of factors
including: the repayment of sums received
from the UK Government for April; the payment
of enhanced rates and at the Group’s expense
for the UK employees that continued to be
supported on furlough; the resumption of
our dividend during the year; the substantial
reduction in salary taken by the Executive
Directors during the year; and the strong
performance delivered by the business.
Taking all of the above into account, the
Committee considered the bonus outcome
to be a fair reflection of performance, and no
discretion was exercised to vary the amount.
In terms of the broader communities in
which we operate, the Company partnered
with the Daily Mail in their Mail Force
The CEO received 96.0 per cent and the FD
94.0 per cent respectively of their total
potential bonus for the year. Fifty per cent
of the bonus will be deferred into
Computacenter shares, with half of this
payable after one year in 2022 and the
remainder payable after two years in 2023.
Of the Computacenter Performance Share
Plan (PSP) awards granted in March 2018,
70.0 per cent will vest in March 2021, and
will be paid out to the Executive Directors,
subject to a two-year holding period. The
conditions for the vesting of these awards
are calculated by reference to the growth
in the Company’s adjusted1 diluted EPS and
growth in Group Services revenue for the
three financial years ended 31 December
2020. The payout reflects the significant
value creation enjoyed by shareholders
during this period and no discretion was
exercised to adjust the amount.
The year ahead
The basic salary of the CEO and FD will be
increased by two per cent for 2020,
consistent with the average increase for
the wider UK workforce.
Award levels under the annual bonus plan for
2021 will be set at 150 per cent and 125 per
cent of salary for the Chief Executive Officer
and Group Finance Director respectively. This
is within the overall maximum approved by
shareholders within the policy, albeit above
the level previously operated (being 125 per
cent and 100 per cent). The Committee
considered this increase appropriate taking
into account the sustained performance and
increase in size and complexity of the Group
over recent years (including recent
acquisitions), which has increased the scope
of the role and responsibilities of the Executive
Directors accordingly. Shareholders were
consulted on the proposed change and
understood the approach. The Committee has
ensured that the targets set for the year are
stretching and will assess performance in
the round to ensure that the outcomes are
fair and a complete reflection of the
performance achieved by the Group and/or
the Executive Directors.
There will be no change in award levels
under our Performance Share Plan, which are
currently set at 200 per cent of salary for the
Chief Executive Officer and 175 per cent of
salary for the Group Finance Director. Awards
will continue to be based on stretching
targets set out against our Earnings per
Share and Services Revenue Growth metrics.
97
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Committee evaluation
During the year, a review of the Committee
was internally facilitated. The results of this
evaluation have been analysed and, in
response to some of the observations made,
we will continue to discuss and review the
Executive remuneration strategy to ensure
that it remains current over the three-year
life of the Directors’ Remuneration Policy and
fit for purpose against an ever-evolving
regulatory and competitive environment,
taking into account the views of our
broader stakeholders.
Shareholder engagement
Our Remuneration Policy was approved by
shareholders at the 2020 AGM with a vote of
98.65 per cent in favour, with 99.99 per cent
of shareholders approving the associated
annual remuneration report. We are grateful
for shareholders’ ongoing support of our
approach. Taking into account the changes
to the Group, as set out above, and the
external context, the Remuneration
Committee intends to review the policy
during the year to ensure that it continues to
be fit for purpose. We will, of course, consult
with shareholders on any proposed changes
to be made.
The Committee’s role is to ensure that the
remuneration paid out to Executive Directors
reflects and underpins the Group’s
performance. I hope that, having read this
report, shareholders will be satisfied that
the Committee has discharged its duties
appropriately and in line with your interests.
The Committee and I would welcome any
comments you may have on the contents
of this report.
Ros Rivaz
Chair of the Remuneration Committee
15 March 2021
Directors’ Remuneration Report
continued
In line with last year, any bonus paid in
respect of 2021 will have 50 per cent
deferred into Computacenter shares, with
half the shares payable after one year and
the remaining half after two years, and the
PSP awards to be granted to the Executive
Directors in respect of 2021 will be subject to
a two-year holding period. Further details on
how our Directors’ Remuneration Policy will
be applied for the 2021 financial year are set
out on page 116.
Wider workforce
In my role as designated Non-Executive
Workforce Engagement Director, I have
attended a number of Works Councils and
Employee Forums virtually throughout the
year. This has enabled me to gain a valuable
insight into employee views, as well as the
ways in which the Group has supported
colleagues during the year. The Board has
been kept advised of these meetings through
written reports that I have submitted and
this has been further formalised by adding
these reports to the Board’s standing items
for its meeting agenda.
During the year, in addition to considering
senior pay, the Committee reviewed
information on broader workforce pay and
practices, as well as the Company’s gender
pay gap reporting. This information provided
important context for the decisions taken
during the year.
The Group has ensured that our success has
been shared with employees. In recognition
of the achievement of an adjusted1 diluted
EPS of over £1 per share, which has been a
long-term goal for the Company, a one-off
award was made to employees of up to £500,
based on service, to mark the contribution
made. This award was targeted at those
employees below the senior Management
level and was paid to 80 per cent of Group
employees world-wide in December 2020.
We have operated a Sharesave plan in the UK
and Germany for a number of years, and
have now extended this to include the US.
Following the launch of the most recent
scheme in 2020, the employee participation
rate in these schemes, where an employee
is in at least one active savings scheme, is
53 per cent of all employees in the UK
(2019: 47 per cent), 17.3 per cent in Germany
(2019: 13.4 per cent), and 31.7 per cent in the
US (2019: 26.8 per cent).
98
Alignment of our policy with the UK Corporate Governance Code
The Committee considers that the current Remuneration Policy and its implementation appropriately addresses the following principles, as set
out in the UK Corporate Governance Code.
Principle
Clarity
How the Committee has addressed this
• The Committee is committed to providing open and transparent disclosures with regards to executive
remuneration arrangements.
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
•
• As part of the review of the Remuneration Policy undertaken in 2019, we consulted with shareholders in order to allow
their feedback to be considered by the Committee. The Committee consulted with shareholders in 2021 with respect
to the approach to Directors’ bonus award levels.
In terms of workforce engagement, the Remuneration Committee Chair took questions from employees on Executive
pay matters as part of Works Council and other employee events during the year.
In determining the remuneration framework, the Committee was mindful of avoiding complexity and ensuring that
arrangements are easy to understand.
•
• Our remuneration arrangements are simple in nature, comprising three main elements – fixed pay (comprising of
base salary, pension and benefits), variable short-term incentives (annual bonus), and variable long-term incentives
(PSP awards). This framework is well understood by both participants and shareholders.
• The Committee believes that the structure of remuneration arrangements does not encourage excessive risk taking.
• The remuneration framework has a number of features which align remuneration outcomes with risk, including a
two-year post-vesting holding period applied to any PSP awards, and personal shareholding guidelines applying both
in-employment and post-employment.
In addition, malus and clawback provisions apply to both the annual bonus and PSP awards.
•
• The Remuneration Policy outlines the threshold, target and maximum levels of pay that Executive Directors can earn
in any given year over the three-year life of the approved Remuneration Policy. Actual incentive outcomes vary
depending upon the level of performance against various measures, with performance against targets normally
disclosed in the Annual Report on Remuneration each year.
• The Committee is satisfied that the Remuneration Policy does not reward poor performance. Payment of the annual
bonus and PSP is subject to the achievement of stretching performance targets, which are clearly linked to the
Group’s strategy.
• Both the Committee and Executive Directors are cognisant of the pay and conditions for the wider workforce, and
this is taken into account when considering Executive remuneration. This was demonstrated by the Executive
Directors voluntarily waiving their base salary from 1 April to 30 June 2020 in light of the impact of COVID-19 and in
solidarity with employees.
• Additionally, the Committee retains the discretion to adjust formulaic outcomes under the annual bonus and/or PSP
should it consider that the outcome is not aligned to the underlying performance of the Company or individual.
• The performance measures that are used for the annual bonus and PSP are clearly linked to delivery of the Group’s
Strategic Priorities. In addition, 20 per cent of the annual bonus is based on achievement against non-financial
strategic targets, which ensures both financial and non-financial strategic goals are considered.
99
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
Computacenter’s Remuneration Policy table
The table below sets out the main components of Computacenter’s Directors’ Remuneration Policy which was approved by way of a binding vote
at the Company’s General Meeting on 14 May 2020. The full Policy can be found on the Company’s website at investors.computacenter.com.
Details of the way in which the Policy will be implemented in 2021 are set out in blue in the table below.
Supports the recruitment and retention of Executives of the calibre required to deliver the Group’s strategy.
Base salaries are paid in cash and reflect an individual’s responsibilities, performance, skills and experience.
Normally reviewed annually with any changes effective on 1 January, taking into account the level of pay settlements
across Computacenter Group, the performance of the business and general market conditions. Salary levels at other
organisations of a similar size, complexity and business orientation will be reviewed for guidance.
A review may not necessarily result in an increase in base salary.
An exceptional review may take place to reflect a change in the scale or scope of a Director’s role, for example:
a major acquisition.
Salary levels for the current Executive Directors for the 2021 financial year are:
Group Chief Executive Officer: £573,000
Group Finance Director: £371,200
There is no prescribed maximum base salary or maximum annual increase. Ordinarily any salary increase will reflect
our standard approach to increases for other employees in the Group. Higher increases may be considered in certain
circumstances as required, for example, to reflect:
• an increase in scope of role or responsibility;
• performance in role; or
• an Executive Director being moved to appropriate market positioning over time.
Individual and business performance are taken into consideration when deciding salary levels.
To incentivise the delivery of annual, short-term, stretching financial and non-financial objectives. To align pay costs to
affordability and the value delivered to shareholders.
Performance measures and targets are set at the beginning of each financial year. Performance is normally assessed
over one financial year.
50 per cent will be paid in cash and 50 per cent will be deferred into Computacenter shares, with half the shares
payable after one year and the remaining half after two years.
Deferred awards will include the right to receive dividend equivalents in respect of dividends paid over the period from
grant of the award to the date on which the Executive Director is first able to acquire shares pursuant to the award,
calculated on such basis as the Committee determines.
Malus and clawback provisions will apply, as set out in the notes to this table.
The Committee has discretion to vary bonus payments downwards or upwards in appropriate circumstances, including
if it considers the outcome would not be a fair and complete reflection of the performance achieved by the Group and/
or the Executive Director(s). To the extent that this discretion is exercised, this will be disclosed in the relevant
Directors’ Remuneration Report and may be the subject of shareholder consultation if deemed appropriate.
Policy table
Base salary
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Annual bonus
Purpose and link to strategy
Operation
100
Maximum opportunity
The maximum annual bonus opportunity in respect of any financial year is 150 per cent of base salary.
In respect of 2021, the maximum bonus opportunity will be 150 per cent of salary for the CEO, Mike Norris and 125 per
cent of salary for the FD, Tony Conophy.
Performance measures
Increases above the current opportunities, up to the maximum limit, may be made to take account of individual
circumstances, which may include an increase in the size or scope of role or responsibility.
Financial measures will normally be used to calculate at least a majority of bonus achievement and the remainder of
the annual bonus will normally be attributed to non-financial measures.
Performance Share Plan (PSP)
Purpose and link to strategy
Operation
Financial measures may include profitability, cost management, cash management and other appropriate measures.
Non-financial targets will be stretching targets set by the Committee, linked to the delivery of our strategy and the
Executive Directors’ personal objectives for the year.
Targets are reviewed and approved annually by the Committee, to ensure that they are stretching and adequately
reflect the strategic aims of the Group.
The Committee determines the threshold and target payout levels each year, taking into account the level of stretch in
the targets set. The level of overall bonus award which is payable for threshold performance will not normally exceed
30 per cent of the maximum opportunity.
To align the interests of Executive Directors and shareholders. To incentivise the achievement of longer-term
profitability and returns to shareholders, and growth of earnings in a stable and sustainable manner.
Awards of nil-cost options (or equivalent) which are granted on a discretionary basis and will normally vest subject to
performance and continued employment at the end of a performance period of at least three years.
PSP shares will normally be subject to a two-year holding period following vesting. The shares held during the holding
period will include the right to receive dividend equivalents in respect of dividends paid over the period from the end of
the performance period to the date on which the Executive Director is first able to acquire shares pursuant to the
award, calculated on such basis as the Committee determines.
The Committee reviews the performance criteria, targets and weightings prior to each grant in line with business
priorities, to ensure they are challenging and fair.
The Committee has discretion to vary the percentage of awards vesting downwards or upwards in appropriate
circumstances, including if it considers that the outcome would otherwise not be a fair and complete reflection of
performance over the plan cycle.
Maximum opportunity
Awards are subject to malus and clawback provisions, as set out in the notes to this table.
The maximum opportunity under the plan in respect of any financial year is 200 per cent of annual base salary or
400 per cent of annual base salary in exceptional circumstances.
The maximum face value of annual awards granted in respect of 2021 will be 200 per cent of salary for the CEO and
175 per cent of salary for the FD.
Performance measures
For achievement of a threshold performance level (which is the minimum level of performance that results in any part
of an award vesting), no more than 25 per cent of the award will vest.
Earnings per share is currently the primary measure for our Performance Share Plan, but the Committee may exercise
its discretion to introduce additional or alternative measures which are aligned to the delivery of the business strategy.
Details of the performance conditions applied to awards granted in the year under review and to be granted in the
forthcoming year are set out in the Annual Remuneration Report for the relevant year.
101
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
Retirement benefits
Purpose and link to strategy
Operation
Maximum opportunity
Performance measures
Other benefits
Purpose and link to strategy
Operation
To provide an income for retirement.
No special arrangements are made for Executive Directors, who are entitled to become members of the Group’s
defined contribution pension scheme, which is open to all UK employees, or the pension plan relevant to the country
where they are employed if different.
If the Executive Director so chooses, he/she may take some or all of the pension contribution as a cash alternative,
which will be the same percentage of salary as the pension contribution foregone.
The maximum pension contribution or allowance for Executive Directors will be in line with that available to UK
employees or to participants in the pension plan relevant to the country where they are employed, if different. For UK
employees this is currently 5.0 per cent of salary.
N/A
To provide a competitive level of employment benefits.
No special arrangements are generally made for Executive Directors.
Benefits currently include:
• a car benefit appropriate for the role performed;
• participation in the Company’s private health and long-term sickness schemes;
•
• participation in all-employee share plans, on the same basis as other eligible employees.
life insurance and income continuance schemes; and
If new benefits are introduced for a wider employee group, the Executive Directors shall be entitled to participate on
the same basis as other eligible employees.
Maximum opportunity
If, in the opinion of the Committee, a Director must relocate to undertake and properly fulfil his/her executive duties,
relocation benefits may be provided, which may include a cash payment to cover reasonable expenses.
There is no maximum level of benefits provided to an individual Executive Director, as the cost of benefits is dependent
upon costs in the relevant market. Benefits will be set at levels which are competitive, but not excessive.
Performance measures
Participation by Executive Directors in any all-employee share plan operated by the Company, is limited to the
maximum award levels permitted by the plan rules from time to time and, in the case of any UK tax qualifying plan,
the limits prescribed by the relevant tax legislation.
N/A
102
Chairman and Non-Executive Director fees
Purpose and link to strategy
Operation
To ensure that the Group is able to attract and retain experienced and skilled Non-Executive Directors.
Fee levels are determined with reference to those paid by other companies of similar size and complexity and taking
into account the scope of responsibilities and the amount of time that is expected to be devoted during the year.
No individual is involved in the process of setting his/her own remuneration.
Fee levels may be reviewed annually. They may also be increased on an ongoing or temporary basis, to take into
account changes in the working of the Board.
The Chairman of the Board receives a fixed fee. Other Non-Executive Directors receive a basic fee and additional fees
are payable for the Chairmanship of Board Committees and for the additional responsibility of being the Senior
Independent Director and may also be paid to reflect additional time commitments and responsibilities. Fees are
normally paid in cash.
Travel expenses, hotel costs and other benefits related to the performance of the role, including any tax due, are also
paid where necessary.
2021 fee levels for the incumbents are as follows:
Non-Executive Chairman: £214,200
Non-Executive Director base fee: £56,100
Founder Non-Executive Director base fee: £51,000
Supplementary fees:
Senior Independent Director: £8,150
Audit Committee Chair: £18,350
Remuneration Committee Chair: £10,200
Non-Executive Directors do not participate in any of the Group’s incentive arrangements or share schemes and are not
eligible for pension or other benefits.
Maximum in line with the Company’s Articles of Association.
N/A
To strengthen alignment between Executives and shareholders.
Levels are set in relation to annual base salary, and are normally required to be built over a five-year period. The
Committee retains discretion to extend this period on an individual basis, if it believes that it is fair and reasonable to
do so.
Options which have vested unconditionally, but are as yet unexercised, and shares subject to deferred bonus awards
and PSP awards which are in the holding period but which are no longer subject to performance conditions, will be
included on a net of tax basis, for the purposes of calculating shareholdings, as will shares held by an Executive’s
spouse or dependents.
Post-cessation of employment, Executive Directors are also expected to remain aligned with the interests of
shareholders for an extended period after leaving the Company, other than in exceptional circumstances. Details of the
application of this policy are set out in the Annual Report on Remuneration.
Maximum opportunity
Performance measures
Share ownership guidelines
Purpose and link to strategy
Operation
Maximum opportunity
The Committee will regularly review the minimum shareholding guidelines.
There is no maximum, but minimum levels have been set at 200 per cent of base salary for both the current CEO and FD.
Non-Executive Directors are not required to hold shares in the Company.
Performance measures
Executive Directors who have not yet met their shareholding requirement will be expected to retain at least 50 per cent of
any deferred bonus awards and PSP awards which vest (net of tax) until such time as this level of holding is met.
N/A
103
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Performance conditions applying to any
award may be amended or substituted by
the Committee if an event occurs which
causes the Committee to determine an
amended or substituted performance
condition would be more appropriate and
not materially less difficult to satisfy.
Remuneration arrangements across
the Group
When setting Executive remuneration,
consideration is given to pay policies and
employment conditions of employees of
the Company and elsewhere in the Group.
The remuneration of employees across the
Group is based on three fundamental
principles. First, that it allows the Group to
retain the level of talent necessary to
implement the strategy as set by the CEO and
Board. Second, that levels of remuneration
should be sufficient to achieve this aim, but
should never be higher than is necessary to
do so. Finally, with limited exceptions, the
more significant the ability of an employee
to influence the Company’s financial results
through their individual performance, the
higher the proportion of their remuneration
should be performance based.
The level and design of variable pay takes
into account the need to avoid incentivising
the Group’s employees to act in a manner
that is inconsistent with the Group’s risk
appetite, as set by the Board.
Consistent with the policy for Executive
Directors, where annual bonuses are in
place across the Group, they are linked to
business performance with a focus on
underlying Group or divisional profit and
other relevant metrics.
Whilst only Executive Directors and senior
executives participate in the PSP, other
employees can participate in the Company’s
all-employee share schemes, which are
designed to incentivise participants to build
a shareholding in the Company, thus aligning
their interests with those of the Company’s
shareholders. This plan is not subject to
performance conditions, but requires the
employee to remain employed at the end
of the term of the scheme which they
have joined.
In line with local country practices, all
employees are encouraged to contribute
appropriate savings toward their retirement.
In the UK, the Company operates pension
arrangements within the Occupational and
Personal Pension Schemes (Automatic
Enrolment) Regulations 2010.
Whilst the Company does not feel it
appropriate to consult directly with
employees when drawing up the Directors’
Remuneration Policy, the Committee has
considered any feedback received via
employee engagement surveys and from the
regular meetings the CEO and Chief People
Officer conduct with staff representative
bodies in each of our major geographies.
The Remuneration Committee Chair, Ros
Rivaz, was appointed as the Designated
Non-Executive Director on 9 November 2017
to facilitate engagement with the wider
workforce, to assist the Board in
understanding the views of Computacenter’s
employees. During 2020, this involved
attending Works Council meetings and other
employee events, virtually, and feeding back
the views raised by employees to the Board.
Whilst Executive pay has not been a specific
topic in these discussions, these events have
provided a valuable opportunity for
employees to share their views freely on a
range of topics and Ros welcomed questions
on a broad range of topics including
Executive remuneration and how the
Company measures success. Further
information on the role and the activities of
the Designated Non-Executive Director is on
page 98.
Directors’ Remuneration Report
continued
Malus and clawback
Malus and clawback provisions apply to the
annual bonus and Performance Share Plan.
For awards paid or granted in respect
of 2020 onwards, the provisions are set
out below.
Malus and/or clawback may apply to annual
bonus awards, including deferred awards for
a period of two years and to Performance
Share Plan awards in the period up to the
fifth anniversary of grant, in the event of:
• a material misstatement of results;
• gross or serious misconduct;
• an error or misstatement which has
resulted in a material overpayment to
the participants;
• a significant failure of risk management
within the Company or any Group Member;
• significant reputational damage to the
Company or any Group Member;
• the participant leaving in circumstances
which, had all the facts been known, would
have resulted in the award lapsing; or
• any other circumstances that the
Committee, in its discretion, considers
to be similar in nature or effect to
those above.
The malus and clawback provisions that
apply to awards prior to the dates set out
above are in line with the relevant policy in
force at the time the awards were made.
Explanation of performance measures
The performance measures in respect of
variable remuneration outlined within the
Policy are based on a combination of
financial and strategic measures, with an
emphasis on the financial performance of
the Group, and therefore to the value that
the business delivers to its shareholders.
The Company is committed to long-term
earnings per share growth through
increased profitability and prudent use of
cash generation, with a services-led
strategy. This commitment is reflected in the
measures used to motivate and incentivise
our management team through the annual
bonus and PSP.
The Committee reviews potential
performance criteria and targets for the
annual bonus and PSP annually, resulting in
the performance criteria structure outlined
in the Policy. The measures for 2021 are
outlined on page 116.
104
ANNUAL REMUNERATION REPORT
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; and
• the specific remuneration packages of the Executive Directors, the Chairman of the Board and senior Executives of the Group including, but not
limited to, base salary, pension, annual performance-related bonuses and PSP 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.
The full responsibilities of the Committee are contained within its Terms of Reference, which are available on our website at
investors.computacenter.com.
Membership and attendance
The Remuneration Committee is made up of the Independent Non-Executive Directors and the Chairman of the Board, who was considered to be
independent on appointment. Details of the membership of the Committee and attendance of the members at Committee meetings during the
year, are provided below.
Current members
1. Ros Rivaz
2. Peter Ryan
3. Rene Haas
4. Ljiljana Mitic
5. Minnow Powell
Role
Senior Independent Director
Non-Executive Chairman of the Board
Non-Executive Director
Non-Executive Director
Non-Executive Director
Attendance record
4/4
4/4
4/4
4/4
4/4
The CEO attends meetings by invitation, as does the Chief People Officer. The Company Secretary is the secretary to the Committee.
The principal advisor to the Committee is Deloitte LLP (Deloitte), which was selected by the Committee in September 2016 by way of a tender
process. Minnow Powell receives a pension from Deloitte and, as such, recused himself from all discussions relating to the appointment
of Deloitte.
The total fees paid to Deloitte in relation to advice to the Committee in 2020 were £50,250 (2019: £68,900). The Committee considers the advice
that it receives from Deloitte LLP to be independent. During the year, Deloitte also provided consulting, tax and share plan advice to the Company.
Deloitte is a founding member of the Remuneration Consultants Group and, as such, voluntarily adheres to its Code of Conduct.
Audited information
The audited tables and related notes are identified within this report, using an A key.
105
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
A
Single Figure of Total Remuneration
The total amount paid by the Company to each of the Directors, in respect of the financial years ended 31 December 2020 and 2019, is set out in
the table below. The Company announced on 6 April 2020 that Mike Norris, Chief Executive Officer, and Tony Conophy, Group Finance Director, had
elected to reduce their base salary to zero from 1 April 2020 until 30 June 2020, showing solidarity with staff that had been furloughed across the
business. Accordingly, the salary component of the single figure of total remuneration for 2020 shown below reflects that reduction.
Year ended 31 December 2020
Executive
Mike Norris
Tony Conophy
Non-Executive
Peter Ryan6
Rene Haas7
Philip Hulme8
Ljiljana Mitic10
Peter Ogden8
Minnow Powell
Ros Rivaz
Total (£’000)
Year ended 31 December 2019
Executive
Mike Norris
Tony Conophy
Non-Executive
Peter Ryan6
Rene Haas7
Philip Hulme8
Greg Lock9
Ljiljana Mitic10
Peter Ogden8
Minnow Powell
Ros Rivaz
Regine Stachelhaus11
Total (£’000)
Salary or fees
£’000
Benefits
£’000
Pension
£’000
Total
Fixed Pay
£’000
Annual bonus
£’000
PSP awards
£’000
Total
Variable Pay
£’000
421.51
273.01
210.0
55.0
12.5
55.0
12.5
73.0
73.0
1,185.5
19.32
15.73
–
–
–
–
–
–
–
35.0
24.7
16.0
–
–
–
–
–
–
–
40.7
465.5
304.7
210.0
55.0
12.5
55.0
12.5
73.0
73.0
1,261.2
674.4
342.2
1,451.84
822.74
2,126.2
1,164.9
–
–
–
–
–
–
–
1,016.6
–
–
–
–
–
–
–
2,274.5
–
–
–
–
–
–
–
3,291.1
Total
£’000
2,591.7
1,469.6
210.0
55.0
12.5
55.0
12.5
73.0
73.0
4,552.3
Salary or fees
£’000
Benefits
£’000
Pension
£’000
Total
Fixed Pay
£’000
Annual bonus
£’000
PSP awards
£’000
Total
Variable Pay
£’000
Total
£’000
550.8
357.0
150.3
20.2
50.0
73.5
34.5
50.0
70.4
70.4
18.8
1,445.9
29.42
16.73
–
–
–
–
–
–
–
–
–
46.1
24.2
15.7
–
–
–
–
–
–
–
–
–
39.9
604.4
389.4
150.3
20.2
50.0
73.5
34.5
50.0
70.4
70.4
18.8
1,531.9
636.9
328.4
–
–
–
–
–
–
–
–
–
965.3
1,150.15
651.75
1,787.0
980.1
–
–
–
–
–
–
–
–
–
1,801.8
–
–
–
–
–
–
–
–
–
2,767.1
2,391.4
1,369.5
150.3
20.2
50.0
73.5
34.5
50.0
70.4
70.4
18.8
4,299.0
1.
The salary figure for Mike Norris and Tony Conophy reflects the voluntary reduction to zero for the period 1 April 2020 until 30 June 2020 as described further below. Note that other
elements of remuneration, namely benefits, pension, annual bonus and PSP awards continued to be calculated by reference to the salaries the Directors were eligible for in 2020,
being £562,000 and £364,000 for Mike Norris and Tony Conophy respectively.
2. The benefits figure represents the taxable benefit arising from the provision of a driver service and other travel-related benefits for Mike Norris.
3. The benefits figure represents the taxable benefit arising from cash allowances paid in lieu of the provision of company car and other travel-related benefits for Tony Conophy.
4.
This relates to the 2018 PSP awards which will be paid out in March 2021 and had a performance period of 1 January 2018 to 31 December 2020. The relevant performance criteria were
partially achieved and therefore 70.00 per cent of the award vested for each of the Executive Directors. This calculation is based upon the average value of Computacenter plc shares
over the last quarter of 2020 being £23.36. The PSP value attributable to share price growth since the awards were granted is £717,000 and £406,000 for the CEO and FD respectively.
The Committee did not exercise its discretion to change the value of awards vesting based on the share price appreciation or depreciation during the period.
5. The value of the 2017 PSP awards have been updated to reflect the actual share price at vesting on 23 March 2020 of £9.99.
6. Peter Ryan was appointed to the role of Chairman on 16 May 2019.
7. Rene Haas was appointed to the Board on 20 August 2019.
8.
The Company announced on 6 April 2020 that Philip Hulme and Peter Ogden waived their basic fees due to them as Founder Non-Executive Directors from 1 April 2020 until 31 December
2020 showing solidarity with staff that had been furloughed across the business.
9. Greg Lock stepped down from the Board on 16 May 2019.
10. Ljiljana Mitic was appointed to the Board on 16 May 2019.
11. Regine Stachelhaus stepped down from the Board on 16 May 2019 and was paid in euros prior to that date.
106
Remuneration paid in 2020: Executive Directors
2020 base salary
The annual salaries of the Executive Directors were increased by 2.0 per cent in 2020 to £562,000 for the CEO and £364,000 for the FD.
The Company announced on 6 April 2020 that Mike Norris, CEO, and Tony Conophy, FD, had elected to reduce their base salary to zero from 1 April
2020 until 30 June 2020, showing solidarity with staff that had been furloughed across the business. As the extent of the Group’s performance
and resilience through the second quarter became known, the Company made no further claim on the UK Job Retention Scheme following the first
monthly claim made for April 2020, and has subsequently repaid the sums received from the UK Government for April. Note that other elements of
remuneration, namely benefits, pension, annual bonus and PSP awards continued to be calculated by reference to the salaries the Directors were
eligible for in 2020, as set out above.
2020 annual bonus
The Maximum Bonus Opportunity in 2020 was 125 per cent of base salary for the CEO and 100 per cent of base salary for the FD. Half of the bonus
will be deferred into Computacenter shares, with half payable after one year and half payable after two years.
The 2020 annual bonus opportunity was driven by the financial performance of the business and individual targets for each Director. For the year
ended 31 December 2020, 80 per cent of this award was conditional on the achievement of criteria linked to the financial performance of the
Group. These targets were set by the Committee with reference to the Group’s strategic and financial plans, as approved by the Board of Directors.
The non-financial personal objectives set for the Executive Directors were based principally on delivery against the Group’s Strategic Priorities,
integration of acquisitions and certain people-related objectives, including progress on diversity and inclusion.
The Committee considered the formulaic outturns in the context of the current external environment, wider Company and individual
performance, the shareholder experience, the customer experience and the treatment of employees throughout the rest of the Group. The
Committee was mindful of the cancellation of the 2019 dividend and limited use of furlough in the year. However, this was counterbalanced by a
number of factors including: the repayment of sums received from the UK Government for April; the payment of enhanced rates and at the Group’s
expense for the UK employees that continued to be supported on furlough; the resumption of our dividend during the year; the substantial
reduction in salary taken by the Executive Directors during the year; and the strong performance delivered by the business.
Taking all of the above into account, the Committee considers that the annual bonus outcomes are a fair reflection of individual and Group
performance in the year. As such, the Committee has not exercised its discretion to adjust the awards.
A
The table below sets out details of the annual bonus criteria which applied for the Executive Directors for 2020 and performance delivered:
Measure
Financial criteria
Profit before tax (£m)
Percentage payout
Services contribution
growth (£m)
Percentage payout
Cash balance (£m)
Percentage payout
Costs 2020 (%)
Percentage payout
Costs 2021 (%)
Percentage payout
Non-financial criteria
Personal objectives
Total
As a percentage of
Maximum Bonus
Opportunity
Performance required
Threshold
Target
Stretch
Maximum
Actual %
achieved
Payout
£’000
CEO
FD
CEO
FD
50%
10%
10%
5%
5%
20%
100%
146.8
10%
249.2
5%
95.6
5%
30.1%
3%
30.4%
3%
0%
26.0%
152.7
20%
263.0
7.5%
111.5
7.5%
30.25%
4%
30.7%
4%
7.5%
50.5%
158.7
35%
276.8
10%
127.4
10%
30.4%
5%
31.0%
5%
15%
80.0%
166.6
50%
276.8
10%
127.4
10%
30.4%
5%
31.0%
5%
20%
100%
195.31
50%
288.3
10%
202.9
10%
37.4%2
5%
35.1%3
5%
351.3
182.0
70.3
36.4
70.3
36.4
35.1
18.2
35.1
18.2
16%
14%
112.3
51.0
96.0% 94.0%
674.4
342.2
1. Profit before tax represents Group adjusted1 profit before tax on a currency adjusted basis excluding the results of the entities acquired during the year.
2. The measure represents the actual percentage of gross profit retained as adjusted1 operating profit, after costs, within the core UK, German and French geographies for 2020.
3.
The measure represents the targeted percentage of gross profit to be retained as adjusted1 operating profit, after costs, within the core UK, German and French geographies for 2021,
in accordance with longer-term cost reduction, and margin improvement, objectives.
107
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
The personal objectives for the Executive Directors are subject to a profit performance underpin and are related to the following:
Objectives
CEO
Drive gender diversity in senior levels across the Group
Develop the senior Management team with emphasis on
succession planning
Focus on driving growth
Reduce complexity and increase speed and agility in execution
Develop the US business
Objectives
FD
Improve US cash management and collection processes, in line with
Group models
Drive the implementation of Group systems in the US
Provide governance for the commercial bid management process
Develop and implement the formal climate change response,
to include reporting
Grow the customer financial and leasing capability across the Group
Progress in the year
Gender diversity has improved at all levels in Computacenter during 2020,
with particular emphasis on senior levels. During 2020 we improved our
gender diversity at senior levels, making progress towards our goals despite
the static nature of recruitment as a result of the pandemic.
Succession plans are in place for the senior Management team, along with
an alternative organisation structure in the event of an unplanned change.
Leadership development training has been delivered remotely to a number
of the senior team across the business.
New business wins were challenged due to the environment. However,
we have grown our customer base this year both organically and through
acquisition. The growth of existing clients has been seen predominantly in
the larger clients and in particular Public Sector. Revenue grew 6.6 per cent
on a constant currency2 basis from £5.1 billion to £5.4 billion.
Management is driving organisational changes to reduce complexity.
The overhead cost base in Services decreased, as did similar cost metrics
in sales and business services. Overall EBIT retained as a percentage of
contribution, product EBIT margins and Services EBIT margins all increased
on the prior year. There are also a number of significant programmes
underway to replace various systems with one unified global platform that
reduces IT support complexity, while driving commonality of approach
across the sales teams in our various geographies.
Progress has been made in implementing Group systems in the US.
However, full deployment has been slowed as a result of travel restrictions.
The US EBIT result was in line with target for the year, with the US Managed
Services business exceeding expectations in margin performance. The Pivot
acquisition creates a significant combined North America footprint, from
which to grow further.
Progress in the year
Improvements have been made to processes and targets have been tracked
through 2020. Inventory holding for major clients will continue to be a focus.
Progress has been made in implementing Group systems in the US.
However, full deployment has been slowed as a result of travel restrictions.
Governance is delivered through global bid review boards to ensure
commercial oversight and good progress has been made, as demonstrated
by the fact that contracts are operating to planned outcomes.
In 2020 we established a Climate Committee, chaired by our FD. This
committee is focused on driving change, debating and implementing
initiatives to reduce our Carbon footprint across the Group. We continue our
commitment to renewable energy, both in generation through photovoltaic
systems, but also major green energy purchases, in both our German and UK
operations. These measures culminate in both significant reduced usage
and CO2 emissions. Our wider environmental plan is focusing on a collection
of measures, from reduced car emissions and elimination of single use
plastics to reduced business travel.
This has been a major success in 2020, generating improved margin returns,
and we now have implemented a portal-based lease accounting system for
customers, to improve reporting to them.
108
PSP
The PSP awards granted to Executive Directors with a performance period ending on 31 December 2020 vested at 70.00 per cent, pursuant to the
2018 PSP Scheme, as the relevant performance criteria threshold was partially achieved. The vested awards are subject to a two-year holding
period before release to the Executive Directors.
Vesting of these awards to each Executive Director was dependent upon the achievement of the following performance measures over
a three-year period:
The compound annual growth rate of the Group’s adjusted1 diluted earnings per share (EPS) – 70 per cent weighting
Performance level*
Maximum (100 per cent vesting)
In line with expectations (50 per cent vesting)
Threshold (10 per cent vesting)
*
Vesting occurs on a straight-line basis in between these thresholds.
Adjusted1 diluted
EPS growth CAGR
12.5%
8.33%
5%
The growth in adjusted1 diluted EPS during the period 1 January 2018 to 31 December 2020 was 24.33 per cent per annum. This resulted in 100 per
cent of this element vesting. The EPS number used for the base year of this award (i.e. EPS in 2017) is consistent with the EPS number that was
used to calculate the vesting of the 2015–2017 PSP.
Services revenue growth – 30 per cent weighting (measured on a constant currency2 basis)
Performance level*
Maximum (100 per cent vesting)
In line with expectations (50 per cent vesting)
Threshold (25 per cent vesting)
*
Vesting occurs on a straight-line basis in between these thresholds.
The Services revenue growth was 2.56 per cent, resulting in nil per cent of this element vesting.
Remuneration awards granted in 2020: Executive Directors
Services revenue
growth CAGR
7.5%
5.5%
3.5%
A
Share scheme interests awarded during the year
The table below details awards made during 2020 under the PSP scheme. The performance conditions for these awards are set out in more detail
below. Any awards that vest will be subject to a two-year holding period.
Scheme/type
of award
Number of
shares
Face value at
time of grant
PSP – nil
cost option
110,977
£1,102,0021
PSP – nil
cost option
62,915
£624,7461
CEO
FD
Performance
conditions
applied
Compound growth of
Company EPS (70%)
Compound growth of
Services revenue (30%)
Compound growth of
Company EPS (70%)
Compound growth of
Services revenue (30%)
Amount vesting related to
threshold of performance
Threshold
performance
(% of face value)
Maximum
performance
(% of face value)
10%
25%
10%
25%
100%
100%
100%
100%
Performance
period set
Three financial years
from 1 January 2020
Three financial years
from 1 January 2020
1. This is based on the average mid-market share price of Computacenter plc on the three immediately preceding business days from grant, being £9.93.
The Committee is mindful of the concept of ‘windfall’ gains and will assess this at the point of vesting, alongside an assessment of wider Group
and individual performance, the shareholder experience, and wider stakeholder experience.
109
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
Vesting of these awards to each Executive Director will be dependent upon the achievement of the performance measures over a three-year
period, as follows:
The compound annual growth rate of the Group’s adjusted1 diluted earnings per share (EPS) (70 per cent weighting)
Performance level*
Maximum
In line with expectations
Threshold
* Vesting occurs on a straight-line basis in between these thresholds.
The compound annual growth rate of the Group’s Services Revenue (GSR) (30 per cent weighting) measured on a constant currency2 basis
Performance level*
Maximum
In line with expectations
Threshold
Adjusted1 diluted
EPS growth CAGR
12.5%
8.33%
5.0%
Services revenue
growth CAGR
7.5%
5.5%
3.5%
* Vesting occurs on a straight-line basis in between these thresholds.
The table below details awards made during 2020 under the Deferred Bonus Plan (DBP) scheme.
CEO
FD
Scheme/type of award
Number of
shares
Face value
DBP2 – Conditional Share
32,068
£318,4351
DBP2 – Conditional Share
16,538
£164,2221
Vesting date
50% – 21 March 2021
50% – 21 March 2022
50% – 21 March 2021
50% – 21 March 2022
1. This is based on the average mid-market share price of Computacenter plc on the three immediately preceding business days from grant, being £9.93.
2. These are not subject to any other performance conditions.
110
A
Executive Director outstanding Share Awards as at 31 December 2020
Directors’ interests in Share Schemes
Mike Norris
Tony Conophy
Schemes
Sharesave*
Sharesave*
PSP
PSP
PSP
PSP
DBP
DBP
DBP
Sharesave*
PSP
PSP
PSP
PSP
DBP
DBP
DBP
Note
1
1
2,3
3
3
3
4
4
4
1
2,3
3
3
3
4
4
4
Exercise/
share price
524.0p
1011.0p
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1054.0p
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Exercise period
01/12/19 – 31/05/20
01/12/24 – 31/05/25
22/03/20 – 21/03/27
21/03/23 – 20/03/28
21/03/24 – 20/03/29
23/03/25 – 22/03/30
21/03/19 – 21/03/20
21/03/20 – 21/03/21
21/03/21 – 21/03/22
01/12/23 – 31/05/24
22/03/20 – 21/03/27
21/03/23 – 20/03/28
21/03/24 – 20/03/29
23/03/25 – 22/03/30
21/03/19 – 21/03/20
21/03/20 – 21/03/21
21/03/21 – 21/03/22
At
1 January
2020
5,782
2,967
142,566
88,782
90,604
–
12,811
23,396
–
2,846
80,788
50,310
51,384
–
6,530
12,865
–
Granted
during
the year
–
–
–
–
–
110,977
–
–
32,068
–
–
–
–
62,915
–
–
16,538
Exercised
during
the year
5,782
–
115,164
–
–
–
12,811
11,698
–
–
–
–
–
–
6,530
6,432
–
Lapsed
during
the year
–
–
27,402
–
–
–
–
–
–
–
15,528
–
–
–
–
–
–
At
31 December
2020
–
2,967
–
88,782
90,604
110,977
–
11,698
32,068
2,846
65,260
50,310
51,384
62,915
–
6,433
16,538
1.
2.
3.
Issued under the Rules of the Computacenter 2018 Sharesave Plan, which is available to employees and full-time Executive Directors of the Computacenter Group. Eligible employees can
save between £5 and £500
a month to purchase options in shares in Computacenter plc at a price fixed at the beginning of the scheme term. There are no conditions relating to the performance of the Company
for this scheme.
These awards vested during the year at 80.78 per cent, and accordingly 19.22 per cent of the shares under award lapsed.
Issued under the terms of the Computacenter Performance Share Plan 2005, as amended at the AGM held on 19 May 2015, or as amended at the AGM held on 18 May 2018.
(a) In respect of 70 per cent of the total award: 10 per cent of this portion of the award will vest if the compound annual EPS growth over the Performance Period equals 5 per cent per
annum. If the compound annual EPS growth rate over the Performance Period is between 5 per cent and 8.33 per cent, this portion of the award will vest on a straight-line basis up to
one-half. This portion of the award will vest in full if the compound annual EPS growth equals or exceeds 12.5 per cent per annum, with straight-line vesting between 50 per cent and
100 per cent.
(b) In respect of 30 per cent of the total award: the award will start to vest if the compound annual Services revenue growth rate over the Performance Period equals 3.5 per cent. If the
compound annual Services revenue growth rate over the Performance Period is 7.5 per cent, this portion of the award will vest in full. If the compound annual Services revenue
growth rate over the period is between 3.5 per cent and 7.5 per cent, then this portion of the award will vest on a straight-line basis between 25 per cent and 100 per cent.
PSP awards from 2018 onwards are subject to the two-year holding period.
4. Conditional shares issued under the terms of the Computacenter 2017 Deferred Bonus Plan. Awards vest in equal tranches on the first and second anniversary of the grant date.
* The Sharesave scheme only requires that an employee remains employed by the Group at the end of the term of the scheme. There are no performance conditions attached.
Director gains
PSP
Director
Mike Norris
Tony Conophy
Date of vesting
21/03/2020
21/03/2020
Scheme
PSP
PSP
Number of
shares
115,164
65,260
Exercise
price
Nil
Nil
Market price
at exercise
£9.99
£9.99
Notional
gain made
£1,150,120
£651,739
The closing market price of ordinary shares at 31 December 2020 (being the last trading day of 2020) was £24.48 (31 December 2019: £17.73).
The highest price during the year was £25.38 and the lowest was £9.35.
Minimum shareholding requirements
In accordance with the Group’s minimum shareholding guidelines, the CEO is required to build up a shareholding that is equal to 200 per cent of
his/her gross salary. In respect of the FD, the threshold that is expected to be achieved is 200 per cent of his/her gross salary. It is also expected
that the Executive Director will achieve these levels within five years of appointment. For the purposes of these requirements, deferred bonuses,
shares subjected to the holding period and options which have vested unconditionally, but are as yet unexercised, will be included on a net basis,
for the purposes of calculating shareholdings, as will shares held by an Executive’s spouse or dependants. There is no requirement for the
Non-Executive Directors of the Company to hold shares.
In addition, when an Executive Director steps down from the Board they will be expected to retain an interest in Computacenter shares based on
their in-employment share ownership guideline (or actual shareholding at the date of stepping down from the Board if lower) for a period of two
years. This policy will be supported by the use of nominee accounts.
111
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020
Directors’ Remuneration Report
continued
The Committee has the discretion to disapply or reduce this requirement in extenuating circumstances, for example in compassionate
circumstances.
Both the CEO and the FD substantially exceed their shareholding requirement.
A
Directors’ shareholdings
The beneficial interest of each of the Directors in the shares of the Company, as at 31 December 2020, is as follows:
Current Directors
Mike Norris
Tony Conophy
Peter Ryan
Rene Haas
Philip Hulme
Ljiljana Mitic
Peter Ogden
Minnow Powell
Ros Rivaz
Number of shares in
the Company as at
31 December 2020
1,119,504
1,858,812
900
–
9,361,695
–
18,699,389
1,340
1,382
Percentage of
requirement
achieved
2,438%3
6,251%3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Interests in shares
SAYE
2,9671
2,8461
–
–
–
–
–
–
–
PSP
290,3632
229,8692,4
–
–
–
–
–
–
–
DBP
43,7661
22,9711
–
–
–
–
–
–
–
Total
1,456,600
2,114,498
900
–
9,361,695
–
18,699,389
1,340
1,382
Note: There has been no grant of, or trading in, shares of the Company between 1 January 2021 and 15 March 2021 apart from Ros Rivaz who
purchased 799 shares on 22 January 2021 following the release of the Company’s pre-close trading update.
1. There are no conditions relating to the performance of the Company or individual for the vesting of this scheme.
2. There are performance conditions for this scheme as set out within the table on page 111.
3.
Based on the Company’s closing share price as at 31 December 2020, being £24.48, and the approved 2020 base salaries, excluding the impact of the election made by Mike Norris
and Tony Conophy to forego their Q2 2020 salary payments as announced on 6 April 2020.
Includes 65,260 options that have vested but remain unexercised at 31 December 2020.
4.
Dilution limits
Computacenter uses a mixture of both new issue and market purchase shares to satisfy the vesting of awards made under its PSP, DBP and
Sharesave schemes. In line with best practice, the use of new 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 5.0 per cent in the same period. The Company’s
current position against its dilution limit is under each of these thresholds. The Company regularly reviews its position against the dilution
guidelines and, should there be insufficient headroom within which to grant new awards which could be satisfied by issuing new shares,
the Company intends to continue its current practice of satisfying new awards with shares purchased on the market.
Payments to past Directors and payments for loss of office
There were no payments made to past Directors and no payments made for loss of office during the period.
Executive service contracts
A summary of the Executive Directors’ contracts of employment is given in the table below:
Director
Mike Norris
Tony Conophy
Start date
23/04/1998
23/04/1998
Expiry date
n/a
n/a
Unexpired term
None specified
None specified
Notice period
(months)
12
12
All Executive Directors have a rolling 12-month service contract with the Company, which is subject to 12 months’ written notice by either the
Company or the Director.
External appointments for Executive Directors
Executive Directors are permitted to hold outside directorships, subject to approval by the Chairman of the Board, and any such Executive Director
is permitted to retain any fees paid for such services. During 2020, neither Executive Director held any outside fee-paying directorships.
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 AGM following their appointment, and which may be renewed at that point. The letters of appointment provide that should a Non-Executive
Director not be re-elected at an AGM before he or she is due to retire, then his or her appointment will terminate. The Board has agreed that all
Directors will be subject to re-election at the AGM on 14 May 2020.
112
The terms and conditions of appointment of the Non-Executive Directors are available for inspection by shareholders at the Company’s registered
office. The appointments continue until the expiry dates set out below, unless terminated for cause or on the period of notice stated below:
Director
Peter Ryan
Rene Haas
Philip Hulme
Ljiljana Mitic
Peter Ogden
Minnow Powell
Ros Rivaz
Date of latest letter of
appointment
16 May 2019
20 August 2019
4 May 2019
16 May 2019
4 May 2019
14 December 2020
11 November 2019
Expiry date
Close of the Company’s Annual General Meeting in 2022
Close of the Company’s Annual General Meeting in 2022
Close of the Company’s Annual General Meeting in 2022
Close of the Company’s Annual General Meeting in 2022
Close of the Company’s Annual General Meeting in 2022
Close of the Company’s Annual General Meeting in 2024
Close of the Company’s Annual General Meeting in 2022
Notice period
3 months
3 months
3 months
3 months
3 months
3 months
3 months
In 2021, the Chairman will be paid a single consolidated fee of £214,200, an increase of 2.0 per cent on 2020, a rise consistent with average
increases made within the wider UK workforce. The Non-Executive Directors are paid a basic fee, plus additional fees for Chairmanship of Board
Committees or Senior Independent Director duties.
Non-Executive Directors’ fees were last benchmarked in December 2020 and an increase of 2.0 per cent on 2020, a rise consistent with average
increases made within the wider UK workforce, has been agreed to adjust the Non-Executive Directors’ annual fees, which are set out in the
table below:
Position
Independent Non-Executive Directors
Founder Non-Executive Directors
Additional fee for the Chairmanship of the Audit Committee
Additional fee for the Chairmanship of the Remuneration Committee
Additional fee for the position of Senior Independent Director
Performance of the Company
Total shareholder return performance
(Computacenter versus FTSE Software and Computer Services sector)
2020 Annual
fees (£)
55,000
50,000
18,000
10,000
8,000
2021 Annual
fees (£)
56,100
51,000
18,350
10,200
8,150
1,000
800
600
400
200
0
Dec
2010
Dec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Computacenter
FTSE All Share – Software and Computer Services
In this graph, TSR performance shows the value, in December 2020, of £100 invested in the Company’s shares in December 2010, assuming that all
dividends received between December 2010 and December 2020 were reinvested in the Company’s shares (source: Datastream).
113
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
CEO pay history
The table below shows the total remuneration figure for the CEO over the previous 10 financial years. The total remuneration figure includes the
annual bonus and PSP awards which vested based on performance in those years. The annual bonus and PSP percentages show the payout for
each year as a percentage of the maximum.
CEO single figure
of remuneration
Annual bonus payout (as a
% of maximum opportunity)
Annual bonus
PSP vesting (as a % of
maximum opportunity)
PSP vesting
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
1,878,675
1,085,300
937,300
1,506,300
2,763,900
1,807,600
2,291,500
2,081,700
2,391,409
2,591,673
63.7%
26.8%
61.2%
69.39%
84.54%
49.12%
92.35%
82.63%
92.5%
350,350
161,000
367,000
451,035
803,200
319,280
606,047
557,753
636,863
100%
58.5%
0%
35.34%
71.5%
85.13%
68.01%
65.68%
80.78%
96.0%
674,400
70.00%
997,351
385,355
–
478,679
1,384,500
891,800
1,101,400
923,699
1,150,120
1,451,754
Percentage change in remuneration of Board Directors and employees
The table below sets out the percentage change in the salary, benefits and annual bonus of all Executive and Non-Executive Directors compared
to the average amount paid to Computacenter employees in the UK, between the year ended 31 December 2019 and 31 December 2020.
Executive
Mike Norris
Tony Conophy
Non-Executive
Peter Ryan
Rene Haas
Philip Hulme
Ljiljana Mitic
Peter Ogden
Minnow Powell
Ros Rivaz
Employees
Salary/Fee
Benefits7
Annual bonus
(23.47)%1
(23.53)%1
(34.35)%
(5.99)%
5.89%
4.20%
39.72%2
172.28%3
(75.00)%4
59.42%5
(75.00)%4
3.69%
3.69%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Computacenter UK-based employees
3.26%6
(10.39)%
(3.48)%8
1.
As disclosed last year, the base salary that the Directors were eligible for was increased by 2 per cent from 1 January 2020. The percentage decrease for the CEO and Group FD reflects
the voluntary temporary reduction in base salary for the year for the period 1 April 2020 until 30 June 2020.
2. Peter Ryan was appointed to the role of Chairman on 16 May 2019. The increase reflects that he was only paid the Chairman’s fee for part of the prior year.
3. Rene Haas was appointed to the Board on 20 August 2019.
4.
The Company announced on 6 April 2020 that Philip Hulme and Peter Ogden waived their basic fees due to them as Founder Non-Executive Directors from 1 April 2020 until
31 December 2020.
5. Ljiljana Mitic was appointed to the Board on 16 May 2019.
6.
The average change in salary for UK-based employees takes account of promotions, pay reviews, changed in terms and conditions, and benchmark increases across the year, excluding
Executive and Non-Executive Directors who have been reported separately above.
The reduction in benefits reflects reduced travel costs in the year, a lower number of employees with cars and those shifting to greener vehicles with lower benefit in kind values has
had the effect of reducing the average taxable benefit spend year on year.
Although total bonus spend was 4 per cent higher than 2019, increasing employee numbers overall has reduced the average spend per employee by 3.48 per cent. This figure includes the
one-off ‘EPS bonus’ as described in the Finance Directors’ Statement on page 63.
7.
8.
On the basis that Computacenter plc (the Parent Company) does not employ any staff, the comparator group of Computacenter UK-based
employees was chosen on a voluntary basis as the Committee believes it provides a sufficiently large comparator group based on a similar
incentive structure to the CEO and reduces any distortion arising from currency and cost of living differences in other geographies in which the
Group operates.
114
CEO pay ratio
The CEO pay ratio table shows the ratio of pay between the CEO of Computacenter and Computacenter’s UK employees. The ratio compares the
total remuneration of the CEO against the total remuneration of the median UK employee and those who sit at the 25th and 75th percentiles
(lower and upper quartiles).
Computacenter’s CEO pay ratios have been calculated using Option B, a continuation of approach from last year and based on the availability of
data at the time the Annual Report is published. This uses the most recent gender pay data to identify the three employees that represent our
25th, 50th and 75th percentile employees. As an additional sense check the salary and total pay and benefits of a number of employees either
side of these 25th, 50th and 75th employees were also reviewed with an adjustment made to ensure that the figures used were representative
of an employee at these positions.
The total remuneration for these individuals has been calculated based on all components of pay for 2020, including base salary, performance-
based pay, pension and benefits. The Committee considers that this now provides an outcome that is representative of the employees at these
pay levels.
No adjustments were necessary this year due to working hours or start date and no elements of employee remuneration have been excluded
from the pay ratio calculation.
The day by reference to which the Company determined the 25th, 50th and 75th percentile employees was 31 December 2020.
The Committee believes that the median pay ratio is consistent with the pay, reward and progression policies for the Company’s UK employees
taken as a whole. Computacenter’s employer pension contributions, Company-paid benefits and voluntary benefit scheme options are consistent
for all UK employees, including the CEO. In addition, the CEO is eligible to participate in the Company’s annual bonus and Performance Share Plan, in
line with other members of the senior Management team. The value of these variable pay awards is affected by performance delivered and, in the
case of the Performance Share Plan, share price movement over three years.
The median pay ratio has increased in 2020. This reflects Company and share price performance, as the CEO’s remuneration is heavily
performance linked.
Year
20201
20192
Method
Option B
Option B
25th percentile pay ratio
70:1
76:1
Median pay ratio
59:1
51:1
75th percentile pay ratio
34:1
36:1
1.
2.
The pay ratio movement from 2019 is impacted by the Company’s announcement on 6 April 2020 that Mike Norris, CEO, and Tony Conophy, FD, had elected to reduce their base salary to
zero from 1 April 2020 until 30 June 2020.
The 2019 ratios have been updated to reflect the actual CEO’s 2019 single figure total using the share price on the date of vesting, further detail of which is set out in the notes to the
Single Figure table.
2020 salary and total pay and benefits all employee figures
Employees
Total pay and benefits
Salary
25th percentile
£36,862
£30,703
Median
£44,228
£40,923
75th percentile
£75,457
£66,955
Relative importance of spend on pay
The charts below show the relative expenditure of the Group on the pay of its employees, against certain other key financial indicators of the Group:
Expenditure on Group employees’ pay
Shareholder distributions
Group adjusted1 profit before tax*
2020
2019
£809.6m
£779.5m
2020
2019
£13.9m
£35.8m
2020
2019
£200.5m
£146.3m
*
As well as information prescribed by current remuneration reporting regulations, Group adjusted1 profit before tax has also been included as this is deemed to be a key performance
indicator of the Group which is linked to the delivery of value to our shareholders.
115
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Remuneration Report
continued
Statement of implementation of remuneration policy in the following financial year
Executive Director Remuneration for 2021 will be in accordance with the terms of our Directors’ Remuneration Policy table, as set out on pages
100 to 104 of this report.
2021 base salaries
The base salary of the CEO and the FD will increase by 2.0 per cent to £573,000 and £371,200 respectively from 1 January 2021.
2021 annual bonus
The performance measures and weightings for the 2021 annual bonus will be as follows:
Mike Norris – CEO
(2021)
Tony Conophy – FD
(2021)
1
2
3
4
5
1
2
3
4
5
1. Group adjusted1 profit before tax (up to 50%)
2. Services contribution growth (up to 10%)
3. Cash balance (up to 10%)
4. Cost savings (up to 10%)
5. Personal objectives (up to 20%)
1. Group adjusted1 profit before tax (up to 50%)
2. Services contribution growth (up to 10%)
3. Cash balance (up to 10%)
4. Cost savings (up to 10%)
5. Personal objectives (up to 20%)
The measures for 2021 have been set to be challenging relative to our 2021 business plan. The targets themselves, as they relate to the 2021 financial
year, are deemed by the Committee to be commercially sensitive and therefore have not been disclosed. They will be disclosed at such time as the
Committee no longer deems them to be so, and it currently anticipates including these in the Company’s 2021 Annual Report and Accounts.
The maximum bonus opportunity for the Executive Directors in 2021 will be 150 per cent of base salary for the CEO and 125 per cent of base salary for
the FD. The rationale for the increase in the maximum bonus opportunity is described on page 97. These awards will be subject to deferral in line with
our Policy on page 100.
2021 PSP
The award levels for the Executive Directors in the 2021 financial year are 200 per cent of salary for the CEO and 175 per cent of salary for the FD.
The 2021 financial year PSP awards will be subject to the same performance measures and targets as for the 2020 PSP awards as set out above.
The 2021 financial year PSP awards will be subject to a two-year holding period.
Statement of voting
The results of voting on the Directors’ Remuneration Report at the Company’s 2020 AGM are outlined in the table below:
Votes cast in favour/discretionary
99.99%
98,707,330
Votes cast against
9,401
0.01%
Total votes cast
98,716,731
Votes withheld/abstentions
232,080
The results of voting on the Remuneration Policy at the Company’s 2020 Annual General Meeting are outlined in the table below:
Votes cast in favour/discretionary
98.65%
97,606,813
Votes cast against
1,339,845
1.35%
Total votes cast
98,946,658
Votes withheld/abstentions
2,153
The Committee is grateful for the continuing support of shareholders. To ensure that this continues, the Committee will consult with shareholders
on major issues where it is appropriate to do so. It will also continue to adhere to its underlying principle of decision making that Executive
Directors’ pay must be linked to performance and the sustainable delivery of value to our shareholders.
This Annual Remuneration Report has been approved by the Board of Directors and signed on its behalf by:
Ros Rivaz
Chair of the Remuneration Committee
15 March 2021
116
Relations with Shareholders
The Board recognises the importance of
meeting shareholders and values the
opportunity to obtain their views. It has
therefore established a programme to
communicate with shareholders, based on
the Company’s financial reporting calendar.
Dialogue with shareholders
The Board is informed of any substantial
changes in the ownership of the Company’s
shares, through monthly reports from the
Company’s corporate brokers, Investec plc
and Credit Suisse. In addition, meetings are
held with major shareholders following both
the Annual and Interim results. Normally,
these meetings are with the CEO and FD.
The Board is briefed on the outcome of these
meetings and discusses any issues raised.
In addition, the Board receives feedback
reports from the Group’s investor relations
firm, Tulchan, and the corporate brokers.
Once a year, the Company’s top 15
shareholders are invited to meet individually
with the Chairman, Company Secretary and,
on request, the Senior Independent Director,
to provide feedback on the Group’s
Management, strategy and corporate
governance arrangements, and to raise
other comment. Only a few shareholders
take up this opportunity. These meetings will
next take place in March and April 2021, to
address any areas of discussion prior to the
Company’s next AGM. Again, the Board will be
briefed on the outcomes of these meetings.
Non-Executive Directors are available to
meet major shareholders at any time and
can be contacted through the Company
Secretary, at the Company’s registered
office address.
Constructive use of General Meetings
All of the Directors aim to attend the AGM and
value the opportunity to welcome 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 the meetings, noted in the
minutes, made available on the Company’s
website and notified to the market.
Annual General Meeting (AGM)
The AGM of the Company will be held on
Thursday 20 May 2021 at the Company’s UK
and Group Headquarters at Hatfield Business
Park, Hatfield Avenue, Hatfield, Hertfordshire,
AL10 9TW. The AGM notice of meeting sets
out each of the resolutions being proposed.
This notice will shortly be available at
investors.computacenter.com, and will be
mailed to shareholders if they have elected
to receive hard copies.
Compliance with DTR
The information that is required by DTR 7.2.6,
relating to the share capital of the Company,
can be found within the Directors’ Report
from page 118.
This Corporate Governance Report was
approved, by order of the Board, and signed
on its behalf by:
Raymond Gray
Company Secretary
15 March 2021
117
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Report
The Directors present the Directors’ Report,
together with the audited accounts of
Computacenter plc and its subsidiary
companies (the Group) for the year ended
31 December 2020.
Management Report
This Directors’ Report, together with the
other reports, forms the Management Report
for the purposes of Disclosure and
Transparency Rule 4.1.8.
Computacenter plc is incorporated as
a public limited company and is registered
in England and Wales with the registered
number 3110569. Computacenter plc’s
registered office address is Hatfield Avenue,
Hatfield, Hertfordshire, AL10 9TW. The
Company’s registrar is Equiniti Limited,
which is situated at Aspect House, Spencer
Road, Lancing, West Sussex, BN99 6DA.
The pages from the inside front cover to
123 of this Annual Report and Accounts are
incorporated by reference into the Directors’
Report, which has been drawn up and
presented in accordance with English
company law, and the liabilities of the
Directors in connection with that report shall
be subject to the limitations and restrictions
provided by such law.
Strategic Report
The Companies Act 2006 requires the Group
to prepare a Strategic Report, which
commences at the start of this Annual
Report and Accounts up to page 76. The
Strategic Report includes information about
the Group’s operations and business model,
particulars of all important events affecting
the Company or its subsidiaries, the Group’s
financial performance in the year and likely
future developments, key performance
indicators, principal risks and information
regarding the Group’s sustainable
development plan.
Corporate governance
Under Disclosure and Transparency Rule 7.2,
the Company is required to include a
Corporate Governance Report within the
Directors’ Report.
Information on our corporate governance
practices can be found in the Corporate
Governance Report on pages 77 to 117, and
the reports of the Audit, Remuneration and
Nomination Committees on pages 90, 96 and
86 respectively, all of which are incorporated
into the Directors’ Report by reference.
Results and dividends
The Group’s activities resulted in a profit
before tax of £206.6 million (2019:
£141.0 million). The Group profit for the year,
attributable to shareholders, amounted to
£153.8 million (2019: £101.7 million).
The Directors recommend a final dividend of
38.4 pence per share (2019: 26.9 pence per
share proposed but not approved at the AGM
on 14 May 2020) totalling £43.8 million (2019:
£30.7 million). The dividend record date is set
on Friday 4 June 2021, and the shares will be
marked ex-dividend on Thursday 3 June
2021. This is in line with the normal dividend
procedure timetable, as set by the London
Stock Exchange.
Following the payment of an interim dividend
for 2020 of 12.3 pence per share on
23 October 2020, the total dividend for 2020
will be 50.7 pence per share. The Board has
consistently applied the Company’s dividend
policy, which states that the total dividend
will be 2 to 2.5 times covered by adjusted1
diluted earnings per share. Further detail on
the Company’s dividend policy can be found
within the Group Finance Director’s review on
page 64.
Dividends are recognised in the accounts in
the year in which they are paid, or in the case
of a final dividend, when approved by the
shareholders. As such, the amount
recognised in the 2020 Annual Report and
Accounts, as described in note 14, is only
made up of the 2020 interim dividend (12.3
pence per share) as the proposed 2019 final
dividend (26.9 pence per share) was not paid.
Articles of Association
The Company’s Articles of Association set out
the procedures for governing the Company.
The Articles of Association may only be
amended by a special resolution at a general
meeting of the shareholders, and were last
amended at the Company’s AGM on 16 May
2019. A copy of the Articles of Association is
available on the Company’s website:
investors.computacenter.com.
118
Directors and Directors’ authority
The Directors who served during the year
ended 31 December 2020 were Tony Conophy,
Rene Haas, Philip Hulme, Ljiljana Mitic, Mike
Norris, Peter Ogden, Minnow Powell, Ros Rivaz
and Peter Ryan. Biographical details of each
Director, as at 31 December 2020, are given
on pages 80 and 81.
The Company’s Articles of Association require
that at each AGM, those Directors who were
appointed since the last AGM retire, as well as
one-third of the Directors who have been the
longest serving. The Board has decided, in
accordance with the Code, that all Directors
will retire at each forthcoming AGM and offer
themselves for re-election. The Nomination
Committee has considered each Director
who is standing for re-election and
recommends their re-election. Further
details on the Committee’s
recommendations for the re-election of the
Directors are set out in the Notice of AGM,
which summarises the skills and experience
that the Directors bring to the Board.
Subject to applicable law and the Company’s
Articles of Association, the Directors may
exercise all of the powers of the Company.
The Company’s Articles of Association
provide for a Board of Directors consisting
of between three and 20 Directors, who
manage the business and affairs of the
Company. The Directors may appoint
additional or replacement Directors, who
shall serve until the following AGM of the
Company, at which point they will be required
to stand for election by the members.
A Director may be removed from office by
the Company as provided for by applicable
law, in certain circumstances set out in the
Company’s Articles of Association, and at
a general meeting of the Company, by the
passing of an Ordinary Resolution (provided
special notice has been given in accordance
with the Companies Act 2006).
Members have previously approved a
resolution to give the Directors authority to
allot shares, and a renewal of this authority
is proposed at the 2021 AGM. This authority
allows the Directors to allot shares up to the
maximum amount stated in the Notice of AGM
(approximately one-third of the issued share
capital). In addition, the Company may not
allot shares for cash (unless pursuant to an
employee share scheme) without first
making an offer to existing shareholders in
proportion to their existing holdings. This is
known as rights of pre-emption. Two
resolutions allowing a limited waiver of these
rights were passed by the members at last
year’s AGM. Members also approved a
resolution giving delegated authority
allowing the Company to make market
purchases of its own shares, up to a
maximum of 10 per cent of the Company’s
issued share capital, subject to certain
conditions including price of purchase,
amongst others. Each of these standard
authorities will expire on the earlier of
30 June 2021 or the conclusion of the
Company’s 2021 AGM. The Directors will seek
to renew each of the authorities at the 2021
AGM, and full details are provided in the
Notice of AGM. As at 28 February 2021, none of
these authorities approved by shareholders
at the 2020 AGM had been exercised.
Directors’ indemnities
The Company has executed deeds of
indemnity with each of the Directors.
These deeds contain qualifying third-party
indemnity provisions, indemnifying the
Directors to the extent permitted by law,
and remain in force at the date of this report.
The indemnities are uncapped and cover all
costs, charges, losses and liabilities the
Directors may incur to third parties, in the
course of acting as Directors of the Company
or its subsidiaries.
Directors’ conflicts of interest
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. If appropriate, they are then
considered further by the Directors who are
not conflicted, who may authorise the
position. The register of notifications and
authorisations is reviewed by the Board
twice a year. Where the Board approves an
actual or potential conflict, the conflicted
Director cannot participate in any discussion
or decision affected by the conflict.
Directors’ interests in shares
The Directors’ interests in the Company’s share capital, at the start and end of the reporting period, were as follows:
Executive Directors
Mike Norris
Tony Conophy
Non-Executive Directors
Peter Ryan
Rene Haas
Philip Hulme
Ljiljana Mitic
Peter Ogden
Minnow Powell
Ros Rivaz
As at 31 December 2020
As at 1 January 2020
or date of appointment
Number of
ordinary shares
Beneficial
Number of
ordinary shares
Non-beneficial
Number of
ordinary shares
Beneficial
Number of
ordinary shares
Non-beneficial
1,119,504
1,858,812
900
–
9,361,695
–
18,699,389
1,340
1,382
–
–
1,145,630
1,851,961
–
–
–
–
9,033,293
–
8,103,356
–
–
900
–
9,411,695
–
18,699,389
1,340
1,382
–
–
8,983,293
–
8,103,356
–
–
Major interests in shares
The Company did not receive any notifications of updates to disclosable interests in its issued ordinary shares, in accordance with Disclosure and
Transparency Rule 5, between 1 January 2020 and 31 December 2020.
No further interests have been disclosed to the Company between 31 December 2020 and 28 February 2021.
An updated list of the Company’s major shareholders is available at investors.computacenter.com.
119
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 The employee share schemes have change
of control provisions that would be triggered
if another entity or individual takes control of
the Company. Participants may, in certain
circumstances, be allowed to exchange their
existing options for options of an equivalent
value over shares in the acquiring company.
Alternatively, the options may vest early.
Early vesting under the executive schemes
will generally be on a time-apportioned
basis. Under the Sharesave scheme,
employees will only be able to exercise their
options to the extent that their accumulated
savings allow at that time.
During the period, no ordinary shares were
purchased for cancellation.
Significant agreements and relationships
Details regarding the status of the Group’s
various borrowing facilities are provided in
the Group Finance Director’s review on pages
66 to 68. 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
Company. The Group’s longer-term Services
contracts may also 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.
The Company does not have any agreements
with any Director or employee that would
provide compensation for loss of office or
employment resulting from a change of
control on takeover, except in relation to the
Company’s share schemes and plans, as
described above.
Financial instruments
The Group’s financial risk management
objectives and policies are discussed in the
Group Finance Director’s review on page 68.
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, there were no options
outstanding under these schemes (2019: nil).
The Company also operates a Performance
Share Plan (PSP) to incentivise employees.
During the year, 647,430 ordinary shares of
75⁄9 pence each were conditionally awarded
(2019: 504,975 shares). At the year end,
awards over 1,883,164 shares remained
outstanding under this scheme (2019:
1,798,533 shares). During the year, awards
over 479,766 shares were transferred to
participants and awards over 83,033 shares
lapsed. In addition, the Company operates
a Sharesave scheme for the benefit of
employees. As at the year end, 3,726,208
options granted under the Sharesave
scheme remained outstanding
(2019: 3,964,537).
On 21 March 2020, in accordance with the
rules of the Computacenter 2017 Deferred
Bonus Plan, the Company granted 48,606
conditional awards over ordinary shares
of 75⁄9 pence each (2019: 36,261).
Corporate sustainable development and
political donations
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 report on pages 44 to 51,
which covers matters regarding health and
safety, equal opportunities, employee
involvement and employee development.
During the year, the Group did not make any
political donations or incur any political
expenditure within the meaning of Sections
362 to 379 of the Companies Act 2006.
Directors’ Report
continued
Capital structure and rights attaching
to shares
As at 28 February 2021, there were
122,687,970 fully paid ordinary shares in
issue, of which the Company held 8,546,861
ordinary shares in treasury, representing
6.97 per cent of voting rights. The total
number of voting rights in the Company,
which shareholders may use as the
denominator when calculating if they are
required to notify their interest in the
Company or a change to that interest,
under the Disclosure and Transparency
Rules, is therefore 114,141,109.
The rights attaching to each of the
Company’s ordinary shares and deferred
shares are set out in its Articles of
Association. As at 28 February 2021, there
were no deferred shares in issue.
The holders of ordinary shares are entitled,
subject to applicable law and the Company’s
Articles of Association, to:
• have shareholder documents made
available to them, including notice of any
general meetings of the Company; and
• to attend, speak and exercise voting rights
at general meetings of the Company,
either in person or by proxy.
There are no specific restrictions on the
transfer of securities in the Company, which
is governed by its Articles of Association and
prevailing legislation. The Company is not
aware of any arrangements between
shareholders which may result in
restrictions on the transfer of securities
or other voting rights.
Pursuant to the Company’s share schemes,
there are two employee benefit trusts which,
as at the year end, held a total of 988,505
ordinary shares of 75⁄9 pence each,
representing approximately 0.8 per cent of
the issued share capital. During the year, the
trusts purchased a total of 843,191 shares,
so they could satisfy the maturities
occurring pursuant to these share option
schemes. When the trusts hold shares before
transferring them to participants then, in
line with good practice, the Trustees do not
exercise the associated voting rights. The
Trustees also have a dividend waiver in place
in respect of shares which are the beneficial
property of each of the trusts. During 2020,
no ordinary shares in the Company were
issued for cash to satisfy the exercise
of options.
120
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 after
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
providing a healthy environment that
encourages productive and mutually
respectful working relationships. 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.
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 uses one or
more of these channels to brief employees
on the Group’s performance and the financial
and economic factors affecting it. Team
briefings are a primary method for engaging
and consulting with employees, with
managers tasked with ensuring regular
information sharing, discussion and feedback.
Employee consultative forums exist in each
Group country, to consult staff on major
issues affecting employment and matters
of policy, and to enable Management to seek
employees’ views on a wide range of
business matters. Where there are cross-
jurisdictional issues to discuss, a European
forum is engaged, made up of
representatives from each country forum.
The Senior Independent Director attends at
least one meeting per year of this European
forum, to engage directly with employee
representatives and report a summary of
this engagement to the Board.
The Group regularly reviews employees’
performance through a formal review
process, 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 Group’s current and future needs. The
Board directly monitors and closely reviews
succession and plans for developing
identified key senior managers.
The development of employee skills and
careers, as well as the communication of
the Group’s goals, are driven by our Winning
Together processes and tools. Annual
assessments via our Winning Together
processes and tools are a formal
requirement of all managers.
The Group operates a Save As You Earn (SAYE)
share scheme for eligible employees, who
are encouraged to save a fixed monthly sum
for a period of either three and/or five years.
When the scheme matures, participants can
purchase shares in the Company at a price
set at the start of the savings period.
Further information can be found in the
report on pages 44 to 51 covering employee
involvement and employee development, and
in the Section 172 Statement on page 57,
which explains how the Board has engaged
with and considered employees.
Engagement with suppliers, customers
and others
The required disclosure on engagement with
suppliers, customers and other stakeholders
can be found in the Section 172 Statement on
pages 57 to 59.
Business ethics
The Group Ethics policy commits 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
non-conformance with the policy and sets
out the procedures to be followed.
Going concern
The Directors’ statement regarding adoption
of the going concern basis of accounting in
preparation of the annual Consolidated
Financial Statements is set out within the
Strategic Report on page 69.
Long-term Viability Statement
The Directors’ statement regarding the
long-term viability of the Company is set out
within the Strategic Report on pages 69 to 70.
Greenhouse gas emissions
The Company is required to state the annual
quantity of emissions in tonnes of carbon
dioxide equivalent from Group activities, and
to provide details of its energy usage. Details
can be found in the Strategic Report on
pages 52 to 56. Further details of our
environmental policies and programmes can
be found on our corporate website
computacenter.com.
Auditor
A resolution to reappoint KPMG LLP as auditor
of the Group was approved by the Company’s
shareholders at the Company’s 2020 AGM.
A resolution to reappoint KPMG LLP as the
auditor of the Group will be put to
shareholders at the forthcoming 2021 AGM.
Disclosure of information to auditor
In accordance with Section 418 of the
Companies Act 2006, each of the Directors
at the date of approval of this report
confirms that:
• to the best of their knowledge and belief,
there is no information relevant to the
preparation of their report of which the
Group’s auditor is 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 auditor is aware of
that information.
121
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 Directors’ Report
continued
Listing rule (LR) disclosures
The information required to be disclosed by LR 9.8.4R is set out below, along with cross references indicating where the relevant information is
otherwise set out in the Annual Report and Accounts:
N/A
N/A
Details of the Company’s performance share plan can be found in the
Remuneration Committee Report on page 109 to 111.
Details of the waiver of emoluments made by Mike Norris, Chief Executive
Officer, Tony Conophy, Group Finance Director, Philip Hulme, Founder
Non-Executive Director, and Peter Ogden, Founder Non-Executive
Director, are set out on page 96.
N/A
N/A
N/A
Details of significant contracts are set out in the Group Finance
Director’s review on pages 65 to 68. Details of transactions with
related parties are set out on page 186 in note 34 to the Consolidated
Financial Statements.
N/A
The Trustees of the Company’s employee share schemes have a dividend
waiver in place in respect of shares which are the beneficial property of
each of the trusts.
The Trustees of the Company’s employee share schemes have a dividend
waiver in place in respect of shares which are the beneficial property of
each of the trusts.
Any person who exercises or controls on their own or together with any
person with whom they are acting in concert, 30 per cent or more of the
votes able to be cast on all or substantially all matters at general
meetings are known as ‘controlling shareholders’. The Financial Conduct
Authority’s Listing Rules now require companies with controlling
shareholders to enter into a written and legally binding agreement
(a Relationship Agreement) which is intended to ensure that the
controlling shareholder complies with certain ‘independence related’
provisions. The Company confirms that it has undertaken a thorough
process during the reporting period to review whether it has any
‘controlling shareholders’. Following this process, it was determined that
there was no requirement on the Company to enter into a Relationship
Agreement with any of its shareholders. The Company confirms that this
remained the case as at 31 December 2020, but will keep the matter
under review.
Interest capitalised
Publication of unaudited financial information
Details of performance share plans
Waiver of emoluments by a Director
Waiver of future emoluments by a Director
Non pre-emptive issues of equity for cash
Non pre-emptive issues of equity for cash in relation to major
subsidiary undertakings
Contracts of significance
Provision of services by a controlling shareholder
Shareholder waiver of dividends
Shareholder waiver of future dividends
Agreements with controlling shareholder
MJ Norris
Chief Executive Officer
FA Conophy
Group Finance Director
15 March 2021
15 March 2021
122
Directors’ Responsibilities
Statement of Directors’ Responsibilities
in respect of the Annual Report and the
Financial Statements
The Directors are responsible for preparing
the Annual Report and the Group and
Parent Company Financial Statements
in accordance with applicable law
and regulations.
Company law requires the Directors to
prepare Group and Parent Company Financial
Statements for each financial year. Under
that law, they are required to prepare the
Group Financial Statements in accordance
with international accounting standards in
conformity with the requirements of the
Companies Act 2006 and applicable law and
have elected to prepare the Parent Company
Financial Statements in accordance with UK
accounting standards and applicable law,
including FRS 101 Reduced Disclosure
Framework. In addition the Group Financial
Statements are required under the UK
Disclosure and Transparency Rules to be
prepared in accordance with International
Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union (‘IFRSs as
adopted by the EU’).
Under company law, the Directors must not
approve the Financial Statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Parent Company and of their profit or
loss for that period. In preparing each of the
Group and Parent Company Financial
Statements, the Directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable, relevant, reliable and prudent;
• for the Group Financial Statements, state
whether they have been prepared in
accordance with international accounting
standards in conformity with the
requirements of the Companies Act 2006
and IFRSs as adopted by the EU;
• for the Parent Company Financial
Statements, state whether applicable UK
accounting standards have been followed,
subject to any material departures
disclosed and explained in the Parent
Company Financial Statements;
• assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting,
unless they either intend to liquidate the
Group or the Parent Company or to cease
operations or have no realistic alternative
but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Parent
Company’s transactions and disclose with
reasonable accuracy at any time the
financial position of the Parent Company,
and enable them to ensure that its Financial
Statements comply with the Companies
Act 2006. They are responsible for such
internal control as they determine is
necessary to enable the preparation of
Financial Statements that are free from
material misstatement, whether due to
fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate
Governance Statement that complies with
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the UK
governing the preparation and dissemination
of Financial Statements may differ from
legislation in other jurisdictions.
Responsibility statement of the Directors in
respect of the Annual Report and Accounts
We confirm that to the best of our knowledge:
• the Financial Statements, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial
position and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole; and
• the Strategic Report and Directors’ Report
includes a fair review of the development
and performance of the business and the
position of the issuer and the
undertakings included in the consolidation
taken as a whole, together with a
description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts,
taken as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
The Annual Report from inside front cover
to page 123 was approved by the Board of
Directors and authorised for issue on
15 March 2021 and signed for and on behalf
of the Board by:
Mike Norris
Chief Executive
Officer
Tony Conophy
Group Finance
Director
123
GOVERNANCE REPORTANNUAL REPORT AND ACCOUNTS 2020 FINANCIAL
STATEMENTS
125
133
134
Independent Auditor’s Report to the
members of Computacenter plc
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
135 Consolidated Balance Sheet
136
Consolidated Statement of Changes
in Equity
137 Consolidated Cash Flow Statement
Notes to the Consolidated Financial
138
Statements
187 Company Balance Sheet
188
Company Statement of Changes
in Equity
Notes to the Company Financial
Statements
Group five-year financial review
189
194
194 Financial calendar
195 Corporate information
196 Principal offices
124
Independent Auditor’s Report
to the members of
Computacenter plc
1. Our opinion is unmodified
We have audited the financial statements of Computacenter plc (‘the Company’) for the year ended 31 December 2020 which comprise the
Consolidated income statement, Consolidated statement of comprehensive income, Consolidated balance sheet, Consolidated statement of
changes in equity, Consolidated cash flow statement, Company balance sheet and Company statement of changes in equity, and the related
notes, including the accounting policies in note 2.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2020 and of
the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as
it applies in the European Union;
• the Parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity
with the requirements of, and as applied in accordance with the provisions of, the Companies Act 2006, including FRS 101 Reduced Disclosure
Framework; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation to the extent applicable.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the Audit Committee.
We were first appointed as auditor by the shareholders on 19 May 2015. The period of total uninterrupted engagement is for the six financial years
ended 31 December 2020. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that
standard were provided.
Overview
Materiality: Group financial statements as a whole
Coverage
Key audit matters
Event driven
Recurring risks
£9.0 million (2019: £6.0 million)
4.7 per cent of normalised profit before tax (2019: 4.3 per cent of profit before tax)
95 per cent of normalised Group profit before tax (2019: 95 per cent of Group profit before tax)
vs 2019
New: Valuation of intangible assets recognised on acquisition of
Pivot Technology Solutions Inc.
Professional Services and Managed Services – loss making contracts
Technology Sourcing bill and hold revenue cut-off
Recoverability of Parent Company’s investment in subsidiaries (Parent)
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2. Key audit matters: including our assessment of risks of material misstatement
When planning our audit we made an assessment of the relative significance of the key risks of material misstatement to the Group financial
statements initially without taking account of the effectiveness of controls implemented by the Group. As part of our audit planning procedures,
we presented and discussed our initial assessment of key risks to the Audit Committee and subsequently discussed changes to our assessment.
Our final risk map is shown below. We identified four key audit matters that were expected to have the greatest effect on our audit. Throughout
our audit we continually reassess the significance of each of these key audit matters. Key audit matters are those matters that, in our
professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below, the key audit matters, in arriving
at our audit opinion above together with our key audit procedures to address those matters and our findings from those procedures in order that
the Company’s members as a body may better understand the process by which we arrived at our audit opinion. These matters were addressed,
and our findings are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements
as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on
these matters.
125
Independent Auditor’s Report
to the members of Computacenter plc continued
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Going Concern
Goodwill impairment
Recoverability of Parent
Company’s investment in
subsidiaries (Parent)
Acquisition accounting and
valuation of Computacenter NS
intangible assets
Tax positions and
transfer pricing
Valuation of Pivot Technology
Solutions Inc. intangible assets
Technology Sourcing
revenue recognition
Fraud risk from
Management override
of controls
Professional Services and Managed
Services – loss-making contracts
Technology Sourcing
bill and hold revenue
cut-off
Presentation of exceptional items and
alternative performance measures
The impact of uncertainties due to
the UK exiting the European Union
Deferred tax assets
Bad debt exposure
Segmental reporting
disclosure
Lower
Likelihood of occurrence
Higher
Key audit matter
Presumed fraud risk per auditing standards
Other financial statement risk
Our response
Our procedures included:
• Our valuation expertise: Use of our own valuation specialists to
assess the appropriateness of the valuation methodology applied.
• Benchmarking assumptions: Comparing the Group’s assumptions
to externally derived data in relation to key inputs such as revenue
growth rates, customer attrition rate and discount rates.
• Historical comparisons: Challenging the reasonableness of the
assumptions, particularly revenue growth rates and customer
attrition rates by assessing the historical accuracy of Pivot’s ability
to forecast and by comparing to previous performance of Pivot and
a similar entity within the Group.
• Assessing transparency: Assess whether the Group’s disclosures
about the sensitivity relating to key assumptions on the valuation of
acquired intangibles are adequate.
Our findings
• We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
• We found the resulting valuation of Pivot Technology Solutions
intangible assets to be balanced. We found the Group’s disclosures
to be proportionate in their description of the forecast uncertainty
regarding valuation of Pivot Technology Solutions intangible assets.
Valuation of Pivot
Technology Solutions
intangible assets
(£57.1 million; 2019: £nil)
Refer to page 91 (Audit
Committee Report), page
143 (accounting policy) and
page 165 (financial
disclosures).
The risk
Forecast-based valuation:
On 2 November 2020 Computacenter
plc acquired the entire Share Capital
of Pivot Technology Solutions Inc for
consideration of CAD102.4 million.
We identified the valuation of Pivot
Technology Solutions intangibles
as a risk because of the inherent
complexity, estimation uncertainty,
and judgements involvement in
determining and applying
assumptions to assess the fair
value of the identified intangibles,
and because of the size of
the acquisition.
As part of our risk assessment, we
determined that the valuation of
intangible assets has a high degree
of estimation uncertainty, with a
potential range of reasonable
outcomes greater than our
materiality for the Financial
Statements as a whole.
126
Professional Services and
Managed Services – loss-
making contracts
(Revenue – £1,261.2 million;
2019: £1,230.5 million)
(Onerous contract provisions
– £9.6 million; 2019:
£7.8 million)
Refer to page 91 (Audit
Committee Report), page
140 (accounting policy) and
page 152 (financial
disclosures).
The risk
Subjective estimate:
The contractual arrangements that
underpin the measurement and
recognition of revenue by the Group
can be complex, with significant
estimation of future financial
performance in fulfilment of the
contract required.
Where an onerous contract provision
is required, estimation is required in
assessing the level of provision,
including estimated cost to complete
and total contract revenue, taking into
account performance and delivery
risks to the end of the contract,
contractual obligations, extension
periods and customer negotiations.
The effect of these matters is that,
as part of our risk assessment for
audit planning purposes, we
determined that the forecasts had
a high degree of estimation
uncertainty, with a potential range of
reasonable outcomes greater than
our materiality for the financial
statements as a whole. In
conducting our final audit work, we
concluded that reasonably possible
changes to the forecasts would not
be expected to result in a material
change to the provision.
Revenue – Technology
Sourcing Bill and Hold
revenue cut-off
(£231.3 million; 2019:
£191.0 million)
Refer to page 91 (Audit
Committee Report), page
149 (accounting policy) and
page 152 (financial
disclosures).
2020/2021 sales:
Technology Sourcing revenue
includes revenues from bill and hold
transactions.
There is judgement required to
determine if all of the criteria have
been met to recognise a bill and hold
sale. This gives rise to some risk that
bill and hold revenue is recognised
too early.
Our response
Our procedures included:
Contracts were selected for substantive audit procedures based on
qualitative factors, such as commercial complexity, and quantitative
factors, such as financial significance and profitability that we
considered to be indicative of risk. Our audit testing for the contracts
selected included the following:
• Our sector expertise: Inspecting and challenging accounting papers
prepared by the Group, assessing whether key events and conditions
affecting contract estimates and onerous contract provisions
are complete.
• Tests of detail: Considering contradictory evidence for future
forecast costs including the risks and estimates within these
forecasts by obtaining evidence through discussions with key
management personnel (including project managers, commercial
finance and Group finance), relevant correspondence with customers
and delivery performance to date.
• Historical comparisons: Comparing the previous contract forecasts
to historic and in year performance to assess the historical accuracy
of the forecasts for a sample of completed projects in the year and
specifically for those contracts where an onerous contract provision
is recorded.
• Assessing transparency: Assessing the adequacy of the Group’s
disclosure regarding onerous contract provisions relating to Managed
and Professional Services contracts.
Our findings
• We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of provision meant that
detailed testing is inherently the most effective means of obtaining
audit evidence.
• We found the estimates in relation to onerous contract provisions to
be mildly cautious (2019 finding: mildly cautious). We found the Group’s
disclosures to be proportionate regarding Professional Services and
Managed Services – loss making contracts.
Our procedures included:
• Tests of details: For a sample of orders selected close to year end,
we inspected bill and hold agreements, evaluated the segregation
and readiness of inventory, and considered if the reason for the
arrangement was substantive, in order to assess whether revenue
had been recognised in the appropriate period. This sample was
selected on the basis of a risk-based sampling methodology
combined with a statistical sample.
Our findings
• We performed the tests above rather than seeking to rely on any
of the Group’s/Company’s controls because the small number of
transactions within the risk period meant that detailed testing is
inherently the most effective means of obtaining audit evidence.
• In determining the treatment of Technology Sourcing bill and hold
revenue cut-off there is room for judgement and we found that within
that, the Group’s judgement was balanced (2019: balanced).
127
Independent Auditor’s Report
to the members of Computacenter plc continued
Recoverability of Parent
Company’s investment in
subsidiaries
(£344.1 million; 2019:
£334.0 million)
Refer to page 93 (Audit
Committee Report), page
190 (accounting policy) and
page 192 (financial
disclosures).
The risk
Low risk, high value:
The carrying amount of the Parent
Company’s investments in
subsidiaries represents 75 per cent
(2019: 87 per cent) of the Company’s
total assets. Their recoverability is
not at a high risk of significant
misstatement or subject to
significant judgement. However, due
to their materiality in the context of
the Parent Company financial
statements, this is considered to be
the area that had the greatest effect
on our overall Parent Company audit.
Our response
Our procedures included:
• Tests of detail: Comparing the carrying amount of material
investments with the relevant subsidiaries’ draft balance sheets to
identify whether their net assets, being an approximation of their
minimum recoverable amount, were in excess of their carrying
amount and assessing whether those subsidiaries have historically
been profit-making.
• Assessing subsidiary audits: Assessing the work performed by the
subsidiary audit teams of those subsidiaries where audits are
performed and considering the results of that work on those
subsidiaries’ profits and net assets.
• Our sector experience: For the investments where the carrying
amount exceeded the net asset value, comparing the carrying
amount of the investment with the expected value of the business
based upon a discounted cash flow model.
Our findings
• We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of balance meant that
detailed testing is inherently the most effective means of obtaining
audit evidence.
• We found the Group’s assessment of the recoverability of the
investment in subsidiaries to be balanced (2019: balanced).
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £9.0 million (2019: £6.0million), determined with reference to a benchmark
of Group profit before tax of £192.5 million (2019: £141.0 million) normalised for the gain on acquisition of a subsidiary disclosed on page 155,
of which it represents 4.7 per cent (2019: 4.3 per cent). In addition, we applied materiality of £0.1 million (2019: £0.1 million) to related party
transactions for which we believe misstatements of lesser amounts than materiality for the financial statements as a whole could be reasonably
expected to influence the company’s assessment of the financial performance of the Group.
Materiality for the Parent Company financial statements as a whole was set at £2.5 million (2019: £2.0 million), determined with reference to
a benchmark of Company total assets, of which it represents 0.7 per cent (2019: 0.5 per cent).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account
balances add up to a material amount across the financial statements as a whole.
Group profit before tax
Group profit before tax of £192.5 million, normalised
to exclude an exceptional item (2019: Group profit
before tax of £141.0 million)
Group materiality
£9.0 million (2019: £6.0 million)
£9.0 million (2019: £6.0 million)
Whole financial statements materiality
£6.5 million (2019: £2.0 million to £4.0 million)
Range of materiality at six (2019: five)
components (£2.5 million to £6.5 million)
Group profit before tax, normalised
to exclude an exceptional item
Group materiality
£0.45 million (2019: £0.30 million)
Misstatements reported to the Audit Committee
Performance materiality was set at 75 per cent (2019: 75 per cent) of materiality for the Group and Parent Company financial statements as
a whole, which equates to £6.7 million (2019: £4.5 million) for the Group and £1.8 million (2019: £1.5 million) for the Parent company. We applied this
percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.
128
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.9 million (2019: £0.6 million) in
respect of misstatements which relate solely to reclassifications within the balance sheet, and £0.45 million (2019: £0.30 million) in respect of all
other misstatements, in addition to other identified misstatements that warranted reporting on qualitative grounds.
The Group operates a Shared Service Centre (SSC) in Budapest, Hungary, the outputs of which are included in the financial information of three
of the five reporting components subject to full scope audit and therefore it is not a separate reporting component. Audit procedures were
performed at the SSC which focus on the testing of trade receivables and trade payables transaction processing. Additional procedures are
performed at certain reporting components to address the audit risks not covered by the work performed over the shared service centres.
Of the Group’s 21 (2019: 19) reporting components, we subjected six (2019: five) to full scope audits for Group purposes. The components within
the scope of our work accounted for the percentages illustrated below. For the residual components, we performed analysis at an aggregated
Group level to re-examine our assessment that there were no significant risks of material misstatement within these. The remaining 4 per cent
of total Group revenue, 5 per cent of group profit before tax and 5 per cent of total Group assets is represented by 15 reporting components, none
of which individually represented more than 1 per cent of any of total Group revenue, Group profit before tax or total Group assets.
The Group team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and the
information to be reported back. The Group team approved the component’s materialities, which ranged from £2.5 million to £6.5 million (2019:
£2.0 million to £4.0 million), having regard to the mix of size and risk profile of the Group across the components. The work on four of the six
components (2019: three of the five components) was performed by component auditors and the rest, including the audit of the Parent Company,
was performed by the Group team. For the item excluded from normalised Group profit before tax, the Group team performed procedures on the
excluded item.
The Group team held video calls with the four (2019: three) overseas components located in France, Germany, the US and Canada, in addition to the
Shared Service Centre in Hungary (2019: France, Germany, US and Shared Service Centre in Hungary). At these meetings, the findings reported to
the Group team were discussed in more detail, the audit documentation reviewed, and any further work required by the Group team was then
performed by the component auditor.
Group revenue
Group profit before tax
96
98
96%
(2019: 98%)
95
95
95%
(2019: 95%)
Group total assets
Group profit before exceptional items and tax
95
96
95%
(2019: 96%)
95
95
95%
(2019: 95%)
Full scope for Group audit purposes 2020
Full scope for Group audit purposes 2019
Residual components
129
Independent Auditor’s Report
to the members of Computacenter plc continued
4. Going concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or the Group or to
cease their operations, and as they have concluded that the Company’s and the Group’s financial position means that this is realistic. They have
also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for
at least a year from the date of approval of the financial statements (‘the going concern period’).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model
and analysed how those risks might affect the Group’s financial resources or ability to continue operations over the going concern period.
The risk that we considered most likely to adversely affect the Group’s available financial resources over this period was lower than expected
trading volumes.
We considered whether these risks could plausibly affect the liquidity in the going concern period by assessing the degree of downside
assumption that, individually and collectively, could result in a liquidity issue, taking into account the Group’s current and projected cash and
facilities (a reverse stress test). We also assessed the completeness of the going concern disclosure.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s or Company’s ability to continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors’ statement on page 121 to the financial statements on the use
of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Company’s use of
that basis for the going concern period, and we found the going concern disclosure on page 69 to be acceptable; and
• the related statement under the Listing Rules set out on page 122 is materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will
continue in operation.
5. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and other key management personnel, and inspection of policy documentation as to
the Group’s high-level policies and procedures to prevent and detect fraud, including the internal audit function as well as whether they have
knowledge of any actual, suspected or alleged fraud.
• Reading Board meeting minutes and by attending audit committee meetings.
• Reading and considering the content of remuneration incentive schemes and performance targets for management, directors, and sales staff,
including the EPS target for management remuneration.
• Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit. This included
communication from the Group to full scope component audit teams of relevant fraud risks identified at the Group level and request to full scope
component audit teams to report to the Group audit team any instances of fraud that could give rise to a material misstatement at Group.
As required by auditing standards, and taking into account recent revisions to profit guidance, we perform procedures to address the risk of
management override of controls and the risk of fraudulent revenue recognition, in particular the risk that Technology sourcing bill and hold sales
are recorded in the wrong period and the risk that Group and component management may be in a position to make inappropriate accounting
entries, and the risk of bias in accounting estimates and judgements such as provision for onerous service contracts.
We did not identify any additional fraud risks.
Further detail in respect of Technology Sourcing Bill and Hold sales and onerous service contracts is set out in the key audit matter disclosures in
section 2 of this report.
We performed procedures including:
• Identifying journal entries and other adjustments to test for all full scope components based on risk criteria and comparing the identified
entries to supporting documentation. These included those posted to unusual accounts, those with unusual descriptions, and round number
adjustments to provisions.
• Assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general
commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards). We also
discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.
130
As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures
for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the
audit. This included communication from the Group to full-scope component audit teams of relevant laws and regulations identified at the Group
level, and a request for full scope component auditors to report to the Group team any instances of non-compliance with laws and regulations
that could give rise to a material misstatement at Group.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation, and taxation legislation, and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as
those most likely to have such an effect: export legislation, health and safety, anti-bribery, employment law, and certain aspects of company
legislation, recognising the nature of the Group’s activities to export IT hardware and provide global IT services. Auditing standards limit the
required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management, and
inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the
financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less
likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
6. We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we
have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Disclosures of principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in respect of
principal risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the viability statement on page 69 that they have carried out a robust assessment of the principal risks
facing the Group, including those that would threaten its business model, future performance, solvency and liquidity;
• the Principal Risks and Uncertainties disclosures describing these risks and explaining how they are being managed and mitigated; and
• the directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what period they have done so
and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
We are also required to review the viability statement, set out on pages 69 to 70 under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.
131
Independent Auditor’s Report
to the members of Computacenter plc continued
6. We have nothing to report on the other information in the Annual Report continued
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot
predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and our
audit knowledge:
• the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the Group’s position and performance, business model
and strategy;
• the section of the annual report describing the work of the Audit Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these issues were addressed; and
• the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal control systems.
We are required to review the part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK
Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects.
7. We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required 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.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 123, the directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal control as they determine is statements that are free from material
misstatement, whether due to fraud or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or
the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
9. The purpose of our audit work and to whom we owe our responsibilities
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 and the terms
of our engagement by the Company. 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 the further matters we are required to state to them in accordance with the terms agreed
with the Company, 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.
David Neale (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
15 March 2021
132
Consolidated Income
Statement
For the year ended 31 December 2020
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Gain on acquisition of a subsidiary
Finance income
Finance costs
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the Parent
Non-controlling interests
Profit for the year
Earnings per share:
– basic
– diluted
Note
4,5
18d
10
11
12
2020
£’000
5,441,258
(4,720,717)
720,541
2019
£’000
5,052,779
(4,389,665)
663,114
(522,054)
198,487
(516,090)
147,024
14,030
475
(6,421)
206,571
(52,415)
154,156
153,750
406
154,156
–
980
(7,046)
140,958
(39,397)
101,561
101,655
(94)
101,561
13
13
136.2p
133.8p
90.3p
89.0p
133
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
Profit for the year
Items that may be reclassified to the Consolidated Income Statement:
Loss arising on cash flow hedge
Income tax effect
Exchange differences on translation of foreign operations
Items not to be reclassified to the Consolidated Income Statement:
Remeasurement of defined benefit plan
Other comprehensive expense for the year, net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the Parent
Non-controlling interests
Total comprehensive income for the year
Note
2020
£’000
154,156
2019
£’000
101,561
33
(1,894)
369
(1,525)
3,217
1,692
(4,329)
(2,637)
(915)
176
(739)
(18,175)
(18,914)
(786)
(19,700)
151,519
81,861
151,113
406
151,519
81,956
(95)
81,861
134
Consolidated Balance Sheet
As at 31 December 2020
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in associate
Deferred income tax assets
Prepayments
Current assets
Inventories
Trade and other receivables
Income tax receivable
Prepayments
Accrued income
Derivative financial instruments
Cash and short-term deposits
Total assets
Current liabilities
Trade and other payables
Deferred income
Financial liabilities
Lease liabilities
Derivative financial instruments
Income tax payable
Provisions
Non-current liabilities
Financial liabilities
Lease liabilities
Deferred income
Provisions
Deferred income tax liabilities
Total liabilities
Net assets
Capital and reserves
Issued share capital
Share premium
Capital redemption reserve
Own shares held
Translation and hedging reserve
Retained earnings
Shareholders’ equity
Non-controlling interests
Total equity
Approved by the Board on 15 March 2021.
MJ Norris
Chief Executive Officer
FA Conophy
Group Finance Director
Note
15
15
16
18a
12d
19
20
5
24
21
22
5
23a
23b
24
26
23a
23b
5
26
12d
29
29
29
29
29
29
2020
£’000
2019
£’000
106,974
129,622
274,732
57
10,081
23,605
545,071
211,279
1,095,875
9,978
102,745
125,433
1,643
309,844
1,856,797
2,401,868
1,116,741
273,947
105,475
41,683
5,066
39,158
4,132
1,586,202
15,719
95,791
18,630
35,730
18,873
184,743
1,770,945
630,923
9,270
3,942
74,957
(111,613)
15,720
635,523
627,799
3,124
630,923
101,443
110,882
175,670
54
9,204
3,520
400,773
122,189
979,917
11,288
82,315
96,971
3,218
217,881
1,513,779
1,914,552
975,904
174,258
20,032
36,574
1,707
39,278
7,703
1,255,456
60,740
80,192
–
13,982
11,698
166,612
1,422,068
492,484
9,270
3,942
74,957
(113,563)
14,028
503,928
492,562
(78)
492,484
135
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
At 1 January 2020
Relating to acquisition of subsidiary
Profit for the year
Other comprehensive income/(expense)
Total comprehensive income
Cost of share-based payments
Tax on share-based payments
Exercise of options
Purchase of own shares
Equity dividends
At 31 December 2020
At 1 January 2019
Profit for the year
Other comprehensive expense
Total comprehensive income/(expense)
Cost of share-based payments
Tax on share-based payments
Exercise of options
Purchase of own shares
Asset reunification
Equity dividends
At 31 December 2019
Issued
share
capital
£’000
9,270
–
–
–
–
–
–
–
–
–
9,270
9,270
–
–
–
–
–
–
–
–
–
9,270
Attributable to equity holders of the Parent
Share
premium
£’000
3,942
–
–
–
–
–
–
–
–
–
3,942
Capital
redemption
reserve
£’000
74,957
–
–
–
–
–
–
–
–
–
74,957
Own
shares
held
£’000
(113,563)
–
–
–
–
–
–
20,901
(18,951)
–
(111,613)
Translation
and hedging
reserves
£’000
14,028
–
–
1,692
1,692
–
–
–
–
–
15,720
3,942
–
–
–
–
–
–
–
–
–
3,942
74,957
–
–
–
–
–
–
–
–
–
74,957
(113,474)
–
–
–
–
–
15,798
(15,887)
–
–
(113,563)
32,941
–
(18,913)
(18,913)
–
–
–
–
–
–
14,028
Retained
earnings
£’000
503,928
–
153,750
(4,329)
149,421
7,954
3,390
(15,227)
–
(13,943)
635,523
440,119
101,655
(786)
100,869
6,775
1,790
(10,071)
–
210
(35,764)
503,928
Share-
holder’s
equity
£’000
492,562
–
153,750
(2,637)
151,113
7,954
3,390
5,674
(18,951)
(13,943)
627,799
447,755
101,655
(19,699)
81,956
6,775
1,790
5,727
(15,887)
210
(35,764)
492,562
Non-
controlling
interests
£’000
(78)
2,796
406
–
406
–
–
–
–
–
3,124
17
(94)
(1)
(95)
–
–
–
–
–
–
(78)
Total
equity
£’000
492,484
2,796
154,156
(2,637)
151,519
7,954
3,390
5,674
(18,951)
(13,943)
630,923
447,772
101,561
(19,700)
81,861
6,775
1,790
5,727
(15,887)
210
(35,764)
492,484
136
Consolidated Cash Flow Statement
For the year ended 31 December 2020
Operating activities
Profit before taxation
Net finance cost
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Share-based payments
Loss on disposal of intangibles
Loss on disposal of property, plant and equipment
Net cash flow from inventories
Net cash flow from trade and other receivables (including contract assets)
Net cash flow from trade and other payables (including contract liabilities)
Gain on acquisition of a subsidiary
Net cash flow from provisions
Other adjustments*
Cash generated from operations
Income taxes paid
Net cash flow from operating activities
Investing activities
Interest received
Acquisition of subsidiaries, net of cash acquired
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from disposal of property, plant and equipment
Net cash flow from investing activities
Financing activities
Interest paid
Interest paid on lease liabilities
Dividends paid to equity shareholders of the Parent
Asset reunification
Proceeds from share issues
Purchase of own shares
Repayment of loans and credit facility
Payment of capital element of lease liabilities*
New Borrowings – bank loan
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
Note
2020
£’000
2019*
£’000
206,571
5,946
24,033
45,154
14,635
7,954
321
200
(50,448)
48,276
(26,169)
(14,030)
1,919
85
264,447
(27,645)
236,802
475
(30,095)
(23,141)
(4,360)
1,652
(55,469)
(1,942)
(4,479)
(13,943)
–
5,674
(18,951)
(20,021)
(43,200)
289
(96,573)
84,760
7,203
217,881
309,844
140,958
6,066
21,456
40,266
11,543
6,775
116
347
(27,422)
136,682
(108,799)
–
10,670
(6,142)
232,516
(34,231)
198,285
980
6,116
(30,132)
(8,737)
1,009
(30,764)
(3,318)
(3,728)
(35,764)
210
5,727
(15,887)
(51,755)
(38,618)
–
(143,133)
24,388
(6,949)
200,442
217,881
15
15
16
18d
10
18
15
16
11
11
14
23b
21
21
*
Interest paid on lease liabilities of £3.7 million was included as part of ‘Payment of Capital element of lease liabilities’ in the prior year. The prior year comparative has been re-presented
for this amount. This has also resulted in an adjustment to ‘Other adjustments’ of £3.7 million.
137
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
1 Authorisation of Consolidated Financial Statements and statement of compliance with IFRS
The Consolidated Financial Statements of Computacenter plc (Parent Company or the Company) and its subsidiaries (the Group) for the year
ended 31 December 2020 were authorised for issue in accordance with a resolution of the Directors on 15 March 2021. The Consolidated 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.
2 Summary of significant accounting policies
The accounting policies adopted are consistent with those of the previous financial year as disclosed in the 2019 Annual Report and Accounts
except for IAS 20 – Accounting for government grants and disclosure of government assistance.
IAS 20 – Accounting for government grants and disclosure of government assistance
IAS 20 defines government grants as assistance by government in the form of transfers of resources to an entity in return for past or future
compliance with certain conditions relating to the operating activities of the entity. If the conditions are met, then a company recognises
government grants in profit or loss within administration expenses in line with its recognition of the expenses that the grants are intended
to compensate.
The Group has recognised unconditional government grants relating to short-term schemes introduced by governments within Europe, including
Germany, France and the Netherlands as a result of COVID-19 crisis for the purpose of protecting employment. These grants compensate the
Group for expenses incurred and are recognised in the Consolidated Income Statement on a systematic basis in the periods in which the expenses
are recognised.
Effective for the year ending 31 December 2021
No new standards, interpretations and amendments not yet effective are expected to have a material effect on the Group’s future financial
statements.
2.1 Basis of preparation
The Consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (‘IASB’), in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with international financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union (‘IFRSs as adopted by the EU’).
The Consolidated Financial Statements are prepared on the historical cost basis other than derivative financial instruments, which are stated at
fair value.
The Consolidated Financial Statements are presented in pound sterling (£) and all values are rounded to the nearest thousand (£’000) except
when otherwise indicated.
In determining whether it is appropriate to prepare the Financial Statements on a ‘going concern’ basis, the Group prepares a three-year Plan (the
‘Plan’) annually by aggregating top down expectations of business performance across the Group in the second and third year of the Plan with a
detailed 12-month ‘bottom-up’ budget for the first year, which were approved by the Board. The Plan is subject to rigorous downside sensitivity
analysis which involves flexing a number of the main assumptions underlying the forecasts within the Plan. The forecast cash flows from the Plan
are aggregated with the current position, to provide a total three-year cash position against which the impact of potential risks and uncertainties
can be assessed. In the absence of significant external debt, the analysis also considers access to available committed and uncommitted
finance facilities, the ability to raise new finance in most foreseeable market conditions and the ability to restrict dividend payments.
The Directors have identified a period of not less than 12 months as the appropriate period for the going concern assessment and have based
their assessment on the relevant forecasts from the Plan for that period.
The potential impact of the principal risks and uncertainties, as set out on pages 71 to 76 of the Strategic Report, is then applied to the Plan. This
assessment includes only those risks and uncertainties that, individually or in plausible combination, would threaten the Group’s business model,
future performance, solvency or liquidity over the assessment period and which are considered to be severe but reasonable scenarios. It also
takes into account an assessment of how the risks are managed and the effectiveness of any mitigating actions.
For the current period, the primary downside sensitivity relates to a modelled, but not predicted, severe downturn in Group revenues, beginning in
2021, due to a worsening impact on our customers from the COVID-19 crisis. This sensitivity analysis models a continued market downturn
scenario for some of our customers whose businesses have been affected by COVID-19 and a similar downturn occurring for the remainder of our
customer base.
Our cash and borrowing capacity provides sufficient funds to meet the foreseeable needs of the Group. At 31 December 2020, the Group had cash
and cash equivalents of £309.8 million and bank debt, primarily related to the recent North American acquisitions and the headquarters in
Germany, of £121.2 million. In addition, the Group has in place a three-year committed facility of £60.0 million that was originally entered into
during 2013 for a value of £40.0 million and has never been drawn upon.
138
The Group has a resilient balance sheet position, with net assets of £630.9 million as at 31 December 2020. The Group made a profit after tax
of £154.2 million, and delivered net cash flows from operating activities of £236.8 million, for the year ended 31 December 2020.
As the analysis continues to show a strong forecast cash position, even under the severe economic conditions modelled in the sensitivity
scenarios, the Directors continue to consider that the Group is well placed to manage business and financial risks in the current economic
environment. Based on this assessment, the Directors confirm that they have a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period of not less than 12 months from the date of signing this Annual Report and
Accounts and therefore have prepared the Financial Statements on a going concern basis.
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the Financial Statements of the Parent Company and its subsidiaries as at 31 December each
year. The Financial Statements of subsidiaries are prepared for the same reporting year as the Parent Company, using existing GAAP in each
country of operation. Adjustments are made on consolidation for differences that may exist between the respective local GAAPs and IFRS.
All intra-Group balances, transactions, income and expenses and profit and losses resulting from intra-Group transactions have been eliminated
in full.
Subsidiaries are consolidated from the date on which the Group obtains control and cease to be consolidated from the date on which the Group no
longer retains control. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the Group
and is presented separately within equity in the Consolidated Balance Sheet, separately from Parent shareholders’ equity.
2.2.1 Foreign currency translation
Each entity in the Group determines its own functional currency and items included in the Financial Statements of each entity are measured using
that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of
exchange ruling at the Consolidated Balance Sheet date. All differences are taken to the Consolidated Income Statement.
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 material overseas subsidiaries are euro (€), US dollar ($), South African rand (ZAR) and Swiss franc (CHF). The
Group’s presentation currency is pound sterling. 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 Consolidated Income Statements
are translated at the average exchange rates for the year. Exchange differences arising on the retranslation are recognised in the Consolidated
Statement of Comprehensive Income. On disposal of a foreign entity, the deferred cumulative amount recognised in the Consolidated Statement
of Comprehensive Income relating to that particular foreign operation is recognised in the Consolidated Income Statement.
2.3 Revenue
Revenue is recognised to the extent of the amount which is expected to be received from customers as consideration for the transfer of goods
and services to the customer.
In multi-element contracts with customers where more than one good (Technology Sourcing) or service (Professional Services and Managed
Services) is provided to the customer, analysis is performed to determine whether the separate promises are distinct performance obligations
within the context of the contract. To the extent that this is the case, the transaction price is allocated between the distinct performance
obligations based upon relative standalone selling prices. The revenue is then assessed for recognition purposes based upon the nature of the
activity and the terms and conditions of the associated customer contract relating to that specific distinct performance obligation.
The following specific recognition criteria must also be met before revenue is recognised:
2.3.1 Technology Sourcing
The Group supplies hardware and software (together as ‘goods’) to customers that are sourced from and delivered by a number of suppliers.
Technology Sourcing revenue is recognised at a point in time when control of the goods has passed to the customer, usually on delivery.
Payment for the goods is generally received on industry-standard payment terms.
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FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
2 Summary of significant accounting policies continued
Technology Sourcing principal versus agent recognition
Management assesses the classification of certain revenue contracts for Technology Sourcing revenue recognition on either an agent or
principal basis.
Because the identification of the principal in a contract is not always clear, albeit the level of judgement required is low, Management make
a determination by evaluating the nature of our promise to our customer as to whether it is a performance obligation to provide the specified
goods or services ourselves, in that we are the principal, or to arrange for those goods or services to be provided by the other party, where we
are the agent. We determine whether we are a principal or an agent for each specified good or service promised to the customer by evaluating
the nature of our promise to the customer against a non-exhaustive list of indicators that a performance obligation could involve an agency
relationship:
• Evaluating who controls each specified good or service before that good or service is transferred to the customer;
• The vendor retains primary responsibility for fulfilling the sale;
• We take no inventory risk before or after the goods have been ordered, during shipping or on return;
• We do not have discretion to establish pricing for the vendor’s goods limiting the benefit we can receive from the sale of those goods; and
• Our consideration is in the form of a usually predetermined commission.
2.3.2 Professional Services
The Group provides skilled professionals to customers either on a ‘resource on demand’ basis or operating within a project framework.
For those contracts which are ‘resource on demand’, where the revenue is billed on a timesheet basis, revenue is recognised based on monthly
invoiced amounts as this corresponds to the service delivered to the customer and the satisfaction of the Group’s performance obligations.
For contracts operating within a project framework, revenue is recognised based on the transaction price with reference to the costs incurred
as a proportion of the total estimated costs (percentage of completion basis) of the contract. Under either basis, Professional Services revenue
is recognised over time.
If the total estimated costs and revenues of a contract cannot be reliably estimated, revenue is recognised only to the extent that costs have
been incurred and where the Group has an enforceable right to payment as work is being performed.
A provision for forecast excess costs over forecasted revenue is made as soon as a loss is foreseen (see note 2.12.1 for further detail).
Unbilled Professional Services revenue is classified as a contract asset and is included within accrued income in the Consolidated Balance Sheet.
Unearned Professional Services revenue is classified as a contract liability and is included within deferred income in the Consolidated Balance
Sheet. Payment for the Services, which are invoiced monthly, are generally on industry standard payment terms.
2.3.3 Managed Services
The Group sells maintenance, support and management of customers’ IT infrastructures and operations.
Managed Services revenue is recognised over time, throughout the term of the contract, as services are delivered. The specific performance
obligations and invoicing conditions in our Managed Services contracts are typically related to the number of calls, interventions or users that
we manage and therefore the customer simultaneously receives and consumes the benefits of the services as they are performed. Revenue is
recognised based on monthly invoiced amounts as this corresponds to the service delivered to the customer and the satisfaction of the Group’s
performance obligations.
Unbilled Managed Services revenue is classified as a contract asset and is included within accrued income in the Consolidated Balance Sheet.
Unearned Managed Services revenue is classified as a contract liability and is included within deferred income in the Consolidated Balance Sheet.
Amounts invoiced relating to more than one year are deferred and recognised over the relevant period. Payment for the services is generally
on industry standard payment terms.
If the total estimated costs and revenues of a contract cannot be reliably estimated, revenue is recognised only to the extent that costs have
been incurred and where the Group has an enforceable right to payment as work is being performed. A provision for forecast excess costs over
forecasted revenue is made as soon as a loss is foreseen (see note 2.12.1 for further detail). On occasion, the Group may have a limited number
of Managed Services contracts where revenue is recognised on a percentage of completion basis, which is determined by reference to the costs
incurred as a proportion of the total estimated costs of the contract (see note 3.1.1 for further detail).
140
Costs of obtaining and fulfilling revenue contracts
The Group operates in a highly competitive environment and is frequently involved in contract bids with multiple competitors, with the outcome
usually unknown until the contract is awarded and signed.
When accounting for costs associated with obtaining and fulfilling customer contracts, the Group first considers whether these costs fit within
a specific IFRS standard or policy. Any costs associated with obtaining or fulfilling revenue contracts which do not fall into the scope of other IFRS
standards or policies are considered under IFRS 15. All such costs are expensed as incurred other than the two types of costs noted below:
1. Win fees – The Group pays ‘win fees’ to certain employees as bonuses for successfully obtaining customer contracts. As these are incremental
costs of obtaining a customer contract, they are capitalised along with any associated payroll tax expense to the extent they are expected to be
recovered. These balances are presented within prepayments in the Consolidated Balance Sheet. The win fee balance that will be realised after
more than 12 months is disclosed as non-current.
2. Fulfilment costs – The Group often incurs costs upfront relating to the initial set-up phase of an outsourcing contract, which the Group refers
to as Entry Into Service. These costs do not relate to a distinct performance obligation in the contract, but rather are accounted for as fulfilment
costs under IFRS 15 as they are directly related to the future performance on the contract. They are therefore capitalised to the extent that they
are expected to be recovered. These balances are presented within prepayments in the Consolidated Balance Sheet.
Both win fees and Entry Into Service costs are amortised on a straight-line basis over the contract term, as this is equivalent to the pattern of
transfer of services to the customer over the contract term. The amortisation charges on win fees and Entry Into Service costs are recognised in
the Consolidated Income Statement within administration expenses and cost of sales, respectively.
Any bid costs incurred by the Group’s Central Bid Management Engines are not capitalised or charged to the contract, but instead directly charged
to selling, general and administrative expenses as they are incurred. These costs associated with bids are not separately identifiable nor can they
be measured reliably as the Group’s internal bid teams work across multiple bids at any one time.
2.3.4 Finance income
Income is recognised as interest accrues.
2.3.5 Operating lease income
Rental income arising from operating leases is accounted for on a straight-line basis over the lease term.
2.4 Exceptional items
The Group presents those material items of income and expense as exceptional items which, because of the nature and expected infrequency of
the events giving rise to them, merit separate presentation to allow shareholders to understand better elements of financial performance in the
year, so as to facilitate comparison with prior years and to assess better trends in financial performance.
2.5 Adjusted1 measures
The Group uses a number of non-Generally Accepted Accounting Practice (non-GAAP) financial measures in addition to those reported in
accordance with IFRS. The Directors believe that these non-GAAP measures, set out below, assist in providing additional useful information on the
underlying trends, performance and position of the Group. The non-GAAP measures are also used to enhance the comparability of information
between reporting periods by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid the user in understanding
the Group’s performance.
Consequently, non-GAAP measures are used by the Directors and management for performance analysis, planning, reporting and incentive
setting purposes and have remained consistent with prior year.
These non-GAAP measures comprise of: adjusted operating profit or loss, adjusted profit or loss before tax, adjusted tax, adjusted profit or loss
for the year, adjusted earnings per share and adjusted diluted earnings per share are, as appropriate, each stated before: exceptional and other
adjusting items including gain or loss on business disposals, gain or loss on disposal of investment properties, expenses related to material
acquisitions, amortisation of acquired intangibles, utilisation of deferred tax assets (where initial recognition was as an exceptional item or a fair
value adjustment on acquisition), and the related tax effect of these exceptional and other adjusting items, as Management do not consider these
items when reviewing the underlying performance of the Segment or the Group as a whole.
A reconciliation to adjusted measures is provided on page 61 of the Group Finance Director’s Review which details the impact of exceptional and
other adjusting items when comparing to the non-GAAP financial measures in addition to those reported in accordance with IFRS. Further detail is
also provided within note 4, Segment information.
141
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
2 Summary of significant accounting policies continued
2.6 Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when
annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. Where an asset does not
have independent cash flows, the recoverable amount is assessed for the cash-generating unit (CGU) to which it belongs. Certain other corporate
assets are unable to be allocated against specific CGUs. These assets are tested across an aggregation of CGUs that utilise the asset. The
recoverable amount is the higher of the fair value less costs to sell and the value-in-use of the asset or CGU. Where the carrying amount of an
asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value-in-use,
the estimated future cash flows are discounted to their present value using a 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 Consolidated
Income Statement in those expense categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment was recognised. The reversal is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. As the Group has no assets carried at revalued amounts, such reversal is recognised in the Consolidated
Income Statement.
2.7 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation, down to residual value, is calculated on a straight-line basis over the estimated useful life of the asset as follows:
• freehold buildings: 25-50 years
• short leasehold improvements: shorter of seven years and period to expiry of lease
• fixtures and fittings:
– head office: five-15 years
– other: shorter of seven years and period to expiry of lease
• office machinery and computer hardware: two-15 years
• motor vehicles: three years
Freehold land is not depreciated. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the item) is included in the Consolidated Income Statement in the year the item
is derecognised.
2.8 Leases
Group as lessee
Recognition of a lease
The contracts are assessed by the Group, to determine whether a contract is, or contains a lease. In general, arrangements are a lease when all
of the following apply:
• it conveys the right to control the use of an identified asset for a certain period in exchange for consideration;
• the Group have substantially all economic benefits from the use of the asset; and
• the Group can direct the use of the identified asset.
The policy is applied to contracts entered into, or changed, on or after 1 January 2019. The Group elects to separate the non-lease components
and elected to apply several practical expedients as stated above. In cases where the Group acts as an intermediate lessor, it accounts for its
interests in the head-lease and the sub-lease separately.
Measurement of a right-of-use asset and lease liability
Right-of-use asset
The Group measures the right-of-use asset at cost, which includes the following:
• the initial amount of the lease liability adjusted for any lease payments made at or before 1 January 2019;
• any lease incentives received; and
• any initial direct costs incurred by the Group as well as an estimate of costs to be incurred by the Group in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the lease contract.
Cost for dismantling, removing or restoring the site on which it is located and/or the underlying asset is only recognised when the Group incurs
an obligation to do so.
The right-of-use asset is depreciated over the lease term, using the straight-line method.
142
Lease liability
The lease liability is initially measured at the present value of the unpaid lease payments, discounted using the interest rate implicit in the lease,
or if the rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments included in the measurement comprise of
fixed payments, variable lease payments that depend on an index or a rate, amounts to be paid under a residual value guarantee and lease
payments in an optional renewal period if the Group is reasonably certain to exercise an extension option as well as penalties for early termination of
a lease, if the Group is reasonably certain to terminate early. If there is a purchase option present, this will be included if the Group is reasonably
certain to exercise the option.
Leases of low-value assets and short term
Leases of low-value assets (<£5,000) and short term with a term of 12 months or less are not required to be recognised on the Consolidated
Balance Sheet and payments made in relation to these leases are recognised on a straight-line basis in the Consolidated Income Statement.
2.9 Intangible assets
2.9.1 Software and software licences
Software and software licences include computer software that is not integral to a related item of hardware. These assets are stated at cost less
accumulated amortisation and any impairment in value. Amortisation is calculated on a straight-line basis over the estimated useful life of the
asset. Currently software is amortised over four years.
The carrying values of software and software licences are reviewed for impairment when events or changes in circumstances indicate that the
carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount,
the assets are written down to their recoverable amount.
2.9.2 Software under development
Costs that are incurred and that can be specifically attributed to the development phase of management information systems for internal use
are capitalised and amortised over their useful life, once the asset becomes available for use.
2.9.3 Other intangible assets
Intangible assets acquired as part of a business combination are carried initially at fair value. Following initial recognition intangible assets are
carried at cost less accumulated amortisation and any impairment in value. Intangible assets with a finite life have no residual value and are
amortised on a straight-line basis over their expected useful lives with charges included in administrative expenses as follows:
• order back log: within three months
• existing customer relationships: 10-15 years
• tools and technology: seven 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.
2.9.4 Goodwill
Business combinations are accounted for under IFRS 3 Business Combinations using the acquisition method. Any excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in
the Consolidated Balance Sheet as goodwill and is not amortised. Any goodwill arising on the acquisition of equity accounted entities is included
within the cost of those entities.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment
at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related CGU monitored by Management, usually at business Segment level
or statutory Company level as the case may be. Where the recoverable amount of the CGU is less than its carrying amount, including goodwill,
an impairment loss is recognised in the Consolidated Income Statement.
2.10 Inventories
Inventories 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.
143
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
2 Summary of significant accounting policies continued
2.11 Financial assets
Financial assets are recognised at their fair value, which initially equates to the sum of the consideration given and the directly attributable
transaction costs associated with the investment. Subsequently, the financial assets are measured at either amortised cost or fair value
depending on their classification under IFRS 9. The Group currently holds only debt instruments. The classification of these debt instruments
depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.
2.11.1 Trade and other receivables
Trade receivables, which generally have 30 to 90-day credit terms, are initially recognised and carried at their original invoice amount less an
allowance for any uncollectable amounts. The business model for trade receivables is that they are held for the collection of contractual cash
flows, therefore are subsequently measured at amortised cost. The trade receivables are derecognised on receipt of cash from the customer.
The Group sometimes uses debt factoring to manage liquidity and, as a result, the business model for factored trade receivables is that they are
not held for the collection of contractual cash flows. As a result, subsequent to initial recognition, they are measured at fair value through other
comprehensive income (except for the recognition of impairment gains and losses and foreign exchange gains and losses, which are recognised
in profit or loss). Factored trade receivables are derecognised on receipt of cash from the factoring party. Given the short lives of the trade
receivables, there are generally no material fair value movements between initial recognition and the derecognition of the receivable.
The Group assesses for doubtful debts (impairment) using the expected credit losses model as required by IFRS 9. For trade receivables, the
Group applies the simplified approach which requires expected lifetime losses to be recognised from the initial recognition of the receivables.
For impairment assessment of other receivables, refer to Note 2.6, Impairment of assets, which details the impairment approach adopted where
an asset considered to be impaired would be written down to its recoverable amount which, given the nature of the assets, would most likely be
its fair value less costs to sell.
2.11.2 Current asset investments
Current asset investments comprise deposits held for a term of greater than three months from the date of deposit and which are not available
to the Group on demand. The business model for current asset investments is that they are held for the collection of contractual cash flows,
which are not solely payments of principal and interest. As a result, subsequent to initial measurement, current asset investments are measured
at fair value with fair value movements recognised in profit and loss.
2.11.3 Cash and cash equivalents
Cash and short-term deposits in the Consolidated Balance Sheet comprise cash at bank and in hand, and short-term deposits with an original
maturity of three months or less. Cash is held for the collection of contractual cash flows which are solely payments of principal and interest and
therefore is measured at amortised cost subsequent to initial recognition.
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, where there is a legal right of set off.
2.12 Financial liabilities
Financial liabilities are initially recognised at their fair value and, in the case of loans and borrowings (including credit facility), net of directly
attributable transaction costs.
The subsequent measurement of financial liabilities is at amortised cost, unless otherwise described below:
2.12.1 Provisions (excluding restructuring provision)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is
used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
Customer contract provisions
A provision for forecast excess costs over forecasted revenue is made as soon as a loss is foreseen.
Management monitor continually the financial performance of contracts, and where there are indicators that a contract could result in a negative
margin, the future financial performance of that contract will be reviewed in detail. If, after further financial analysis, the full financial consequence
of the contract can be reliably estimated, and it is determined that the contract is potentially loss-making, then the best estimate of the losses
expected to be incurred until the end of the contract will be provided for.
144
The Group applies IAS 37 in its assessment of whether contracts are considered onerous and in subsequently estimating the provision. An agenda
decision published by the IFRS Interpretations Committee outlined that the current wording of IAS 37 allows for two interpretations of what can
constitute ‘unavoidable’ costs when determining whether a contract is onerous. One of the acceptable interpretations noted by the Committee is
in line with our current practice, which is to consider costs such as overhead allocations as ‘unavoidable’. The matter has been put on the agenda
for future discussion at the IFRS Interpretations Committee, with a view to drafting clarifications to IAS 37. Until there is clarity on this matter, we
have concluded that our current approach, that considers total estimated costs (i.e. directly attributable variable costs and fixed allocated costs)
as included in the assessment of whether the contract is onerous or not and in the measurement of the provision, remains appropriate.
2.12.2 Restructuring provisions
The Group recognises a ‘restructuring’ provision when there is a programme planned and controlled by Management that changes materially the
scope of the business or the manner in which it is conducted.
Further to the Group’s general provision recognition policy, a restructuring provision is only considered when the Group has a detailed formal plan
for the restructuring identifying, as a minimum: the business or part of the business concerned; the principal locations affected; the location,
function and approximate number of employees who will be compensated for terminating their services; the expenditures that will be
undertaken; and when the plan will be implemented.
The Group will only recognise a specific restructuring provision once a valid expectation in those affected that it will carry out the restructuring
by starting to implement that plan or announcing its main features to those affected by it.
The Group only includes incremental costs associated directly with the restructuring within the restructuring provisions such as employee
termination benefits and consulting fees. The Group specifically excludes from recognition in a restructuring provision any costs associated with
ongoing activities such as the costs of training or relocating staff that are redeployed within the business and costs for employees who continue
to be employed in ongoing operations, regardless of the status of these operations post-restructure.
2.12.3 Pensions and other post-employment benefits
The Group operates a defined contribution pension scheme available to all UK employees and similar schemes are operating, as appropriate for
the jurisdiction, for North America and Germany. Contributions are recognised as an expense in the Consolidated Income Statement as they
become payable in accordance with the rules of the scheme. There are no material pension schemes within the Group’s overseas operations.
The Group has an obligation to make a one-off payment to French employees upon retirement, the Indemnités de Fin de Carrière (IFC).
French employment law requires that a company pays employees a one-time contribution when, and only when, the employee leaves the
company on retirement at the mandatory age. This is a legal requirement for all businesses who incur the obligation upon departure, due to
retirement, of an employee.
Typically, the retirement benefit is based on length of service of the employee and his or her salary at retirement. The amount is set via a legal
minimum, but the retirement premiums can be improved by the collective agreement or employment contract in some cases. In Computacenter
France, the payment is based on accrued service and ranges from one month of salary after five years of service to 9.4 months of salary after
47 years of service.
If the employee leaves voluntarily at any point before retirement, all liability is extinguished, and any accrued service is not transferred to any
new employment.
Management continues to account for this obligation according to IAS 19 (revised). Refer to note 33 for further disclosure.
2.13 Derecognition of financial assets and liabilities
2.13.1 Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired; or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to
a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the
asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.
2.13.2 Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.
145
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
2 Summary of significant accounting policies continued
2.14 Derivative financial instruments and hedge accounting
The Group uses foreign currency forward contracts to hedge its foreign currency risks associated with foreign currency fluctuations affecting
cash flows from forecast transactions and unrecognised firm commitments.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply
hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of both
the hedging instrument and the hedged item or transaction and then the economic relationship between the two, including whether the hedging
instrument is expected to offset changes in cash flow of the hedged item. Such hedges are expected to be highly effective in achieving offsetting
changes in cash flows. The Group designates the full change in the fair value of the forward contract (including forward points) as the hedging
instrument. Forward contracts are initially recognised at fair value on the date that the contract is entered into and are subsequently
remeasured at fair value at each reporting date. The fair value of forward currency contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles. Forward contracts are recorded as assets when the fair value is positive and as
liabilities when the fair value is negative.
For the purposes of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that
is either attributable to a particular risk associated with a recognised asset or liability, a highly probable forecast transaction, or the foreign
currency risk in an unrecognised firm commitment.
Cash flow hedges that meet the criteria for hedge accounting are accounted for as follows: the effective portion of the gain or loss on the hedging
instrument is recognised directly in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised
immediately in the Consolidated Income Statement in administrative expenses.
Amounts recognised within the Consolidated Statement of Comprehensive Income are transferred to the Consolidated Income Statement, within
administrative expenses, when the hedged transaction affects the Consolidated Income Statement, such as when the hedged financial expense
is recognised.
If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in equity
is transferred to the Consolidated Income Statement within administrative expenses. If the hedging instrument matures or is sold, terminated
or exercised without replacement or rollover, any cumulative gain or loss previously recognised within the Consolidated Statement of
Comprehensive Income remains within the Consolidated Statement of Comprehensive Income until after the forecast transaction or firm
commitment affects the Consolidated Income Statement.
Any other gains or losses arising from changes in fair value on forward contracts are taken directly to administrative expenses in the
Consolidated Income Statement.
2.15 Taxation
2.15.1 Current tax
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
2.15.2 Deferred income tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
in the Consolidated Financial Statements, with the following exceptions:
• where the temporary difference arises from the initial recognition of goodwill or from an asset or liability in a transaction that is not a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future; and
• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available in the future against which
the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related
asset is realised or liability is settled, based on tax rates and laws enacted, or substantively enacted, at the balance sheet date.
Income tax is charged or credited directly to the Consolidated Statement of Comprehensive Income if it relates to items that are credited or
charged to the Consolidated Statement of Comprehensive Income. Otherwise, income tax is recognised in the Consolidated Income Statement.
146
2.16 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 30. In valuing equity-
settled transactions, no account is taken of any performance conditions as none of the conditions set are market related.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date, until the vesting date, reflects the extent to which
the vesting period has expired and the Directors’ best estimate of the number of equity instruments that will ultimately vest. The Consolidated
Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of
that period. As the schemes do not include any market-related performance conditions, no expense is recognised for awards that do not
ultimately vest.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 13).
The Group has an employee share trust for the granting of non-transferable options to Executive Directors and senior Management. Shares in the
Group held by the employee share trust are treated as investment in own shares and are recorded at cost as a deduction from equity (see note 29).
2.17 Own shares held
Computacenter plc shares held by the Group are classified in shareholders’ equity as ‘own shares held’ and are recognised at cost. Consideration
received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being
taken to reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.
2.18 Fair value measurement
The Group measures certain financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Fair value-related disclosures for financial instruments that are measured at fair value or where fair values are disclosed, are summarised
in note 27.
3 Critical accounting estimates and judgements
The preparation of the Consolidated Financial Statements requires Management to exercise judgement in applying the Group’s accounting
policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
Due to the inherent uncertainty in making these critical judgements and estimates, actual outcomes could be different.
During the year, Management reconsidered the critical accounting estimates and judgements for the Group. This process included reviewing the
last reporting period’s disclosures, the key judgements required on the implementation of forthcoming standards and the current period’s
challenging accounting issues. Where Management deemed an area of accounting to be no longer a critical estimate or judgement, an
explanation for this decision is found in note 3.3 to the Consolidated Financial Statements.
3.1 Critical estimates
Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the year in which the estimates are revised
and in any future years affected. The areas involving significant risk resulting in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are as follows:
147
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
3 Critical accounting estimates and judgements continued
3.1.1 Services revenue recognition and contract provisions
Percentage of completion revenue recognition
On occasion, the Group accounts for certain Services contracts using the percentage of completion method, recognising revenue by reference
to the stage of completion of the contract which is determined by actual costs incurred as a proportion of total forecast contract costs. This
method places considerable importance on accurate estimates of the extent of progress towards completion of the contract and may involve
estimates on the scope of services required for fulfilling the contractually defined obligations. These significant estimates include total contract
costs, total contract revenues, contract risks, including technical risks, and other assumptions. Under the percentage of completion method,
the changes in these estimates and assumptions may lead to an increase or decrease in revenue recognised at the balance sheet date with the
in-year revenue recognition appropriately adjusted as required. When the outcome of the contract cannot be estimated reliably, revenue is
recognised only to the extent that expenses incurred are eligible to be recovered. No revenue is recognised if there are significant uncertainties
regarding recovery of the consideration.
The key judgements are the extent to which revenue should be recognised and also, where total contract costs are not covered by total contract
revenue, the extent to which an adjustment is required.
3.1.2 Accounting for business combinations and valuation of intangibles
Pivot acquisition
Business combinations are accounted for at fair value. The valuation of goodwill and acquired intangibles is calculated separately on each
individual acquisition. In attributing value to intangible assets arising on acquisition, management has made certain assumptions in relation
to the expected growth rates, attrition rates and the appropriate weighted average cost of capital (‘WACC’).
The value attributable to the intangible assets acquired on acquisitions also impacts the deferred tax provision relating to these items.
The total carrying value of acquired intangible – Customer relationship arising from Pivot acquisition amounted to $67.0 million for the USA cash
generating unit (CGU) and $4.7 million for the Canada CGU.
In order to assess the impact of the key assumptions on the values disclosed in the accounts for customer relationship intangible asset,
the Directors have applied the following sensitivities to the acquisitions;
Intangible asset – Customer Relationship – US CGU
Key assumption
Long-term growth rate
WACC
Attrition rate
Rate applied in
the financial
statements
2.0%
11.9%
5.0%
Sensitivity
tested
1.0%
12.9%
7.0%
Value of
intangible
assets $’000
(3,100)
(4,200)
(7,900)
Growth rates are estimated based on the current conditions at the date of each acquisition with reference to inflation adjusted terms.
The attrition rates are estimated based on a review of recent historic attrition levels across the customer portfolio alongside management views
on longer-term attrition expectations.
At the date of acquisition, the resulting valuation provides a reasonable approximation as to the value of the intangibles acquired and that any
reasonably possible change in any one of the estimations in isolation would not have a material impact on the financial statements.
3.2 Critical judgements
Judgements made by Management in the process of applying the Group’s accounting policies, that have the most significant effect on the
amounts recognised in the Consolidated Financial Statements, are as follows:
3.2.1 Exceptional items
Exceptional items remain a core focus of Management with the recent alternative performance measure regulations providing further guidance
in this area.
Management is required to exercise its judgement in the classification of certain items as exceptional and outside of the Group’s adjusted1
results. The overall goal of Management is to present the Group’s underlying performance without distortion from one-off or non-trading events
regardless of whether they are favourable or unfavourable to the underlying result.
To achieve this, Management have considered the materiality, infrequency and nature of the various items classified as exceptional this year
against the requirements and guidance provided by IAS 1, our Group accounting policies and the recent regulatory interpretations and guidance.
148
In reaching their conclusions, Management consider not only the effect on the overall underlying Group performance but also where an item is
critical in understanding the performance of its component Segments which is of relevance to investors and analysts when assessing the Group
result and its future prospects as a whole.
Further details of the individual exceptional items, and the reasons for their disclosure treatment, are set out in note 8.
3.2.2 Bill and hold
The Group generates some of its revenue through its ‘bill and hold’ arrangement with its customers. This arises when the customer is invoiced but
the product is not shipped to the customer until a later date, in accordance with the customer’s request in a written agreement. In order to
determine the appropriate timing of revenue recognition, it is assessed whether control has transferred to the customer.
A bill and hold arrangement is only put in place when a customer lacks the physical space to store the product or the product previously ordered
is not yet needed in accordance with the customer’s schedule and the customer wants to guarantee supply of the product. In order to determine
the bill and hold arrangements, the following criteria must be met:
a) the reason for the bill and hold arrangement must be substantive (for example: the customer has requested the arrangement);
b) the product must be identified separately as belonging to the customer;
c) the product currently must be ready for physical transfer to the customer; and
d) the entity cannot have the ability to use the product or to direct it to another customer.
Judgement is required to determine if all of the criteria (a) to (d) has been met to recognise a bill and hold sale. This is determined by segregation
and readiness of inventory and the review and approval of all customer requests in order to assess whether the accounting policy had been
correctly applied to recognise a bill and hold sale.
3.3 Change in critical estimates and critical judgements
During the year, Management reassessed the critical estimates and critical judgements. The assessment of contract provisions was removed as
a critical estimate as the ‘difficult’ contracts that Management held under review and included within the contract provision have reduced such
that Management no longer consider that the outcomes of any of these ‘difficult’ contracts identified and provided for as at 31 December 2020
contained assumptions that were sufficiently sensitive to affect the provision materially. Accordingly, Management has concluded that the
‘difficult’ contract provisions should not be included as a critical estimate, as defined under IAS 1.125 as a ‘major source of estimation uncertainty.’
Accounting for business combinations and valuation of intangibles has been included as a critical estimate during the current year as the
material nature of the Pivot acquisition means that a number of the estimates used in determining the value attributable to the intangible assets
acquired on acquisition contain assumptions that are sensitive enough to affect the valuations materially.
4 Segment information
During the first half of the year, Management reviewed the way it reported Segmental performance to the Board and the Chief Executive Officer,
who is the Group’s Chief Operating Decision Maker (‘CODM’). As a result, from 1 January 2020 the Group has revised where the results of certain
Managed Services contracts are reported within its operating Segments. The operating Segments remain unchanged in all other respects from
those reported at 31 December 2019. The change in Segmental reporting has no impact on reported Group results.
Operational responsibility for a significant European customer was transferred from the German to the French business from 1 January 2020. The
French Senior Management targets now include the results from this customer. We have therefore restated the results for the French and German
Segments for the year ended 31 December 2019, to assist with understanding the growth in each business and to ensure year-on-year results are
comparable.
Computacenter USA performs Managed Services work for other Computacenter entities, on behalf of several key European contracts. These
revenues were originally recorded in the USA Segment, where the associated underlying subsidiary recognises the revenues in its statutory
accounts. However, to be consistent with practices across the Group, Management has reallocated these revenues to the UK, German, French
and International Segments which have responsibility for the customer contracts. This reflects better where the portfolio coordination and
operational responsibility lies and therefore where the benefits should accrue on a Segmental basis. This treatment also means that for the
Segmental analysis, Computacenter USA, within the USA Segment, is now treated similarly to the remainder of our offshore internal service
provider entities that are grouped within the International Segment. We have, therefore, restated the Managed Services revenues for the year
ended 31 December 2019 to assist with understanding the growth in each business and to ensure year-on-year comparisons reflect true
underlying growth. This has no impact on Segmental profitability, as the margins were previously shared on the same basis that the revenue
now reflects. Further, with the acquisition of Pivot Technology Solutions, Inc. on 2 November 2020, which includes a material business in Canada,
the USA Segment has been renamed as the North American Segment and is referred to as such throughout this Annual Report and Accounts.
149
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
4 Segment information continued
This new Segmental reporting structure is the basis on which internal reports are provided to the Chief Executive Officer, as the CODM, for
assessing performance and determining the allocation of resources within the Group, in accordance with IFRS 8.25. Segmental performance is
measured based on external revenues, adjusted1 gross profit, adjusted1 operating profit and adjusted1 profit before tax. As noted on page 65,
Central Corporate Costs continue to be disclosed as a separate column within the Segmental note.
To enable comparisons with prior year performance, historical Segment information for the year ended 31 December 2019 has been restated in
accordance with the revised Segmental reporting structure.
Segmental performance for the years ended 31 December 2020 and 31 December 2019 were as follows:
UK
£’000
Germany
£’000
France
£’000
North
America
£’000
International
£’000
Central
Corporate
Costs
£’000
1,328,049
1,297,444
526,436
917,654
110,501
129,058
316,291
445,349
1,773,398
233,817
345,001
578,818
1,876,262
249,258
(158,889)
90,369
(1,194)
89,175
279,889
(167,308)
112,581
(2,158)
110,423
35,698
110,688
146,386
672,822
74,380
(61,394)
12,986
(575)
12,411
19,645
7,146
26,791
944,445
86,333
(72,295)
14,038
(909)
13,129
7,185
56,645
63,830
174,331
30,681
(27,117)
3,564
(1,110)
2,454
–
–
–
–
–
–
(27,077)
(27,077)
–
(27,077)
Total
£’000
4,180,084
425,403
835,771
1,261,174
5,441,258
720,541
(514,080)
206,461
(5,946)
200,515
(684)
144
14,030
13,490
(7,434)
206,571
Total
£’000
206,461
(7,434)
(540)
198,487
Year ended 31 December 2020
Revenue
Technology Sourcing revenue
Services revenue
Professional Services
Managed Services
Total Services revenue
Total revenue
Results
Adjusted1 gross profit
Administrative expenses
Adjusted1 operating profit/(loss)
Adjusted1 net interest
Adjusted1 profit/(loss) before tax
Exceptional items:
- costs relating to acquisition of a subsidiary
- redundancy and other restructuring credit
- gain on acquisition of a subsidiary
Total exceptional items
Amortisation of acquired intangibles
Profit before tax
Year ended 31 December 2020
Adjusted1 operating profit
Amortisation of acquired intangibles
Exceptional items
Operating profit
150
Year ended 31 December 2020
Other Segment information
Property, plant and equipment
Right-of-use assets
Intangible assets
Capital expenditure:
Property, plant and equipment
Right-of-use assets
Software
Depreciation of property, plant and
equipment
Depreciation of right-of-use assets
Amortisation of software
UK
£’000
Germany
£’000
France
£’000
North
America
£’000
International
£’000
Central
Corporate
Costs
£’000
40,872
12,757
51,629
8,404
3,774
3,683
11,065
4,566
5,799
42,575
61,500
17,061
5,909
16,670
428
6,565
29,514
917
7,991
18,856
1,954
2,943
10,445
5
2,244
4,163
41
9,020
15,495
192,491
4,476
–
–
1,513
2,170
103
6,516
21,014
11,597
1,409
17,629
244
2,646
4,741
341
Share-based payments
5,601
1,708
221
424
–
UK
(restated)
£’000
Germany
(restated)
£’000
France
(restated)
£’000
North
America
(restated)
£’000
International
(restated)
£’000
Central
Corporate
Costs
£’000
1,142,746
1,344,423
479,423
732,009
123,626
117,685
336,595
454,280
1,597,026
191,866
350,885
542,751
1,887,174
39,016
106,586
145,602
625,025
13,512
5,074
18,586
750,595
4,004
65,329
69,333
192,959
–
–
–
–
–
221,208
(156,673)
64,535
(1,286)
63,249
253,222
(173,721)
79,501
(1,987)
77,514
75,650
(58,362)
17,288
(524)
16,764
69,493
(60,369)
9,124
(871)
8,253
43,541
(35,358)
8,183
(573)
7,610
–
(27,139)
(27,139)
–
(27,139)
Year ended 31 December 2019
Revenue
Technology Sourcing revenue
Services revenue
Professional Services
Managed Services
Total Services revenue
Total revenue
Results
Adjusted1 gross profit
Administrative expenses
Adjusted1 operating profit/(loss)
Adjusted1 net interest
Adjusted1 profit/(loss) before tax
Exceptional items:
– unwinding of discount relating to
acquisition of a subsidiary
– costs relating to acquisition of a subsidiary
Total exceptional items
Amortisation of acquired intangibles
Profit before tax
–
–
–
–
–
–
–
–
–
–
Total
£’000
106,974
129,622
274,732
23,141
48,518
4,360
24,033
45,154
7,201
7,954
Total
£’000
3,822,227
366,083
864,469
1,230,552
5,052,779
663,114
(511,622)
151,492
(5,241)
146,251
(825)
(94)
(919)
(4,374)
140,958
151
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
4 Segment information continued
The reconciliation for adjusted1 operating profit to operating profit as disclosed in the Consolidated Income Statement is as follows:
Year ended 31 December 2019
Adjusted1 operating profit
Amortisation of acquired intangibles
Exceptional items
Operating profit
Other Segment information
Property, plant and equipment
Right-of-use assets
Intangible assets
Capital expenditure:
Property, plant and equipment
Right-of-use assets
Software
Depreciation of property, plant and
equipment
Depreciation of right-of-use assets
Amortisation of software
UK
£’000
Germany
£’000
43,734
13,762
54,035
11,632
1,850
7,903
9,968
3,056
5,616
41,347
70,727
16,678
9,277
25,614
616
6,356
27,007
1,187
France
£’000
4,558
9,795
108
1,126
1,448
13
1,788
4,076
45
Total
£’000
151,492
(4,374)
(94)
147,024
Total
£’000
101,443
110,882
175,670
30,132
34,971
8,737
21,456
40,266
7,169
6,775
–
–
–
–
–
–
–
–
–
–
North
America
£’000
International
£’000
Central
Corporate
Costs
£’000
4,060
7,953
93,696
7,744
8,645
11,153
3,921
1,528
–
748
2,224
–
4,176
4,531
205
2,596
3,903
321
Share-based payments
5,089
1,417
119
150
–
Charges for the amortisation of acquired intangibles and utilisation of deferred tax assets (where initial recognition was an exceptional item or
a fair value adjustment on acquisition) are excluded from the calculation of adjusted1 operating profit. This is because these charges are based
on judgements about their value and economic life, are the result of the application of acquisition accounting rather than core operations, and
whilst revenue recognised in the Consolidated Income Statement does benefit from the underlying asset that has been acquired, the amortisation
costs bear no relation to the Group’s underlying ongoing operational performance. In addition, amortisation of acquired intangibles is not
included in the analysis of Segment performance used by the CODM.
Information about major customers
Included in revenues arising from the UK Segment are revenues of approximately £556.3 million (2019: £317.0 million) which arose from sales
to the Group’s largest customer. For the purpose 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.
5 Revenue
Revenue recognised in the Consolidated Income Statement is analysed as follows:
Revenue by type
Technology Sourcing revenue
Services revenue
Professional Services
Managed Services
Total Services revenue
Total revenue
152
2020
£’000
2019
£’000
4,180,084
3,822,227
425,403
835,771
1,261,174
5,441,258
366,083
864,469
1,230,552
5,052,779
A revenue amount of £231.3 million for the year ended 2020 (2019: £191.0 million) is represented by items still ‘held’ by the Group for ‘bill and hold’
transactions at the balance sheet date.
Contract balances
The following table provides the information about contract assets and contract liabilities from contracts with customers.
Trade receivables
Contract assets, which are included in prepayments
Contract assets, which are included in accrued income
Contract liabilities, which are included in deferred income
Note
20
31 December
2020
£’000
1,065,061
27,725
125,433
292,577
31 December
2019
£’000
948,334
5,959
96,971
174,258
The Group has implemented an expected credit loss impairment model with respect to contract assets using the simplified approach. Contract
assets have been grouped on the basis of their shared risk characteristics and a provision matrix has been developed and applied to these
balances to generate the loss allowance. The majority of these contract asset balances are with blue chip customers and the incidence of credit
loss is low. There has therefore been no material adjustment to the loss allowance under IFRS 9.
Significant changes in contract assets and liabilities
Contract assets are balances due from customers under long-term contracts as work is performed and therefore a contract asset is recognised
over the period in which the performance obligation is fulfilled. This represents the Group’s right to consideration for the services transferred to
date. Amounts are generally reclassified to trade and other receivables when these have been certified or invoiced to a customer. Refer to note
2.11.1 for credit terms of trade receivables.
Trade receivables balance increased during the year by £156.0 million due to acquisition of subsidiaries during the year (2019: nil)
Win fees, deferred contract costs and fulfilment costs are included in the prepayments balance above. The Consolidated Income Statement
impact of the win fees was a recognition of a net income in 2020 of £1.8 million with a corresponding cost to tax of £0.3 million for the year. As at
31 December 2020, the win fee balance was £8.6 million. The Consolidated Income Statement impact of fulfilment costs was a recognition of a net
cost in 2020 of £1.4 million with a corresponding credit to tax of £0.3 million for the year.
As at 31 December 2020, the fulfilment costs balance was £5.6 million. Contract assets, which are included in prepayments, increased by
£39.2 million due to acquisition of a subsidiary during the year. No impairment loss was recorded for win fees or fulfilment costs during the year.
As at 31 December 2020, deferred contract costs of £19.1 million were included within prepayments following the acquisition of subsidiaries
during the year.
Revenue was accrued in the reporting period amounting to £1.6 million with a debit to foreign exchange of £3.1 million. Accrued income balance
also increased by £18.4 million due to acquisition of subsidiaries during the year (2019: nil). No impairment loss was recorded for accrued income
during the year.
Revenue recognised in the reporting period that was included in the contract liability balance at the beginning of the period was £89.4 million.
Contract liabilities, which are included in deferred income, increased by £42.3 million due to the acquisition of subsidiaries during the year.
Revenue recognised in the reporting period from performance obligations satisfied or partially satisfied in previous periods was nil. Partially
satisfied performance obligations continue to incur revenue and costs in the period.
Remaining performance obligations (Work in hand)
Contracts which have remaining performance obligations as at 31 December 2020 and 31 December 2019 are set out in the table below. The table
below discloses the aggregate transaction price relating to those unsatisfied or partially unsatisfied performance obligations, excluding both
(a) amounts relating to contracts for which revenue is recognised as invoiced and (b) amounts relating to contracts where the expected duration
of the ongoing performance obligation is one year or less.
Managed Services
As at 31 December 2020
As at 31 December 2019
Less than
one year
£m
540
588
One to
two years
£m
343
317
Two to
three years
£m
211
198
Three to
four years
£m
170
70
Four years
and beyond
£m
93
34
Total
£m
1,357
1,207
The average duration of contracts is between one and five years, however some contracts will vary from these typical lengths. Revenue is
typically earned over these varying timeframes, however more of the revenue noted above is expected to be earned in the short term.
153
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
6 Group operating profit
This is stated after charging/(crediting):
Depreciation of property, plant and equipment (excluding right-of-use assets)
Depreciation on right-of-use assets
Loss on disposal of property, plant and equipment
Amortisation of software
Loss on disposal of software
Amortisation of acquired intangible assets
Severance cost
Bad debt charge
One-off employee EPS target bonus*
Government grants
Gain/(loss) on net foreign currency differences
2020
£’000
24,033
45,154
200
7,201
321
7,434
13,098
2,212
5,182
(6,400)
398
2019
£’000
21,456
40,266
347
7,169
116
4,374
16,275
2,834
–
–
(1,090)
Costs of inventories recognised as an expense
3,742,593
3,426,307
*
The Company decided to mark the achievement of its long held ambition to exceed £1 of adjusted1 diluted earnings per share with a one-off employee bonus. The bonus was given to
circa 80 per cent of employees globally. Senior managers and those with commission-based rewards were excluded, with the focus on those longest serving. For those eligible, the
award was £200 or equivalent for an employee who had completed their first year of service, rising to £500 for those with more than seven years of service.
The rental income is included in Administrative expenses.
7 Auditor’s remuneration
Auditor’s remuneration:
– Audit of the Financial Statements
– Audit of subsidiaries
Total audit fees
Audit-related assurance services including the review of the Interim Report and Accounts
Taxation compliance services
Other assurance services
Other non-audit services
Total non-audit services
Total fees
2020
£’000
191
1,138
1,329
63
83
4
31
181
1,510
2019
£’000
60
829
889
62
1
7
–
70
959
Audit-related assurance services represent the half year review, and other assurance services represent assurance over government grants
both performed by the Group’s auditor KPMG LLP.
Pivot audit for the two-month period ended 31 December 2020 and also for the year ended 31 December was performed by EY Canada for a fee
of £125,644 ($169,431).
Certain taxation compliance services and other non-audit services in 2020 are provided by Ernst and Young, auditor of a North American
subsidiary. Non-audit services relate to advisory services on COVID-19 subsidies, cyber-attack and Jersey/Ireland entity merger.
154
8 Exceptional items
Operating profit
Costs relating to acquisition of a subsidiary
Gain on release of French Social Plan provision
Gain on acquisition of subsidiary
Exceptional operating profit/(loss)
Interest cost relating to acquisition of a subsidiary
Profit/(loss) on exceptional items before taxation
Income tax
Tax credit on exceptional items
Tax credit relating to acquisition of a subsidiary
Profit/(loss) on exceptional items after taxation
2020
£’000
(684)
144
14,030
13 ,490
–
13,490
–
715
14,205
2019
£’000
(94)
–
–
(94)
(825)
(919)
39
839
(41)
2020: Included within the current year are the following exceptional items:
• An exceptional cost during the year of £0.7 million resulted from the acquisition of Pivot and primarily related to fees paid to the Company’s
advisors. This cost is non-operational, unlikely to recur and is consistent with our prior-year treatment of acquisition costs on material
transactions as exceptional items.
• A credit of £0.1 million arising on an expense previously put in exceptional costs within the financial statements of 2016 in relation to the 2014
French Social plan.
• The acquisition of BT Services France resulted in an exceptional gain of £14.0 million, which was recognised on consolidation of the subsidiary.
The gain arose because the net assets acquired for consideration of €1 totalled £14.0 million after fair value adjustments, including
£27.6 million of cash. Refer to note 18 d) of the Financial Statements for further information on the calculation of the exceptional gain on
acquisition. The business acquired comprised BT’s domestic French services operations which, on acquisition, were making considerable
losses on a stand-alone basis. The Company considers that the exceptional gain reflects the future losses that the acquired business will incur
over the medium term, as it is brought onto a sustainable footing through a combination of upskilling employees, cross-selling into the Group’s
customers, alignment with Group processes and systems, and the general improvement of its operating activities. These costs are non-
operational in nature, material in size and unlikely to recur and have therefore been classified as exceptional.
• A further tax credit of £0.7 million was recorded due to post-acquisition activity in FusionStorm. This benefit derived from payments which were
settled by the vendor, out of the consideration paid, via post-acquisition capital contributions to FusionStorm. As this credit was related to the
acquisition and not operational activity within FusionStorm, is a one-off and material to the overall tax result, we have classified this as an
exceptional tax item, consistent with the treatment in 2018 and 2019.
2019: Included within the prior year are the following exceptional items:
• An exceptional operating loss during the year of £0.1 million resulted from residual costs directly relating to the acquisition of FusionStorm.
These costs were non-operational in nature, material in size and unlikely to recur and have therefore been classified as outside our adjusted1
results. The current year loss resulted from social charges relating to the severance payment for the FusionStorm Chief Executive Officer and
has been treated as an exceptional item for consistency with the disclosure in the year to 31 December 2018. A further £0.8 million relating to
the unwinding of the discount on the deferred consideration for the purchase of FusionStorm has been removed from the adjusted1 net finance
expense and classified as exceptional interest costs.
• A credit of £0.04 million arising from the tax benefit on the FusionStorm exceptional acquisition costs has been recognised as tax on the above
exceptional item. A further tax credit of £0.8 million was recorded due to post-acquisition activity in FusionStorm, related to the transaction,
which has resulted in an in-year tax benefit. This activity was settled by the vendor, out of the consideration paid, via post-acquisition capital
contributions to FusionStorm. As this credit was related to the acquisition and not operational activity within FusionStorm, is of a one-off
nature and material to the overall tax result, it was classified as an exceptional tax item.
9 Staff costs
The average monthly number of employees (including Executive Directors) during the year was made up as follows:
UK
Germany
France
North America
International
2020
No.
4,117
6,418
2,160
1,326
2,743
16,764
2019
No.
4,264
6,511
1,595
604
2,842
15,816
155
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
9 Staff costs continued
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Share-based payments
Pension costs*
2020
£’000
809,592
120,309
9,473
17,419
956,793
2019
£’000
779,462
113,162
6,754
16,532
915,910
*
During the year management has adjusted the presentation of staff costs to exclude certain employee contributions that were previously included within pension costs.
The comparative amount has been reduced by £11.4 million for consistency.
Share-based payments arise from transactions accounted for as equity-settled share-based payment transactions.
10 Finance income
Bank interest received
Other interest received
11 Finance costs
Bank loans and overdrafts
Finance charges paid
Interest paid on lease liabilities
Other interest
12 Income tax
a) Tax on profit from ordinary activities
Tax charged in the Consolidated Income Statement
Current income tax
UK corporation tax
Foreign tax:
– operating results before exceptional items
– exceptional items
Total foreign tax
Adjustments in respect of prior years
Total current income tax
Deferred tax
Operating results before exceptional items:
– origination and reversal of temporary differences
– change in tax rates
– adjustments in respect of prior years
Total deferred tax
Tax charge in the Consolidated Income Statement
156
2020
£’000
424
51
475
2020
£’000
1,757
38
4,479
147
6,421
2019
£’000
823
157
980
2019
£’000
2,406
–
3,728
912
7,046
2020
£’000
2019
£’000
18,176
13,213
36,375
(715)
35,660
350
54,186
(710)
(522)
(539)
(1,771)
26,724
(878)
25,846
(460)
38,599
311
–
487
798
52,415
39,397
b) Reconciliation of the total tax charge
Profit before income tax
At the UK standard rate of corporation tax of 19 per cent (2019: 19 per cent)
Expenses not deductible for tax purposes
Non-deductible element of share-based payment charge
Adjustments in respect of prior years
Effect of different tax rates of subsidiaries operating in other jurisdictions
Change in tax rate
Other differences
Overseas tax not based on earnings
Tax effect of income not taxable in determining taxable profit
At effective income tax rate of 25.4 per cent (2019: 27.9 per cent)
2020
£’000
206,571
2019
£’000
140,958
39,249
(34)
69
(189)
14,305
(522)
1,246
1,427
(3,136)
52,415
26,782
1,474
432
266
8,876
–
32
1,604
(69)
39,397
c) Tax losses
Deferred tax assets of £0.4 million (2019: £2.0 million) have been recognised in respect of losses carried forward.
In addition, at 31 December 2020, there were unused tax losses across the Group of £307.6 million (2019: £143.0 million) for which no deferred tax
asset has been recognised. Of these losses, £24.7 million (2019: £39.8million) arise in Germany and £282.9 million (2019: £103.2 million) arise in
France. A significant proportion of the losses arising in Germany 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 2020 and 31 December 2019 relates to the following:
Consolidated Balance Sheet
Consolidated Income Statement
and Consolidated Statement
of Comprehensive Income
Deferred income tax assets
Relief on share option gains
Other temporary differences
Revaluations of foreign exchange contracts to fair value
Losses available for offset against future taxable income
Gross deferred income tax assets
Deferred income tax liabilities
Revaluations of foreign exchange contracts to fair value
Amortisation of intangibles
Gross deferred income tax liabilities
Deferred income tax charge
Net deferred income tax liabilities
Disclosed on the Consolidated Balance Sheet
Deferred income tax assets
Deferred income tax liabilities
Net deferred income tax liabilities
2020
£’000
1,712
547
619
(994)
(250)
1,705
3,339
2019
£’000
432
(285)
247
(2,131)
(71)
1,186
(622)
2020
£’000
7,012
10,310
987
341
18,650
1,058
26,384
27,442
2019
£’000
5,300
6,575
369
1,343
13,587
809
15,272
16,081
(8,792)
(2,494)
10,081
(18,873)
(8,792)
9,204
(11,698)
(2,494)
At 31 December 2020, there was no recognised or unrecognised deferred income tax liability (2019: £nil) for taxes that could 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
continue to be covered by relevant dividend exemptions. Where, following the departure of the UK from the European Union, the Group’s European
subsidiaries’ unremitted earnings are no longer covered by a dividend exemption, appropriate mitigating steps are envisaged that would
eliminate the incidence of withholding tax.
e) Impact of rate change
The main rate of UK Corporation tax for financial year 2020 is 19 per cent, as enacted in the Finance Act 2020. The deferred tax in these
Consolidated Financial Statements reflects this.
157
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
13 Earnings per share
Earnings per share amounts are calculated by dividing profit attributable to ordinary equity holders by the weighted average number of ordinary
shares outstanding during the year (excluding own shares held).
To calculate diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential shares. Share options granted to employees where the exercise price is less than the average market price of the Company’s ordinary
shares during the year are considered to be dilutive potential shares.
2020
£’000
153,750
2020
£’000
112,894
2,005
114,899
2020
pence
136.2
133.8
2019
£’000
101,655
2019
£’000
112,514
1,655
114,169
2019
pence
90.3
89.0
2020
£’000
2019
£’000
–
13,943
13,943
24,366
11,398
35,764
43,830
30,704
Profit attributable to equity holders of the Parent
Basic weighted average number of shares (excluding own shares held)
Effect of dilution:
Share options
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
14 Dividends paid and proposed
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2019: nil (2018: 21.6 pence)
Interim dividend for 2020: 12.3 pence (2019: 10.1 pence)
Proposed (not recognised as a liability as at 31 December)
Equity dividends on ordinary shares:
Final dividend for 2020: 38.4 pence (2019: 26.9 pence)
158
15 Property, plant and equipment
Cost
At 1 January 2019
Transfer
Implementation of IFRS 16
Relating to acquisition of subsidiaries
Additions
Disposals
Foreign currency adjustment
At 31 December 2019
Relating to acquisition of subsidiaries (note 18)
Additions
Disposals
Transfers
Foreign currency adjustment
At 31 December 2020
Accumulated depreciation and impairment
At 1 January 2019
Implementation of IFRS 16
Relating to acquisition of subsidiaries
Provided during the year
Disposals
Foreign currency adjustment
At 31 December 2019
Provided during the year
Disposals
Foreign currency adjustment
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
At 1 January 2019
Freehold
land and
buildings
£’000
Short leasehold
improvements
£’000
Fixtures,
fittings,
equipment
and vehicles
£’000
Property, plant
and equipment
excluding
Right-of-use
assets
22,102
–
–
2,223
6,713
(1,385)
(795)
28,858
1,453
4,906
(2,489)
600
78
33,406
8,020
–
1,724
3,808
(1,345)
(361)
11,846
3,758
(2,435)
129
13,298
138,388
(15,348)
–
2,765
22,005
(6,270)
(3,790)
137,750
3,969
18,283
(6,664)
(600)
2,330
155,068
90,688
(6,581)
2,579
15,683
(3,602)
(2,579)
96,188
18,261
(6,163)
1,808
110,094
245,947
(15,348)
–
4,988
30,132
(7,655)
(5,695)
252,369
5,518
23,141
(9,153)
–
3,467
275,342
139,680
(6,581)
4,303
21,456
(4,947)
(2,985)
150,926
24,033
(8,598)
2,007
168,368
Right-of-
use assets
£’000
–
15,348
111,839
958
34,971
(3,021)
(5,435)
154,660
12,788
48,518
(14,224)
–
5,562
207,304
–
6,581
–
40,266
(2,309)
(760)
43,778
45,154
(12,927)
1,677
77,682
Total
£’000
245,947
–
111,839
5,946
65,103
(10,676)
(11,130)
407,029
18,306
71,659
(23,377)
–
9,029
482,646
139,680
–
4,303
61,722
(7,256)
(3,745)
194,704
69,187
(21,525)
3,684
246,050
20,108
17,012
14,082
44,974
41,562
47,700
106,974
101,443
106,267
129,622
110,882
–
236,596
212,325
106,267
85,457
–
–
–
1,414
–
(1,110)
85,761
96
(48)
–
–
1,059
86,868
40,972
–
–
1,965
–
(45)
42,892
2,014
–
70
44,976
41,892
42,869
44,485
The Group leases various properties, equipment and cars. Rental contracts are typically made for fixed periods of two to 10 years, but might have
extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets cannot be used as security for borrowing purposes.
As at 31 December 2020, the net book value of recognised right-of-use assets relating to land and buildings was £90.3 million (2019: £68.0 million)
and plant and equipment £39.3 million (2019: £42.9 million). The depreciation charge for the year relating to those assets was £18.8 million
(2019: £16.8 million) and £26.3 million (2019: £23.5 million), respectively.
159
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
16 Intangible assets
Cost
At 1 January 2019
Relating to acquisition of subsidiaries
Additions
Disposals
Adjustment within measurement period
Foreign currency adjustment
At 31 December 2019
Relating to acquisition of subsidiaries (note 18)
Additions
Disposals
Foreign currency adjustment
At 31 December 2020
Accumulated amortisation and impairment
At 1 January 2019
Relating to acquisition of subsidiaries
Provided during the year
Disposals
Foreign currency adjustment
At 31 December 2019
Provided during the year
Disposals
Foreign currency adjustment
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
At 1 January 2019
Acquired intangible assets
Goodwill
£’000
Software
£’000
Customer
relationship
£’000
Others
£’000
Total
£’000
113,897
3,111
–
–
(4,131)
(3,360)
109,517
57,900
–
–
(2,448)
164,969
10,982
–
–
–
(709)
10,273
–
–
640
10,913
154,056
99,244
102,915
100,087
1,394
8,737
(1,321)
–
(633)
108,264
337
4,360
(3,413)
345
109,893
80,969
1,377
7,169
(1,295)
(523)
87,697
7,201
(3,092)
223
92,029
17,864
20,567
19,118
63,025
–
–
–
–
(2,314)
60,711
57,229
–
–
(5,229)
112,711
1,342
–
4,161
–
(443)
5,060
5,728
–
(532)
10,256
22,586
–
–
(1,376)
–
(718)
20,492
1,696
–
–
389
22,577
21,689
–
213
(1,326)
(292)
20,284
1,706
–
230
22,220
299,595
4,505
8,737
(2,697)
(4,131)
(7,025)
298,984
117,162
4,360
(3,413)
(6,943)
410,150
114,982
1,377
11,543
(2,621)
(1,967)
123,314
14,635
(3,092)
561
135,418
102,455
55,651
61,683
357
208
897
274,732
175,670
184,613
17 Impairment testing of goodwill, other intangible assets and other non-current assets
Goodwill acquired through business combinations have been allocated to the following CGUs:
• Computacenter (UK) Limited
• Computacenter Germany
• Computacenter AG
• cITius AG
• Computacenter Belgium
• FusionStorm
• Computacenter Netherlands (formerly Misco Solutions B.V.)
• PathWorks GmbH
• Pivot Technology Solutions, Inc. (Pivot) USA CGU
• Pivot Technology Solutions, Inc. (Pivot) Canada CGU
These represent the lowest level within the Group at which goodwill is monitored for internal Management purposes. Certain other corporate
assets are unable to be allocated against specific CGUs. These assets are tested across an aggregation of CGUs that utilise the asset.
160
Movements in goodwill
1 January
2019
Relating to
acquisition
of subsidiaries
Integration
of CGU
Adjustment
within
measurement
period
Foreign
currency
adjustment
31 December
2019
Relating to
acquisition
of subsidiaries
Foreign
currency
adjustment
31 December
2020
Market
growth rate
Discount rate
(post tax)
CC* – Computacenter.
–
–
4,620
(4,620)
–
–
35,049
–
–
35,049
–
–
–
–
–
–
CC* (UK)
Limited
£’000
TeamUltra
Limited
£’000
CC*
Germany
£’000
CC* AG
£’000
cITius AG
£’000
CC* Belgium
£’000
Fusion
-Storm
£’000
CC*
Netherlands
£’000
PathWorks
GmbH
£’000
30,429
4,620
16,150
1,069
2,096
1,556
43,691
3,304
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,131)
–
–
–
3,138
–
–
(856)
(17)
(33)
(121)
(1,399)
(176)
(76)
15,294
1,052
2,063
1,435
38,161
3,128
3,062
Pivot
Technology
Solutions,
Inc (USA
CGU)
£’000
Pivot
Technology
Solutions,
Inc (Canada
CGU)
£’000
Total
£’000
–
–
–
–
–
–
– 102,915
–
–
–
–
–
3,138
–
(4,131)
(2,678)
99,244
–
812
–
58
–
–
–
–
–
52,890
5,010
57,900
113
90
(1,525)
167
167
(2,712)
(258)
(3,088)
16,106
1,110
2,176
1,525
36,636
3,295
3,229
50,178
4,752 154,056
1.6%
1.6%
1.0%
1.5%
1.5%
1.4%
1.8%
1.3%
1.5%
1.8%
1.8%
8.3%
8.3%
9.4%
6.5%
6.5%
10.1%
9.7%
9.1%
6.5%
11.9%
12.4%
Key assumptions used in value-in-use calculations
The recoverable amounts of all CGUs 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 1.0 per cent
and 1.8 per cent (2019: between 1.0 and 1.8 per cent) thereafter.
Key assumptions used in the value-in-use calculation for all CGUs for 31 December 2020 and 31 December 2019 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 6.5 per cent to 10.1 per cent (2019: 8.7 per cent to 11.3 per cent) which represents
the Group’s pre-tax discount rate adjusted for the risk profiles of the individual CGUs.
Each CGU 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.
Other acquired intangible assets
Other acquired intangible assets consist of customer relationships, order backlog and tools and technology. The expected useful lives are shown
in note 2.
Other non-current assets
When there is an indication of impairment within a CGU, the carrying value of the non-current assets are compared to their recoverable amount
which is the higher of the assets’ fair value less costs of disposal or the value-in-use of the CGU calculated as described above.
161
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
18 Investments
a) Investment in associate
The following table illustrates summarised information of the investment in associates:
Cost
At 1 January
Liquidation
Exchange rate movement
At 31 December
Impairment
At 1 January
Liquidation
At 31 December
Carrying value
2020
£’000
54
–
3
57
–
–
–
57
2019
£’000
606
(549)
(3)
54
(549)
549
–
54
Gonicus GmbH
The Group has a 20 per cent (2019: 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.
b) Investment in subsidiaries
The Group’s subsidiary undertakings are as follows:
Name
Pivot Technology Services Pty Ltd.
Computacenter NV/SA
TeraMach Technologies Inc.
Computacenter Hong Kong Limited
Pivot Services Limited
Computacenter (UK) Limited
TeamUltra Limited
R.D. Trading Limited
Pivot Solutions International (UK) Ltd.
Computacenter France SAS
Computacenter NS
Computacenter AG & Co oHG
Computacenter Aktiengesellschaft
Computacenter Management GmbH
Computacenter Managed Services GmbH
Computacenter Germany AG & Co oHG
Computacenter Holding GmbH
Alfatron GmbH Elektronik – Vertrieb
C’NARIO Informationsprodukte Vertriebs-GmbH
E’ZWO Computer vertriebs
Computacenter Ireland Limited
Pivot Research, Ltd.
Pivot Shared Services, Ltd.
Computacenter B.V.
Computacenter NV
162
Country of incorporation
Australia¹
Belgium²
Canada³
China⁴
China⁵
England⁶
England⁶
England⁷
England⁸
France⁹
France⁹
Germany¹⁰
Germany¹¹
Germany¹¹
Germany¹¹
Germany¹²
Germany¹²
Germany¹²
Germany¹²
Germany¹²
Ireland¹³
Ireland¹⁴
Ireland¹⁴
Netherlands¹⁵
Netherlands¹⁶
Nature of business
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
Proportion of voting rights
and shares held
2020
100%i
100%vi
100%i
100%v
100%i
100%
100%i
90%vii
100%i
100%
100%iv
100%
100%
100%
100%
100%ii
100%
100%ii
100%ii
99.09%ii
100%i
100%i
100%i
100%
100%
2019
–
100%vi
–
100%v
–
100%
100%i
90%vii
–
100%
–
100%
100%
100%
100%
100%ii
100%
100%ii
100%ii
99.09%ii
100%i
–
–
100%
100%
Name
Computacenter Netherlands B.V.
Pivot Services International Singapore Pte. Ltd.
Computacenter (Pty) Limited
Computacenter AG
Computacenter PS AG
Computacenter TS GmbH
Computacenter FusionStorm Inc.
FusionStorm Acquisition Corp.
FusionStorm International Inc.
Computacenter (U.S.), Inc.
Pivot Technology Solutions, Ltd.
Pivot Technology Services Corp.
ARC Acquisition Inc.
Smart-Edge.com Inc.
Prosys Information System Inc.
Applied Computer Solutions
Digica Group Finance Limited
Computacenter Immobilien GmbH
Computacenter Information Technology
(Shanghai) Company Limited
Pivot Technology (Shanghai) Company Limited
Computacenter Services Kft
Computacenter India Private Limited
Computacenter Services (Malaysia) Sdn. Bhd
Computacenter México S. A . de C.V.
Pivot of the Americas, S. A . de C.V.
Computacenter Poland sp. Z.o.o.
Computacenter Services (Iberia) SLU
FusionStorm Netherlands Cooperatief
Computacenter Quest Trustees Limited
Computacenter Trustees Limited
Allnet Limited
Amazon Computers Limited
Amazon Energy Limited
Amazon Systems Limited
CAD Systems Limited
Compufix Limited
Computacenter (FMS) Limited
Computacenter (Management Services) Limited
Computacenter (Mid-Market) Limited
Computacenter Consumables Limited
Computacenter Distribution Limited
Computacenter Leasing Limited
Computacenter Maintenance Limited
Computacenter Overseas Holdings Limited
Computacenter Services Limited
Computacenter Software Limited
Computacenter Solutions Limited
Computacenter Training Limited
Country of incorporation
Netherlands¹⁷
Singapore¹⁸
South Africa¹⁹
Switzerland²⁰
Switzerland²¹
Switzerland²²
USA²³
USA²³
USA²³
USA²³
USA²⁴
USA²⁴
USA²⁴
USA²⁴
USA²⁴
USA²⁵
England⁶
Germany¹⁰
China²⁶
China²⁷
Hungary²⁸
India²⁹
Malaysia³⁰
Mexico³¹
Mexico³²
Poland³³
Spain³⁴
Netherlands¹⁷
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
Proportion of voting rights
and shares held
Nature of business
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
IT infrastructure services
Investment property
Investment property
International call centre services
International call centre services
International call centre services
International call centre services
International call centre services
International call centre services
International call centre services
International call centre services
International call centre services
Financial holdings
Employee share scheme trustees
Employee share scheme trustees
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
2020
100%v
100%i
100%i
100%
100%iii
100%iii
100%v
100%v
100%v
100%
100%v
100%v
100%v
100%v
44.9%viii
40%ix
100%i
100%ii
100%i
100%i
100%i
100%vi
100%i
100%vi
100%i
100%i
100%i
100%v
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
2019
100%v
–
100%i
100%
100%iii
100%iii
100%v
100%v
100%v
100%
–
–
–
–
–
–
100%i
100%ii
100%i
–
100%i
100%vi
100%i
100%vi
–
100%i
100%i
100%v
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
163
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Nature of business
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Proportion of voting rights
and shares held
2020
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%iv
100%iii
100%v
2019
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%i
100%iv
100%iii
100%v
¹³ Skybridge House, Corballis Road North, Dublin Airport, Swords, Co. Dublin, K67P6K2
¹⁴ Galway IDA Business Park, Building 1, Floor 1, Room 1, Dangan, Galway Ireland
¹⁵ Gondel 1, 1186 MJ Amstelveen, Netherlands
¹⁶ Beech Avenue 54 – 80 1119 PW Schipol-Rjik
¹⁷ Prins Bernhardplein 200, 1097JB Amsterdam
¹⁸ 4 Battery Road, #25-01 Bank of China Building, Singapore 049908
¹⁹ Klein D’Aria Estate, 97 Jip de Jager Drive, Belville, 7535, Cape Town
²⁰ Riedstrasse 14, CH-8953 Dietikon
²¹ Giessereistrasse 4, CH-8620 Wetzikon
²² Luzernerstrasse 52c, CH 6025 Neudorf
²³ 1 University Ave, Suite 102, Westwood, MA 02090
²⁴ 6025 The Corners Parkway, Suite 100, Norcorss, GA 30092
²⁵ 15461 Springdale Street, Huntington Beach, CA 92649
²⁶
Unit 229, Block 2, Building 1, Huanhu West 2nd Road no. 888 Nanhui New Town, Putong
District Shanghai
²⁷ 11/F, Carlton Building, No.21, Huangha Road, Haungpu District, Shanghai
²⁸ Haller Gardens, Building D. 1st Floor, Soroksari ut 30 – 34, Budapest 1095
²⁹ 4th Floor, Purva Premiere, Residency Road, Bangalore 560025
³⁰
Level 9, Tower 1, Puchong Financial Corporate Centre, Jalan Puteri 1/2, Bandar Puteri
47100 Puchong, Selangor Darul Ehsan
Av. Paseo de la Reforma, No.412 floor 5, Col.Juarez, Delegacion Cuauhtemoc, CP06600,
Mexico City
³¹
³² Presa de la Angostura 23 PB, Colonia Irrigacion 11500, Distrito Federal, Mexico City
³³ Ul. Glogowska 31/33, 60 – 702, Poznan, Poland
³⁴ Carrer de Sancho De Avila 52 – 58, 08018, Barcelona
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
18 Investments continued
Name
Computadata Limited
Computer Services Group Limited
Digica Group Limited
Digica Group Holdings Limited
Digica SMP Limited
Digica (FMS) Limited
ICG Services Limited
M Services Limited
Merchant Business Systems Limited
Merchant Systems Limited
Logival (SARL)
Damax GmbH
Computacenter (US) Defense Inc.
Country of incorporation
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
England⁶
France⁹
Switzerland²⁰
USA²³
i
ii
Includes indirect holdings of 100 per cent via Computacenter (UK) Limited
Includes indirect holdings of 100 per cent via Computacenter Holding GmbH, excludes
E’ZWO Computervertriebs which is 99.09 per cent
Includes indirect holdings of 100 per cent via Computacenter AG
iii
Includes indirect holdings of 100 per cent via Computacenter France SAS
iv
Includes indirect holdings of 100 per cent via Computacenter (U.S.) Inc.
v
vi
Includes indirect holdings of 1 per cent via Computacenter (UK) Limited
vii Includes indirect holdings of 90 per cent via Compuatcenter (UK) Limited
viii Includes indirect holdings of 44.9 per cent via Pivot Technology Services Corp.
Includes indirect holdings of 40 per cent via Pivot Technology Services Corp.
ix
Tower 2, Darling Park, 201 Sussex Street, Sydney 2000, New South Wales, Australia
Ikaroslaan 31, B-1930 Zaventem
55 Renfrew Drive, Suite 200, Markham, ON L3R 8H3, Canada
3806 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
¹
²
³
⁴
⁵ Unit 2, 10/F, NEO, 123 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong
⁶ Hatfield Avenue, Hatfield, Hertfordshire AL10 9TW
Tekhnicon, Springwood, Braintree, Essex CM7 2YN
⁷
25 Canada Square, Level 37, London, United Kingdom, E14 5LQ
⁸
229 rue de la Belle Etoile, ZI Parid Nord II, BP 52387, 95943 Roissy CDG Cedex
⁹
⁹
229 rue de la Belle Etoile, ZI Parid Nord II, BP 52387, 95943 Roissy CDG Cedex
¹⁰ Computacenter Park 1, 50170 Kerpen, Germany
¹¹ Kattenbug 2, 50667 Koln
¹² Werner-Eckert-Str. 16 – 18, 81829 Munchen
Computacenter plc is the ultimate Parent entity of the Group.
164
c) Acquisition of Pivot Technology Solutions Inc. (Pivot)
On 2 November 2020, the Group acquired 100 per cent of the voting shares of Pivot Technology Solutions Inc. for a consideration of £60.3 million.
The acquisition-related costs amounting to £1.4 million, of which £0.7 million are exceptional and £0.7 million are within admin expenses, are
included in the Consolidated Income Statement. Pivot is based in the Canada and the US. The acquisition has been accounted for using the
purchase method of accounting.
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:
Property, plant and equipment (including right-of-use assets)
Software
Customer relationship and orderbook
Contract asset
Inventories
Trade and other receivables
Deferred tax asset
Cash and short-term deposits
Trade and other payables
Contract liability
Deferred tax liabilities
Credit facility
Lease liabilities
Net assets acquired
Less Minority Interest Share
Goodwill arising on acquisition
Discharged by:
Cash paid on acquisition
Cash and cash equivalents acquired
Cash and short-term deposits
Cash outflow on acquisition
Fair value to
the Group
£’000
13,396
311
57,056
39,171
40,668
142,921
3,358
2,615
(165,363)
(42,268)
(13,885)
(62,225)
(10,394)
5,361
(2,947)
57,900
60,314
60,314
2,615
57,699
Apart from Customer relationship and order book Intangibles, Cash and short-term deposits and credit facility, which has been finalised, the initial
accounting for the acquisition of Pivot has only been provisionally determined at the date of finalisation of these Consolidated Financial
Statements based on Management’s best estimates. The accounting in these areas remains provisional due to the timing of the acquisition,
meaning areas including working capital balances are still in the course of resolution.
Measurement of fair values
Intangible customer relationship and orderbook have been valued using income approach (excess earnings) valuation technique. This approach
states that the value of an intangible asset is given by the present value of the earnings it generates, net of a reasonable return on other assets
also contributing to that stream of earnings (contributory asset charges).
The rest of the assets and liabilities have been valued using market comparison and cost technique. This approach considers market prices for
similar items when they are available, and depreciated replacement cost when appropriate.
Included in the £58.0 million of goodwill that arose on acquisition are certain intangible assets that cannot be individually separated and reliably
measured under IFRS 3 Business Combination from the acquiree due to their nature. These mainly include a footprint from which to grow in the
US/Canada and skillset of the workforce.
From the date of acquisition to 31 December 2020, Pivot contributed £219.1 million to the Group’s revenue and a profit of £0.4 million to the Group’s
profit after tax.
165
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
18 Investments continued
Applied Computer Solutions (ACS)
ACS is a 40 per cent owned affiliate of a Pivot subsidiary, whose principal office is located in Huntington Beach, California, United States of
America. Despite not owning a majority of the voting rights, Computacenter controls this entity through a Pivot subsidiary for accounting
purposes, based on the following facts and circumstances:
• Pivot has the right in its sole discretion to either acquire, at any time, shares of ACS that it does not already own, or to designate a different
owner to purchase the shares provided such transfer(s) are in compliance with applicable Women Business Enterprise (WBE) requirements;
• Pivot has multiple representatives on the ACS board of directors;
• any significant decisions made at ACS requires the approval of the ACS board of directors and/or shareholders, including board changes,
payment of dividends, mergers or acquisitions, material changes to compensation, incurring debt in excess of $100, causing any material
change in the business, and/or assignment or termination of any material agreement; and
• Pivot receives the majority of the benefits from the activities of ACS.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Total comprehensive income (loss)
% interest held
2020
($’000)
14,965
16,596
30,165
–
119,474
295
40%
2019
($’000)
12,709
19,389
29,113
2,287
231,487
65
40%
ProSys Information Systems, Inc (ProSys)
ProSys is a 44.9 per cent owned affiliate of a Pivot subsidiary, whose principal office is located in Norcross, Georgia, United States of America.
Despite not owning a majority of the voting rights, Computacenter controls this entity through a Pivot subsidiary for accounting purposes based
on the following facts and circumstances:
• Pivot has the right to either acquire, at any time, the remaining shares of ProSys it does not already own or to designate a different owner to
purchase the shares provided such transfer(s) are in compliance with applicable WBE requirements;
• Pivot is represented on the ProSys board of directors and any significant decisions made at ProSys requires the approval of the board of
directors and/or shareholders, including changes to its board of directors, payment of dividends, mergers or acquisitions, material changes
to compensation, incurring debt in excess of $0.1 million, causing any material change in the business, and/or assigning or termination of any
material agreement; and
• Pivot receives the majority of the benefits from the activities of ProSys.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Total comprehensive income/(loss)
% interest held
2020
($’000)
181,842
6,533
176,922
5,152
543,249
293
44.9%
2019
($’000)
23,628
539
19,469
–
258,374
(575)
46.4%
d) Acquisition of BT France SAS (Computacenter NS)
On 2 November 2020, the Group acquired 100 per cent of BT’s domestic operations in France for €1. The acquisition-related costs amounted to a
total of £0.9 million of which £0.5 million was included within administration expenses in the Consolidated Income Statement for the year ended
31 December 2019 and £0.4 million was included within administration expenses in the Consolidated Income Statement for the year ended
31 December 2020. The acquisition has been accounted for using the purchase method of accounting.
166
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:
Property, plant and equipment (including right-of-use assets)
Software
Customer relationship
Inventories
Trade and other receivables
Cash and short-term deposits
Prepayments
Trade and other payables
Lease liabilities
Pension liability
Provisions
Net assets acquired
Gain on acquisition of subsidiary
Discharged by:
Cash paid on acquisition
Cash and cash equivalents acquired
Cash and short-term deposits
Cash inflow on acquisition
Fair value to
the Group
£’000
4,910
26
1,869
257
12,688
27,604
16,799
(32,225)
(2,390)
(9,914)
(5,594)
14,030
(14,030)
–
27,604
27,604
Apart from the Customer relationship intangible and Cash and short-term deposits which has been finalised, the initial accounting for the
acquisition of Computacenter NS has only been provisionally determined at the date of finalisation of these Consolidated Financial Statements
based on Management’s best estimates. The accounting in these areas remains provisional due to the timing of the acquisition, meaning areas
including working capital balances are still in the course of resolution.
Measurement of fair values
Intangible customer relationship have been valued using income approach (excess earnings) valuation technique. This approach states that the
value of an intangible asset is given by the present value of the earnings it generates, net of a reasonable return on other assets also contributing
to that stream of earnings (contributory asset charges).
The rest of the assets and liabilities have been valued using market comparison and cost technique. This approach considers market prices for
similar items when they are available, and depreciated replacement cost when appropriate.
From the date of acquisition to 31 December 2020, Computacenter NS contributed £13.5 million to the Group’s revenue and a loss of £1.6 million to
the Group’s profit after tax.
The acquisition of BT Services France resulted in an exceptional gain of £14.0 million, which was recognised on consolidation of the subsidiary.
The gain arose because the net assets acquired for consideration of €1 totalled £14.0 million after fair value adjustments, including £27.6 million
of cash. The business acquired comprised BT’s domestic French services operations which, on acquisition, were making considerable losses on
a stand-alone adjusted EBITDA basis. The Company considers that the exceptional gain reflects the future losses that the acquired business will
incur over the medium term, as it is brought onto a sustainable footing through a combination of upskilling employees, cross-selling into the
Group’s customers, alignment with Group processes and systems, and the general improvement of its operating activities. Where possible, future
charges relating to this reconfiguration of the acquisition will be disclosed separately to the Group’s adjusted1 results. This will mean that, over
time, the future costs incurred are somewhat offset against the exceptional gain on acquisition recognised in the current year.
Results of acquisition from 1 January 2020
If the acquisition of Pivot and Computacenter NS were completed on 1 January 2020, the Group’s revenue for the year would have been
£6,573.0 million and the Group’s profit after tax would have been £155.0 million.
Acquisitions in previous periods
In 2020, no change was recorded to the fair values of PathWorks GmbH (PathWorks) and R.D. Trading Limited (RDC), both of which were acquired in 2019.
167
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
19 Inventories
Inventories for re-sale
20 Trade and other receivables
Trade receivables before provisions
Provision for doubtful debts
Provision for credit notes
Trade receivables
Other receivables
2020
£’000
211,279
2019
£’000
122,189
2020
£’000
1,093,232
(7,863)
(20,308)
1,065,061
30,814
1,095,875
2019
£’000
970,244
(6,691)
(15,219)
948,334
31,583
979,917
For terms and conditions relating to related party receivables, refer to note 34.
Trade receivables are non-interest bearing and are generally on 30 to 90-day credit terms. Note 27 sets out the Group’s strategy towards credit risk.
Other receivables generally arise from transactions outside the usual operating activities of the Group and comprise receivables from tax
receivables (VAT, GST, franchise taxes, and sales and use taxes) of £20.8 million (2019: £24.0 million) and other receivables of £10.0 million
(2019: £12.8 million). Other receivables are financial assets and are measured at amortised cost.
The movements in the provision for doubtful debts were as follows:
At 1 January
Transfer to provision for credit notes
Relating to acquisition
Charge for the year
Utilised
Unused amounts reversed
Foreign currency adjustment
At 31 December
2020
£’000
6,691
–
1,213
2,212
(734)
(1,790)
271
7,863
2019
£’000
19,858
(13,388)
–
2,834
(281)
(2,126)
(206)
6,691
There was no change made to the level of provision for doubtful debts upon the adoption of IFRS 9. The doubtful debt provision is determined
as follows:
2020
Expected loss rate
Gross carrying amount
Provision
2019
Expected loss rate
Gross carrying amount
Provision
Neither past due
nor impaired
£’000
Total
£’000
0.7%
1,093,232
7,863
0.7%
970,244
6,691
0.1%
944,457
1,276
0.0%
831,180
204
Past due but not impaired
<30 days
£’000
30–60 days
£’000
60–90 days
£’000
90–120 days
£’000
>120 days
£’000
1.4%
54,786
743
2.3%
88,197
2,022
4.5%
22,978
1,024
0.8%
22,218
187
0.6%
52,443
339
1.1%
9,932
112
10.6%
5,371
571
8.7%
4,518
393
29.6%
13,197
3,910
26.6%
14,199
3,773
During the year the Group has reclassified an element of the provision for doubtful debts into provision for credit notes to better reflect the
underlying utilisation and charge related to the provision for doubtful debts in order to more clearly demonstrate the actual level of bad debts
and the overall benign debt collection environment that the Group operates within. The credit note provisions relate primarily to trade linked
amounts due back to certain debtors arising in the normal course of the agreed trading relationship.
168
21 Cash and short-term deposits
Cash at bank and in hand
2020
£’000
309,844
2019
£’000
217,881
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 £309.8 million (2019: £217.9 million).
During the year ended 31 December 2020, the Group continued to maintain a strong cash generation and finance its operational requirements
from its cash balance. The overdraft facilities are retained by the Group and can be used upon requirement. The uncommitted overdraft facilities
available to the Group are £13.5 million at 31 December 2020 (2019: £13.1 million). During 2013, the Group entered into a specific committed facility
of £40.0 million. In 2018, this facility was renewed for a second time to a value of £60.0 million and in 2020 it was extended until 8 September 2023.
The Company acquired Pivot during the year, which came with a utilised facility of £58.4 million.
Expected credit loss on cash and cash equivalents is negligible and therefore no provision is held.
22 Trade and other payables
Trade payables
Other payables
2020
£’000
719,737
397,004
1,116,741
2019
£’000
641,061
334,843
975,904
For terms and conditions relating to related parties, refer to note 34.
Trade payables are non-interest bearing and are normally settled on net monthly terms.
The Group had no short-term supplier extended-term interest-bearing credit facilities (2019: nil).
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.
The Group regularly participates in Industry standard vendor rebate plans, primarily relating to volume discounts on purchases, often paid
retrospectively. Rebates are factored into the calculation of purchase cost of inventory valuations. Owing to the nature of these rebate plans, the
calculation of rebates is not subject to significant estimation uncertainty, nor is their recognition a matter of significant judgement.
23 a) Financial liabilities
Current
Bank loans
Credit facility
Non-current
Bank loans
There are no material differences between the fair value of financial liabilities and their book value.
2020
£’000
47,040
58,435
105,475
15,719
15,719
2019
£’000
20,032
–
20,032
60,740
60,740
169
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
23 a) Financial liabilities continued
Bank loans
The Group has three principal bank loans:
• A loan of £100.0 million was drawn at 2.05 per cent interest rate to finance the acquisition of FusionStorm. The outstanding balance as at
31 December 2020 was £41.5 million at a revised interest rate of 1.31 per cent. Repayment of this loan commenced in H1 2019 and will continue
for two years, with an option to repay early; and
• A total loan of €38.5 million was drawn at various stages between December 2017 and July 2018 to finance the fit out of the new German
headquarters building and Integration Center in Kerpen. Further details are shown below:
– €8.0 million drawn in December 2017, carries fixed interest rate at 1.65 per cent per annum. The balance on this loan as at 31 December 2020
was €3.2 million. Repayments commenced in H1 2018 and will continue for two years;
– €8.9 million drawn in December 2017 carries fixed interest rate at 1.95 per cent per annum. The balance on this loan as at 31 December 2020
was €6.2 million. Repayments commenced in H1 2018 and will continue for seven years;
– €8.5 million drawn in July 2018, carries fixed interest rate at 0.95 per cent per annum. The balance on this loan as at 31 December 2020 was
€4.1 million. Repayments commenced in H2 2018 and will continue for three years; and
– €13.1 million was taken out in 2018, carries fixed interest rate at 0.75 per cent per annum. The balance on this loan as at 31 December 2020
was €9.7 million. Repayments commenced in H2 2018 and will continue for seven years.
• A loan balance of £0.3 million via Computacenter China.
Credit facility
• The Pivot Subsidiary has a revolving credit facility via JPMorgan Chase Bank, N.A. (‘JPMC’) of $225.0 million senior secured asset based. This JPMC
Credit Facility can be used for revolving loans, letters of credit, protective advances, over advances, and swing line loans. Advances under the
JPMC Credit Facility accrue interest at rates that are equal to, based on certain conditions and at the Company’s election either use (a) JPMC’s
‘prime rate’ as announced from time to time plus 0.00 per cent to 0.25 per cent, or (b) LIBOR or a comparable or successor rate that is approved
by JPMC, for an interest period of one month plus 1.25 per cent to 1.50 per cent.
• Upon the agreement with the existing lenders, the Pivot subsidiary can increase the commitments under the credit facility by an additional
$75.0 million. The lenders under the JPMC Credit Facility are not under any obligation to provide any such additional commitments, and any
increase in commitments is subject to several conditions precedent and limitations. The JPMC Credit Facility is scheduled to expire on
14 May 2024.
• Under the terms of the JPMC Credit Facility, the covenants require that Pivot maintain a fixed charge coverage ratio of at least 1.0 to 1.0 on
a trailing 12-month basis. Pivot is in compliance with all applicable covenants as at 31 December 2020.
• Amounts owing under the JPMC Credit Facility were $79.8 million and $106.7 million as at 31 December 2020 and 31 December 2019, respectively;
and average undrawn availability was $48.3 million and $65.3 million for the years ended 31 December 2020 and 31 December 2019
respectively.
23 b) Lease liabilities
At 1 January 2020
Implementation of IFRS 16
Additions during the year
Relating to acquisition of a subsidiary
Gross payment of lease liabilities
Interest relating to lease liabilities
Early terminations during the year
Exchange adjustment
At 31 December 2020
Current
Non-current
2020
£’000
116,766
–
49,406
12,788
(47,679)
4,479
(1,335)
3,049
137,474
41,683
95,791
137,474
2019
£’000
120,606
35,720
–
5,128
(42,346)
3,728
(772)
(5,298)
116,766
36,574
80,192
116,766
Facilities
At 31 December 2020, the Group had available £13.5 million of uncommitted overdraft facilities (2019: £13.1 million) and a £60.0 million committed
facility (2019: £60.0 million).
170
24 Derivative financial instruments
Financial instruments at fair value through profit and loss
Foreign exchange forward contracts
Interest rate swaps
Financial instruments at fair value through other comprehensive income
Cash flow hedges
Foreign exchange forward contracts
Current assets
Current liabilities
2020
£’000
(3,645)
(246)
(3,891)
468
(3,423)
1,643
(5,066)
(3,423)
2019
£’000
(852)
–
(852)
2,363
1,511
3,218
(1,707)
1,511
Cash flow hedges
Financial assets and liabilities at fair value through other comprehensive income
Forward Contracts
These amounts reflect the change in the fair value of foreign exchange forward contracts designated as cash flow hedges which are used to
hedge expected contract costs in South African rand and Hungarian forint where sales on those contracts are in pound sterling, based on highly
probable forecast transactions.
Financial assets and liabilities at fair value through profit or loss
Forward Contracts
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 within
administrative expenses.
The foreign exchange forward contract balances vary with the level of expected foreign currency costs and changes in the foreign exchange
forward rates.
Interest rate swaps
The Group’s subsidiary Pivot Technology Solutions Inc. entered into an interest rate swap contract in June 20, with a notional amount of $50.0
million, to lock in the LIBOR between 0.34 per cent and 0.7 per cent, resulting in a range of interest rates between 1.59 per cent and 2.2 per cent,
covering the full term of the JPMC Credit Facility, scheduled to expire 14 May 2024.
As these interest rate swaps are not designated in hedge relationships they are measured at fair value through profit and loss within
administrative expenses. As at 31 December 2020, the interest rate swap was valued at a liability of £0.25 million.
Effectiveness of hedging
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 Consolidated Income Statement.
The cash flow hedges of the forecasted costs were assessed to be highly effective and a net unrealised gain of £468,000 (2019: £2,363,000) with
a deferred tax liability of £71,000 (2019: £440,000) relating to the hedging instruments is included in the Consolidated Statement of Comprehensive
Income. The amounts retained in the Consolidated Statement of Comprehensive Income of £468,000 (2019: £2,363,000) are expected to mature
and affect the Consolidated Income Statement between 2021 and 2025.
171
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
24 Derivative financial instruments continued
Forward currency contracts
At 31 December 2020 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:
Buy currency
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
US Dollars
Euros
Hungarian Forint
SA Rand
Japanese Yen
Swedish Krona
Euros
Euros
Euros
Euros
Euros
US dollars
Buy currency
Sterling
Sterling
Sterling
US dollars
Euros
Swiss francs
Hungarian forint
Norwegian krone
SA rand
Polish zloty
Singapore dollar
Euros
US dollars
Sell currency
Euros
Swiss francs
Hungarian forint
Norwegian krone
Polish zloty
Singapore dollars
Australian dollars
Japanese yen
SA rand
US dollars
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Hungarian forint
Mexican peso
Polish zloty
US dollars
Euros
Nominal value of contracts
£14,159,905
£926,879
£1,554,775
£18,887
£75,034
£210,887
£19,752
£300,041
£5,813,216
£28,602,608
$46,371,921
€19,662,323
HUF 415,000,000
ZAR 209,632,329
JPY 213,490,193
SEK 3,805,533
€828,899
€81,490
€100,940
€955,969
€68,922,256
$7,500,000
Sell currency
Euros
SA rand
US dollars
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
US dollars
Euros
Nominal value of contracts
£2,703,761
£9,784,231
£5,137,156
$38,764,047
€27,579,307
CHF 2,750,000
HUF 188,000,000
NOK 1,825,000
ZAR 147,937,146
PLN 6,630,000.00
SGD35,000
€76,959,468
$9,000,000
Maturity dates
Jan 21 – Oct 23
Jun 21 – Dec 21
Jan 21 – Jun 22
Jan 21
Jan 21
Jan 21
Jan 21
Jan 21
Jan 21 – Nov 24
Jan 21 – Mar 21
Jan 21 – Jul 23
Jan 21 – Mar 21
Feb 21 – Dec 22
Jan 21 – Aug 25
Feb 21
Feb 21
Jan 21
Jan 21
Jan 21
Jan -21 – Jun 21
Jan 21 – Apr 21
Jan 21
Maturity dates
Jan 20 – Dec 21
Jan 20 – Nov 24
Jan 20 – Mar 20
Jan 20 – Jan 22
Jan 20 – Apr 20
Mar 20 – Dec 20
Jan 20 – Dec 20
Jan 20
Jan 20 – Oct 22
Jan 20 – Jun 20
Jan 20
Jan 20 – Mar 20
Jan 20 – Mar 20
Contract rates
1.095 – 1.117
1.199
389.396 – 404.447
11.7290
5.0750
1.8050
1.7730
140.790
19.464 – 27.262
1.291 – 1.361
0.732 – 1.422
0.891 – 1.114
391.502 – 409.923
20.134 – 25.303
138.875
11.142
0.901 – 0.914
331.33
21.795
4.289 – 4.575
1.171 – 1.230
1.168 – 1.170
Contract rates
1.059 – 1.174
18.374 – 27.262
1.286 – 1.331
1.225 – 1.422
0.847 – 0.851
1.2630 – 1.2776
386.028 – 391.177
11.649
18.443 – 23.505
5.005 – 5.041
1.784
1.104 – 1.124
1.124 – 1.128
31 December 2020
UK
Germany
31 December 2019
UK
Germany
172
25 Leases as a Lessor
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:
Within one year
After one year
26 Provisions
At 1 January 2019
Arising during the year
Utilised
Relating to acquisition of a subsidiary
Exchange adjustment
At 31 December 2019
Amount unused reversed
Arising during the year
Utilisation
Relating to acquisition of a subsidiary
Exchange adjustment
At 31 December 2020
Current 2020
Non-current 2020
Current 2019
Non-current 2019
2020
£’000
369
179
2019
£’000
209
–
Customer
contract
provisions
£’000
16,394
2,535
(10,639)
–
(475)
7,815
–
2,848
(5,167)
3,598
460
9,554
3,002
6,552
9,554
5,786
2,029
7,815
Retirement
benefit
obligation
£’000
7,416
1,344
(34)
–
(415)
8,311
–
4,816
(273)
9,914
508
23,276
–
23,276
23,276
–
8,311
8,311
Property
provisions
£’000
2,751
404
3
2,000
(44)
5,114
(489)
98
170
–
46
4,939
1,058
3,881
4,939
1,472
3,642
5,114
Other
provisions
£’000
470
–
–
–
(25)
445
(141)
–
(422)
1,996
215
2,093
72
2,021
2,093
445
–
445
Total
provisions
£’000
27,031
4,283
(10,670)
2,000
(959)
21,685
(630)
7,762
(5,692)
15,508
1,229
39,862
4,132
35,730
39,862
7,703
13,982
21,685
Customer contract provision
These provisions result from customer contracts where total cost exceeds total revenue. Refer to note 2.12.1 for further details.
Retirement benefit obligation
The Group has a provision against the retirement benefit obligations in France under the Indemnités de Fin de Carrière (IFC) as described in note
2.12.3 Economic outflows under the obligation only occur if eligible employees reach the statutory retirement age whilst still in employment or
made redundant. The Group made £273,000 of payments during 2020 under this obligation (2019: £34,000).
In estimating the provision required, Management is required to make a number of assumptions. The key areas of estimation uncertainty are the
discount rate applied to future cash flows, the turnover rate of employed personnel and rate of salary increases over the length of their projected
employment. The level of unrealised actuarial gains or losses are sensitive to changes in the discount rate, which is affected by market conditions
and therefore subject to variation. Management makes use of an independent actuarial valuation in reaching its conclusions.
The net liability recognised in the Consolidated Balance Sheet at 31 December 2020 in respect of the Group’s French retirement benefit obligations
under the IFC was £23.3 million (2019: £8.3 million). Key movements during the year include a charge to the Consolidated Income Statement of
£0.8 million for the service cost and an actuarial loss taken through reserves of £4.3 million. The key driver of actuarial loss this year was the
change in demographic assumptions mainly due to change in staff turnover rates assumption in the actuarial valuation.
173
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
26 Provisions continued
Property provisions
Assumptions used to calculate the property provisions are based on 100 per cent of 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 15 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.
Other provisions
Included within other provisions are legal claims and other costs associated with the completion of the acquisition of Computacenter NS.
27 Financial instruments
An explanation of the Group’s financial instrument risk management objectives, policies and strategies are set out in the Group Finance Director’s
review on page 68.
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.
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 and considers forward-looking information to determine the appropriate expected
credit loss for the whole remaining life of the trade receivable. 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. The Group manages its counterparty credit risk by placing cash on deposit
across a panel of reputable banking institutions, with no more than £70.0 million deposited at any one time.
Aside from the counterparty risk above, there are no significant concentrations of credit risk within the Group.
Interest rate risk
The Group finances its operations through a mixture of retained profits, bank borrowings, cash and short-term deposits and finance leases and
loans for certain customer contracts. The Group’s bank borrowings, existing committed and uncommitted facilities and deposits are at floating
rates. No interest rate derivative contracts have been entered into. If long-term borrowings were to be utilised in the future, the Group’s policy
would be 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.
2020
Sterling
Euro
US dollars
2019
Sterling
Euro
US dollars
Change in
basis points
Effect on profit
before tax
£’000
+25
+25
+25
+25
+25
+25
355
(60)
230
(25)
38
374
The impact of a reasonable 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.
174
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 Consolidated Financial Statements is not materially different from their carrying amount.
Exchange rate sensitivity
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales,
purchases and receivables are denominated and the respective functional currencies of Group companies. The functional currencies of material
overseas subsidiaries are primarily the euro (€), US dollar (USD), South African rand (ZAR) and Swiss franc (CHF).
The Group’s risk management policy is to hedge all of its expected foreign currency exposure in respect of sales and purchases as soon as these
are committed. The Group uses forward exchange contracts to hedge its currency risk. The principal currencies hedged by forward foreign
exchange contracts are US dollar (USD), euro (€), South African rand (ZAR) and Hungarian Forint (HUF).
However, the hedge accounting is mainly applied to the expected trading cash flows denominated in ZAR, HUF, USD and € where the exposure
extends beyond one year and there is a strong expectation that the expected future foreign currency cash flow will occur. The Group uses forward
foreign exchange contracts, designated as cash flow hedges, to hedge these cash flows. When a commitment is entered into, forward foreign
exchange contracts are normally used to increase the hedge to 100 per cent of the expected exposure although between 80 per cent and 110 per
cent of the expected exposure should be hedged to meet risk management policy. The Group designates all of its forward foreign exchange
contracts to hedge its currency risk and applies a hedge ratio of 1:1. The Group’s policy is for the critical terms of the forward exchange contracts
to align with the hedged item.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency,
amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each hedging relationship is expected
to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.
In these hedge relationships, the main sources of ineffectiveness are:
• the effect of the counterparties’ and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not
reflected in the change in the fair value of the hedged cash flows attributable to the change in exchange rates;
• actual cash flows in foreign currencies varying from forecast cash flows; and
• changes in the timing of the hedged transactions.
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.
The summary quantitative data about the Group’s exposure to currency risk as reported to the Management of the Group is as follows:
Trade and other receivables
Trade and other payables
Forecast future cash flow (net)
Forward exchange contracts
Net exposure
31 December 2020
£’000
31 December 2019
£’000
$
409,341
(422,358)
58,407
45,390
€
569,770
(550,978)
(15,216)
3,576
$
167,317
(144,328)
21,941
44,930
€
615,233
(649,600)
18,951
(15,416)
(45,390)
(3,576)
(44,930)
15,416
–
–
–
–
175
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
27 Financial instruments continued
Liquidity risk
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December based on contractual discounted payments:
Year ended 31 December 2020
Bank Loans and Credit facility
Lease Liabilities
Derivative financial instruments
Trade and other payables
Year ended 31 December 2019
Bank Loans
Lease Liabilities
Derivative financial instruments
Trade and other payables
On demand
£’000
<3 months
£’000
3–12 months
£’000
1–2 years
£’000
2–5 years
£’000
>5 years
£’000
Total
£’000
58,435
–
–
–
58,435
1,581
10,466
4,155
1,116,741
1,132,943
45,459
31,397
327
–
77,183
5,186
29,321
337
–
34,844
6,910
42,388
247
–
49,545
3,623
23,902
–
–
27,525
121,194
137,474
5,066
1,116,741
1,380,475
On demand
£’000
<3 months
£’000
3–12 months
£’000
1–2 years
£’000
2–5 years
£’000
>5 years
£’000
Total
£’000
–
–
–
–
–
1,231
10,797
1,449
978,220
991,697
18,120
25,778
155
–
44,053
46,494
27,598
89
–
74,181
9,445
37,568
14
–
47,027
5,482
15,025
–
–
20,507
80,772
116,766
1,707
978,220
1,177,465
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 2020
Bank Loans and Credit facility
Lease Liabilities
Derivative financial instruments
Trade and other payables
Year ended 31 December 2019
Bank Loans
Lease Liabilities
Derivative financial instruments
Trade and other payables
On demand
£’000
<3 months
£’000
3–12 months
£’000
1–2 years
£’000
2–5 years
£’000
>5 years
£’000
Total
£’000
58,435
–
–
–
58,435
1,652
12,470
4,155
1,116,741
1,135,018
45,770
33,308
327
–
79,405
5,354
32,447
337
–
38,138
7,175
46,567
247
–
53,989
3,672
27,734
–
–
31,406
122,058
152,526
5,066
1,116,741
1,396,391
On demand
£’000
<3 months
£’000
3–12 months
£’000
1–2 years
£’000
2–5 years
£’000
>5 years
£’000
Total
£’000
–
–
–
–
–
1,578
10,825
1,449
978,220
992,072
18,871
28,928
155
–
47,954
46,849
29,749
89
–
76,687
9,798
40,520
14
–
50,332
5,587
15,929
–
–
21,516
82,683
125,951
1,707
978,220
1,188,561
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).
176
Derivative financial instruments
At 31 December 2020 the Group had forward currency contracts, which were measured at Level 2 fair value subsequent to initial recognition,
to the value of a net liability of £3,177,000 (2019: net asset of £1,511,000).
At 31 December 2020 the Group had Interest rate swap, which were measured at Level 2 fair value subsequent to initial recognition, to the value of
a net liability of £246,000 (2019: nil).
The realised gains from forward currency contracts in the year to 31 December 2020 of £2,363,000 (2019: £3,278,000) with a deferred tax liability
of £440,000 (2019: £616,000), are offset by broadly equivalent realised losses on the related underlying transactions.
28 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 Company’s Dividend Policy is to maintain a dividend cover of between 2 to 2.5 times. In 2020, the cover was 2.5 times
on an adjusted1 profit basis (2019: 2.5 times). Given the events that unfolded during 2020, the final dividend for 2019 which was expected to
be paid in June 2020 was not paid in light of market uncertainty and the operating environment at the time and therefore dividend cover
increased substantially.
Capital, defined as net funds3, that the Group monitors is disclosed in note 31.
Each operating country manages its 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. Management intends to implement Group policies into acquired businesses over time with the introduction of systems,
reward mechanisms and other operational practices that support these policies.
The Group regularly reviews the adequacy of its facilities against any foreseeable peak borrowing requirement. See note 21 for details on
uncommitted overdraft facilities available to the Group.
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 loan. Whilst the outstanding amounts of these contracts (‘CSF’) are included within net funds3 for statutory reporting purposes, the
Group has previously excluded these when managing the net funds3 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
Technology Sourcing resale and services activities. From 1 January 2019 CSFs were reclassified as lease liabilities following the adoption of IFRS
16. From this point adjusted net funds3 excludes all lease liabilities.
In certain circumstances, the Group deposits its funds in short-term investments that do not fulfil the criteria to be classified as cash and cash
equivalents. The Group considers these deposits when managing the net funds3 of the business, and accordingly includes these deposits within
adjusted net funds3.
Capital is allocated across the Group, in order to minimise its 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. An internal cash pooling arrangement has
been implemented which utilises internal Group financing arrangements (excluding acquisitions).
Within the Group’s European region, the capital base is primarily utilised to finance its fixed assets and working capital requirements. It 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 Technology
Sourcing business via distributors in order to reduce the working capital requirements of the business.
The Pivot subsidiary is subject to certain key financial covenants under its JPMC Credit facility. These covenants, which include fixed charge ratios
as defined in the agreement, are monitored regularly to ensure compliance. As at 31 December 2020, the Pivot subsidiary was in compliance with
all covenants. The Company is not subject to any externally imposed capital requirements.
177
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
29 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 have
been amended to reflect this change.
Issued share capital – ordinary shares
Issued and fully paid
At 1 January 2020 and 31 December 2020
During the year, the issued share capital remained unchanged.
75⁄9p ordinary
shares
No. ’000
122,688
Total
£’000
9,270
The holders of 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 ordinary shares may be entitled to the residual assets of the Company.
The Company has a number of share option schemes under which options to subscribe for the Company’s shares have been granted to Executive
Directors and certain senior Management (note 30).
Asset reunification
During the financial year 2019, following the changes to our Articles of Association approved at our AGM on 16 May 2019, the Company, in
conjunction with our Registrar, conducted an asset reunification exercise during the year. A total of 21,458 shares were forfeited from 355
shareholders with a total of £0.2 million returned to the Company from the sale of the shares. These funds have been allocated by the Board to be
used to support the charitable partners selected by our employees.
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.
Capital redemption reserve
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 (2019: nil).
Own shares held
Own shares held comprise the following:
i) Computacenter Employee Share Ownership Plan (ESOP)
Shares in the Parent undertaking comprise 988,505 ordinary shares of 75⁄9 pence each in Computacenter plc (2019: 1,277,699) 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 0.81 per cent (2019: 1.04 per cent) of the Company’s issued
share capital.
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 75⁄9 pence each in Computacenter plc under other employee share plans of the Group, namely the
Computacenter Service Group plc Approved Executive Share Option Plan, the Computacenter plc Employee Share Option Scheme 1998, the
Computacenter Service Group plc Unapproved Executive Share Option Scheme, the Computacenter Performance Related Share Option Scheme
1998, the Computacenter plc 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 988,505 ordinary shares of 75⁄9 pence each (2019: 1,277,699) that it owns
which are all unallocated shares.
ii) Computacenter Qualifying Employee Share Trust (‘the Quest’)
The total shares held are nil ordinary shares of 75⁄9 pence each (2019: 228,965), which represents nil per cent (2019: 0.19 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 2020 was nil (2019: £4,059,549). The Quest Trustees have waived dividends
in respect of all of these shares. During the year, the Quest subscribed for nil 75⁄9 pence ordinary shares (2019: nil).
178
iii) Treasury shares
The Company holds the ordinary shares purchased pursuant to the Tender Offer in treasury. Immediately following the purchase, the Company’s
issued share capital consisted of 122,687,970 ordinary shares of 75⁄9 pence each, each carrying one voting right, of which the Company held
8,546,861 ordinary shares in treasury.
As at 31 December 2020, the total number of voting rights in the Company which may be used by shareholders as the denominator for the
calculations by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company under the
Disclosure and Transparency Rules is 114,141,109. The percentage of voting rights attributable to those shares it holds in treasury following the
share buy-back is 6.97 per cent.
Translation and hedging reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the Financial Statements of
foreign subsidiaries. The hedging reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective
in cash flow hedges. Included within Translation and hedging reserves is a hedging reserve credit balance of £652,000 (2019: £873,000
debit balance).
Non-Controlling Interests
The non-controlling amounts are as follows:
Applied Computer Solutions (ACS)
ProSys Information Systems, Inc (ProSys)
R.D. Trading Limited (RDC)
2020
£’000
614
2,549
(39)
3,124
2019
£’000
–
–
(78)
(78)
30 Share-based payments
Computacenter Performance Share Plan (PSP)
Under the Computacenter PSP, shares granted will be subject to certain performance conditions as described in the Annual Remuneration Report.
At 31 December 2020 the number of shares outstanding was as follows:
Date of grant
23/03/2012
03/05/2013
20/03/2014
26/03/2015
22/03/2016
22/03/2017
21/03/2018
21/03/2018
21/03/2018
18/05/2018
01/10/2018
21/03/2019
21/03/2019
21/03/2019
23/03/2020
23/03/2020
23/03/2020
23/03/2020
11/05/2020
02/11/2020
Maturity date
23/03/2015
21/03/2016
20/03/2017
26/03/2018
22/03/2019
22/03/2020
21/03/2020
21/03/2021
21/03/2023
18/05/2021
18/05/2021
21/03/2020
21/03/2021
21/03/2022
23/03/2023
21/03/2022
21/03/2022
21/03/2022
21/03/2022
21/03/2022
Share price at
date of grant
433.0p
440.0p
682.5p
720.0p
847.0p
736.5p
1182.67p
1182.67p
1182.67p
1314.00p
1314.00p
1192.00p
1192.00p
1192.00p
993.00p
993.00p
993.00p
993.00p
1472.00p
2265.00p
2020
Number
outstanding
1,685
–
21,150
46,170
69,884
196,189
–
254,836
139,092
18,256
14,985
–
18,131
488,166
24,303
24,303
441,502
173,892
2,853
14,504
1,949,901
2019
Number
outstanding
2,285
6,614
68,645
66,329
94,953
631,319
19,341
255,240
139,092
22,334
14,985
18,130
18,131
496,737
–
–
–
–
–
–
1,854,135
179
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
30 Share-based payments continued
The following table illustrates the number (No.) of share options for the PSP Scheme:
PSP Scheme
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year***
Outstanding at the end of the year
Exercisable at the end of the year
2020
No.
2019
No.
1,854,135
696,036
(83,033)
(517,237)
1,949,901
1,848,807
541,236
(123,803)
(412,105)
1,854,135
335,078
238,826
*** The weighted average share price at the date of exercise for the options exercised is £13.89 (2019: £11.06).
The weighted average remaining contractual life for the options outstanding as at 31 December 2020 is 1.4 years (2019: 1.1 years).
Computacenter Sharesave Scheme (SAYE)
The Group operates a Sharesave Scheme which is available to all employees and full time Executive Directors of the Group 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, 762,623 options were granted (2019: 1,016,492) with a fair value of £5,108,756
(2019: £3,974,764).
Under the scheme the following options have been granted and are outstanding at the year end:
Exercisable between
01/12/2019 – 31/05/2020
01/12/2020 – 31/05/2021
01/12/2019 – 31/05/2020
01/12/2021 – 31/05/2022
01/12/2020 – 01/06/2021
01/12/2022 – 01/06/2023
01/12/2021 – 01/06/2022
01/12/2023 – 01/06/2024
01/12/2022 – 01/06/2023
01/12/2024 – 01/06/2025
01/12/2021 – 01/06/2022
01/12/2023 – 01/06/2024
01/12/2025 – 01/06/2026
01/12/2022 – 01/06/2023
Share
price
524.00p
600.00p
649.00p
577.00p
888.00p
789.00p
1,186.00p
1,054.00p
1,138.00p
1,011.00p
1,138.00p
2,092.00p
1,860.00p
2,092.00p
2020
Number
outstanding
–
117,202
–
477,236
68,174
608,309
245,416
489,356
285,361
613,215
64,062
219,558
523,949
14,370
3,726,208
2019
Number
outstanding
95,890
561,503
41,921
509,661
306,288
645,958
271,327
519,633
305,802
636,697
69,857
–
–
–
3,964,537
Date of grant
October 2014
October 2015
October 2016
October 2016
October 2017
October 2017
October 2018
October 2018
October 2019
October 2019
October 2019
October 2020
October 2020
October 2020
180
The following table illustrates the number (No.) and weighted average exercise price (WAEP) of share options for the Sharesave Scheme:
Sharesave Scheme
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year***
Outstanding at the end of the year
2020
No.
2020
WAEP
2019
No.
3,964,537
762,623
(165,646)
(835,306)
3,726,208
£8.65
£19.30
£9.87
£ 6.76
£11.20
4,209,927
1,016,492
(234,666)
(1,027,216)
3,964,537
2019
WAEP
£7.41
£10.58
£8.19
£5.56
£8.65
Exercisable at the end of the year
200,917
£7.20
163,790
£6.20
Note
*** The weighted average share price at the date of exercise for the options exercised is £21.11 (2019: £10.94).
The weighted average remaining contractual life for the options outstanding as at 31 December 2020 is 3.0 years (2019: 3.1 years).
The fair value of the PSP, DBP and SAYE 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 2020 and 31 December 2019:
2020
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
PSP
scheme
23/03/20
PSP
scheme
23/03/20
PSP
scheme
23/03/20
PSP
scheme
02/11/20
PSP
scheme
11/05/20
DBP
scheme
23/03/20
DBP
scheme
23/03/20
SAYE
scheme
01/12/20
SAYE
scheme
01/12/20
SAYE
scheme
01/12/20
440,170
nil
173,892
nil
16,011
nil
14,504
nil
2,853
nil
24,303
nil
24,303
nil
14,370
£20.92
221,217
£20.92
527,036
£18.60
£9.93
£9.93
£9.93
£22.65
£14.72
£9.93
£9.93
£23.58
£23.58
£23.58
3
See note 1
below
5
See the Annual
Remuneration
Report on
page 84 in
2019 Annual
Report and
Accounts
3
3
3
Three-year
service period
See note 1
below
See note 1
below
1
See the Annual
Remuneration
Report on
page 84 in
2019 Annual
Report and
Accounts
2
See the Annual
Remuneration
Report on
page 84 in
2019 Annual
Report and
Accounts
2
3
5
Two-year
service period
and savings
requirement
Three-year
service period
and savings
requirement
Five-year
service period
and savings
requirement
n/a
n/a
n/a
n/a
n/a
n/a
n/a
44.73%
42.00%
36.30%
3
5
3
3
3
1
2
2
3
5
n/a
2.30%
n/a
2.30%
n/a
2.30%
n/a
0.60%
n/a
1.70%
n/a
2.30%
n/a
2.30%
3.08%
0.57%
3.08%
0.57%
3.08%
0.57%
£9.82
£9.82
£9.82
22.25
£14.01
£10.28
£10.05
£5.87
£6.24
£6.93
181
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
30 Share-based payments continued
2019
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
PSP
scheme
21/03/19
PSP
scheme
21/03/19
PSP
scheme
21/03/19
PSP
scheme
21/03/19
PSP
scheme
21/03/19
DBP
scheme
21/03/19
DBP
scheme
01/12/19
SAYE
scheme
01/12/19
SAYE
scheme
01/12/19
305,505
nil
42,701
nil
141,988
nil
14,781
nil
18,130
nil
18,131
nil
69,914
£11.38
308,814
£11.38
637,764
£10.11
£11.92
£11.92
£11.92
£11.92
£11.92
£11.92
£15.11
£15.11
£15.11
3
See note 1
below
n/a
3
n/a
2.60%
3
See the Annual
Remuneration
Report on
page 84 in 2018
Annual Report
and Accounts
5
See the Annual
Remuneration
Report on
page 84 in 2018
Annual Report
and Accounts
n/a
n/a
3
n/a
2.60%
5
n/a
2.60%
3
See note 1
below
n/a
3
n/a
2.60%
1
See the Annual
Remuneration
Report on
page 84 in 2018
Annual Report
and Accounts
2
See the Annual
Remuneration
Report on
page 84 in 2018
Annual Report
and Accounts
2
3
5
Two-year
service period
and savings
requirement
Three-year
service period
and savings
requirement
Five-year
service period
and savings
requirement
n/a
n/a
35.60%
32.70%
29.90%
1
n/a
2.60%
2
n/a
2.60%
2
2.50%
2.37%
3
2.50%
2.37%
5
2.50%
2.37%
£11.05
£11.05
£10.49
£11.05
£11.62
£11.33
£4.32
£4.33
£4.92
Note
1.
Issued under the terms of the Computacenter Performance Share Plan 2005, as amended at the AGM held on 19 May 2015. 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.
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.
182
31 Analysis of changes in net funds
Cash and cash equivalents
Bank loans and credit facility
Adjusted net funds3 (excluding lease liabilities)
Lease liabilities
Net funds
The financing cash flows included in the table above are detailed as follows:
Balance at 1 January 2020
Changes from financing cash flows
Interest paid
Interest paid on lease liabilities
Repayment of loans
Repayment of Credit facility
Payment of capital element of lease liabilities
New borrowings – Credit facility
New Borrowings – Bank Loan
Total changes from financing cash flows
At
1 January
2020
£’000
217,881
(80,772)
137,109
(116,766)
20,343
Cash flows
in year
£’000
84,760
(42,493)
42,267
47,679
89,946
Non-cash
flow
£’000
–
–
–
(65,338)
(65,338)
Exchange
differences
£’000
7,203
2,071
9,274
(3,049)
6,225
At
31 December
2020
£’000
309,844
(121,194)
188,650
(137,474)
51,176
Bank
loans
(80,772)
1,757
–
19,407
–
–
–
(289)
20,875
Credit
facility
–
–
–
–
614
–
(62,225)
–
(61,611)
Lease
liabilities
(116,766)
Liabilities from
financing
activities
(197,538)
–
4,479
–
–
43,200
–
–
47,679
1,942
4,479
19,407
614
43,200
(62,225)
(289)
7,128
Others
–
185
–
–
–
–
–
–
185
The effect of changes in foreign exchange rates
(1,105)
3,176
–
(3,049)
(978)
Other changes
New leases
New leases relating to acquisition of a subsidiary
Early termination of leases
Interest expense
Total other changes
Balance at 31 December 2020
–
–
–
(1,757)
(1,757)
(62,759)
(49,406)
(12,788)
1,335
(4,479)
(65,338)
(137,474)
(49,406)
(12,788)
1,335
(6,421)
(67,280)
(258,668)
–
–
(58,435)
(185)
(185)
–
183
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
31 Analysis of changes in net funds continued
Cash and cash equivalents
Bank loans
Adjusted net funds3 (excluding CSF and lease liabilities)
CSF leases
Lease liabilities
Total lease liabilities
Net funds
At
1 January
2019
£’000
200,442
(134,234)
66,208
(8,928)
–
(8,928)
57,280
Implementation
of IFRS 16
£’000
–
–
–
8,928
(120,606)
(111,678)
(111,678)
Cash flows
in year
£’000
24,388
51,755
76,143
–
42,346
42,346
118,489
The financing cash flows included in the table above are detailed as follows:
Balance at 1 January 2019
Interest paid
Interest paid on lease liabilities
Repayment of loans
Payment of capital element of lease liabilities
Total changes from financing cash flows
Bank
loans
(134,234)
2,406
–
51,755
–
54,161
Others
–
912
–
–
–
912
Non-cash
flow
£’000
–
–
–
–
(43,793)
(43,793)
(43,793)
Lease
liabilities
–
–
3,728
–
38,618
42,346
The effect of changes in foreign exchange rates
1,707
–
5,298
Exchange
differences
£’000
(6,949)
1,707
(5,242)
–
5,287
5,287
45
At
31 December
2019
£’000
217,881
(80,772)
137,109
–
(116,766)
(116,766)
20,343
CSF
leases
(8,928)
Liabilities from
financing
activities
(143,162)
–
–
–
–
–
–
3,318
3,728
51,755
38,618
97,419
7,005
Other changes
Implementation of IFRS 16
New leases
New leases relating to acquisition of a subsidiary
Early termination of leases
Interest expense
Total other changes
Balance at 31 December 2019
–
–
–
–
(2,406)
(2,406)
(80,772)
–
–
–
–
(912)
(912)
–
(120,606)
(35,720)
(5,128)
772
(3,728)
(164,410)
(116,766)
8,928
–
–
–
–
8,928
–
(111,678)
(35,720)
(5,128)
772
(7,046)
(158,800)
(197,538)
32 Capital commitments
At 31 December 2020, the Group held £0.8 million commitment for capital expenditure (2019: no significant commitments).
184
33 Pensions and other post-employment benefit plans
The Group operates a defined contribution pension scheme available to all UK employees and similar schemes are operating, as appropriate for
the jurisdiction, for North America and Germany. The amount recognised as an expense for this plan is detailed in note 9. Details of the Retirement
Benefit obligation for Computacenter France are given below.
Total defined benefit liability
Movements in total defined benefit liability:
Balance at 1 January
Pension liability acquired
Included in Consolidated Income Statement
Current service cost
Interest cost
Included in Consolidated Statement of Comprehensive Income
Remeasurements loss
Actuarial loss arising from:
– Changes in demographic assumptions
– Change in financial assumptions
– Experience adjustment
Effect of movements in exchange rates
Other
Contributions paid by the employer
Benefits paid
Balance at 31 December
Actuarial assumptions
The following are the principal actuarial assumptions at 31 December (expressed as weighted averages):
Discount rate
Future salary growth
Turnover rates:
– Non-managers
– Supervisors
– Executives
2020
£’000
23,276
2020
£’000
8,311
9,914
687
72
759
4,056
3,255
622
179
509
4,565
2019
£’000
8,311
2019
£’000
7,416
–
492
107
599
752
750
–
2
(423)
329
(273)
(273)
23,276
(33)
(33)
8,311
2020
%
0.50
1.50
5.70
2.70
2.70
2019
%
1.50
0.76
17.20
12.60
10.20
At 31 December 2020, the discount rate used was 0.5 per cent (2019: 1.5 per cent) with reference to the iBoxx € Corporate AA 10y + index.
185
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2020
33 Pensions and other post-employment benefit plans continued
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have
affected the defined benefit obligation by the amounts shown below.
Discount rate (1 per cent movement)
Future salary growth (1 per cent movement)
Turnover rates (1 per cent movement)
2020
£’000
Increase
2,776
(3,316)
782
Decrease
(3,318)
2,828
(994)
2019
£’000
Increase
959
(1,112)
641
Decrease
(1,130)
964
(721)
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the
sensitivity of the assumptions shown.
34 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:
Biomni Limited
Sales to related parties
Purchase from related parties
Receivables from related parties
Amounts owed to related parties
2020
£’000
64
648
18
6
2019
£’000
32
654
–
6
Terms and conditions of transactions with related parties
Outstanding balances at the year end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for
any related party receivables. The Group has not recognised any 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 remuneration table
in the Annual Remuneration Report on page 106 for details of compensation given. A summary of the compensation of key management
personnel is provided below:
Short-term employee benefits
Social security costs
Share-based payment transactions
Pension costs
Total compensation paid to key management personnel
2020
£’000
2,237
435
2,275
41
4,988
2019
£’000
2,447
422
2,623
40
5,532
The interests of the key management personnel in the Group’s share incentive schemes are disclosed in the Annual Remuneration Report on
pages 109 to 111.
35 Contingent liabilities
The Company has given a guarantee in the normal course of business to suppliers of subsidiary undertakings for an amount not exceeding
£134.0 million (2019: £130.1 million).
186
Company Balance Sheet
As at 31 December 2020
Non-current assets
Intangible assets
Investment property
Investments
Current assets
Debtors
Prepayments
Cash at bank and in hand
Total assets
Current liabilities
Trade and other payables
Financial liabilities
Income tax payable
Non-current liabilities
Financial liabilities
Total liabilities
Net assets
Capital and reserves
Issued share capital
Share premium
Capital redemption reserve
Merger reserve
Own shares held
Retained earnings
Shareholders’ equity
Approved by the Board on 15 March 2021.
MJ Norris
Chief Executive Officer
FA Conophy
Group Finance Director
Note
2020
£’000
2019
£’000
3
4
5
6
7
8
8
12
25,221
12,967
344,147
382,335
71,331
159
35
71,525
453,860
–
41,570
6
41,576
–
–
41,576
412,284
33,721
14,000
333,961
381,682
135
348
278
761
382,443
16,709
15,107
331
32,147
40,890
40,890
73,037
309,406
9,270
3,942
74,957
55,990
(111,613)
379,738
412,284
9,270
3,942
74,957
55,990
(113,563)
278,810
309,406
187
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020
Company Statement of Changes in Equity
For the year ended 31 December 2020
At 1 January 2020
Profit for the year
Total comprehensive income for the year
Exercise of options
Share options granted to employees
of subsidiary companies
Purchase of own shares
Equity dividends
At 31 December 2020
At 1 January 2019
Profit for the year
Total comprehensive income for the year
Exercise of options
Share options granted to employees
of subsidiary companies
Purchase of own shares
Equity dividends
Asset reunification
At 31 December 2019
Issued
share
capital
£’000
9,270
–
–
–
–
–
–
9,270
9,270
–
–
–
–
–
–
–
9,270
Share
premium
£’000
3,942
–
–
–
Capital
redemption
reserve
£’000
74,957
–
–
–
–
–
–
3,942
3,942
–
–
–
–
–
–
–
3,942
–
–
–
74,957
74,957
–
–
–
–
–
–
–
74,957
Merger
reserve
£’000
55,990
–
–
–
–
–
–
55,990
55,990
–
–
–
–
–
–
–
55,990
Own shares
held
£’000
(113,563)
–
–
20,901
–
(18,951)
–
(111,613)
(113,474)
–
–
15,798
–
(15,887)
–
–
(113,563)
Retained
earnings
£’000
278,810
121,924
121,924
(15,226)
8,173
–
(13,943)
379,738
297,835
19,825
19,825
(10,071)
6,775
–
(35,764)
210
278,810
Shareholders’
equity
£’000
309,406
121,924
121,924
5,675
8,173
(18,951)
(13,943)
412,284
328,520
19,825
19,825
5,727
6,775
(15,887)
(35,764)
210
309,406
188
Notes to the Company Financial Statements
For the year ended 31 December 2020
1 Authorisation of Financial Statements and statement of compliance with FRS 101
The Parent Company Financial Statements of Computacenter plc (the Company) for the year ended 31 December 2020 were authorised for issue by
the Board of Directors on 15 March 2021 and the Balance Sheet was signed on the Board’s behalf by MJ Norris and FA Conophy. Computacenter plc is
a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary shares are traded on the London Stock Exchange.
These Financial Statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
The Financial Statements are prepared under the historical cost convention.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of international
accounting standards in conformity with the requirements of the Companies Act 2006 (‘Adopted IFRSs’), but makes amendments where
necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has
been taken.
No profit and loss account is presented by the Company as permitted by Section 408 of the Companies Act 2006. The results of Computacenter plc are
included in the Consolidated Financial Statements of Computacenter plc which are available from Computacenter plc, Hatfield Business Park, Hatfield
Avenue, Hatfield, AL10 9TW. The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the year
ended 31 December 2020. The Financial Statements are prepared in pound sterling and are rounded to the nearest thousand pounds (£’000).
2 Summary of significant accounting policies
Basis of preparation
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a)
(b)
(c)
(e)
(f)
(i)
(ii)
(iii)
(iv)
(v)
(g)
(h)
(i)
(j)
(k)
(l)
the requirements of paragraphs 45(b) and 46-52 of IFRS 2 Share-based Payment;
the requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), B64(p), B64(q)(ii), B66 and B67
of IFRS 3 Business Combinations;
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:
paragraph 79(a)(iv) of IAS 1;
paragraph 73(e) of IAS 16 Property, Plant and Equipment;
paragraph 118(e) of IAS 38 Intangible Assets;
paragraphs 76 and 79(d) of IAS 40 Investment Property; and
paragraph 50 of IAS 41 Agriculture.
the requirements of paragraphs 10(d), 10(f), 39(c) and 134-136 of IAS 1 Presentation of Financial Statements;
the requirements of IAS 7 Statement of Cash Flows;
the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members
of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; and
the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
The basis for all of the above exemptions is because equivalent disclosures are included in the Consolidated Financial Statements of the Group
in which the entity is consolidated.
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
189
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020
Notes to the Company Financial Statements continued
For the year ended 31 December 2020
2 Summary of significant accounting policies continued
Investment property
Investment property is defined as land and/or buildings held by the Company to earn rental income or for capital appreciation or both, rather than
for sale in the ordinary course of business or for use in supply of goods or services or for administrative purposes. The Company recognises any
part of an owned (or leased under a finance lease) property that is leased to third-parties as investment property, unless it represents an
insignificant portion of the property.
Investment property is measured initially at cost including transaction costs. Subsequent to initial recognition, the Company elected to measure
investment property at cost less accumulated depreciation and accumulated impairment losses, if any (i.e. applying the same accounting
policies (including useful lives) as for property, plant and equipment). The fair values, which reflect the market conditions at the balance sheet
date, are disclosed in note 4.
Investments
Fixed asset investments are shown at cost less provision for impairment.
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.
Share-based payment transactions
The accounting policy in relation to share-based payment transactions is disclosed in full in the Consolidated Financial Statements. In addition to
that, the financial effect of awards by the Company of options over its equity shares to employees of subsidiary undertakings are recognised by
the Company in its individual Financial Statements as an increase in its investment in subsidiaries with a credit to equity equivalent to the IFRS 2
cost in subsidiary undertakings.
On transition to IFRS, the Group did not apply the measurement rules of IFRS 2 to equity-settled awards granted before 7 November 2002 or
granted after that date and vested before 1 January 2005. However, later modifications of such equity instruments are measured under IFRS 2.
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.
Own shares held
Shares in the Company, held by the Company, 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.
Merger accounting and the merger reserve
Prior to 1 January 2013, certain significant business combinations were accounted for using the ‘pooling of interests method’ (or merger
accounting), which treats the merged groups as if they had been combined throughout the current and comparative accounting periods. Merger
accounting principles for these combinations gave rise to a merger reserve in the Consolidated Balance Sheet, being the difference between the
nominal value of new shares issued by the Parent Company for the acquisition of the shares of the subsidiary and the subsidiary’s own share
capital and share premium account. These transactions have not been restated, as permitted by the IFRS 1 transitional arrangements.
The merger reserve is also used where more than 90 per cent of the shares in a subsidiary are acquired and the consideration includes the issue
of new shares by the Company, thereby attracting merger relief under the Companies Act 1985 and, from 1 October 2009, the Companies Act 2006.
190
3
Intangible assets
Cost
At 1 January 2020 and 31 December 2020
Accumulated amortisation
At 1 January 2020
Charge in the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
4
Investment properties
Cost
At 1 January 2020 and 31 December 2020
Accumulated depreciation
At 1 January 2020
Charge in the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Intellectual
property
£’000
169,737
136,016
8,500
144,516
25,221
33,721
Freehold land
and buildings
£’000
42,350
28,350
1,033
29,383
12,967
14,000
Investment property represents a building owned by the Company that is leased to Computacenter (UK) Ltd, a fully owned subsidiary of the Company.
The fair value of investment property amounted to £38.5 million at 31 December 2020 (2019: £38.4 million). The fair values for disclosure purposes
have been determined using either the support of qualified independent external valuers or by internal valuers with the necessary recognised
and relevant professional qualification, applying a combination of the present value of future cash flows and observable market values of
comparable properties. Management’s most recent external valuation of this property took place in February 2016. As this property is leased
to a subsidiary and is carried at depreciated cost value, an updated external valuation was not sought at 31 December 2020.
191
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Notes to the Company Financial Statements continued
For the year ended 31 December 2020
5
Investments
Cost
At 1 January 2020
Additions
Impairment
Share-based payments
At 31 December 2020
Amounts provided
At 1 January 2020
Provided during the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Investments in
subsidiary
undertakings
£’000
Loans to
subsidiary
undertakings
£’000
Investment
£’000
Total
£’000
449,950
8,051
(6,038)
8,173
466,174
115,989
6,038
122,027
344,147
333,961
2,754
–
–
–
2,754
2,754
–
2,754
–
–
25
–
–
–
25
25
–
25
–
–
452,729
8,051
(6,038)
8,173
468,953
118,768
6,038
124,806
344,147
333,961
During the year, the Company received a return of capital of £7.4 million, from its subsidiary Computacenter Managed Services GmbH which
undertook a capital reduction.
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 note 18 to the Consolidated Financial Statements.
6 Debtors
Amount owed by subsidiary undertaking
Other debtors
Deferred tax
2020
£’000
71,200
125
6
71,331
2019
£’000
–
127
8
135
Amounts owned by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand. Expected credit losses are
considered to be immaterial.
7 Trade and other payables
Amount owed to subsidiary undertaking
8 Financial liabilities
Current
Bank loan
Non-current
Bank loan
There are no material differences between the fair value of financial liabilities and their book value.
192
2020
£’000
–
2020
£’000
2019
£’000
16,709
2019
£’000
41,570
15,107
–
40,890
Bank loans
A loan of £100.0 million was drawn at 2.05 per cent interest rate to finance the acquisition of FusionStorm. The outstanding balance as at
31 December 2020 was £41.4 million at a revised interest rate of 1.31 per cent. Repayment of this loan commenced in H1 2019 and will continue
for two years, with an option to repay early.
9 Contingent liabilities
The Company has given a guarantee in the normal course of business to suppliers of subsidiaries undertaking for an amount not exceeding
£134.0 million (2019: £130.1 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 2020 is £nil (2019: £nil).
10 Auditor’s remuneration
All auditor’s remuneration is borne by Computacenter (UK) Ltd, a fully-owned UK subsidiary of the Company. The amount payable to the auditor in
respect of the audit of the Company is £125,000 (2019: £125,000), all of which is payable to KPMG LLP. The Company is exempt from providing details
of non-audit fees as it prepares Consolidated Financial Statements in which the details are required to be disclosed on a consolidated basis (see
note 7 to the Consolidated Financial Statements).
11 Distributable reserves
Dividends are paid from the standalone Balance Sheet of Computacenter plc, and as at 31 December 2020, the distributable reserves are
approximately £268 million (2019: £165 million).
12 Issued share capital
Asset reunification
During the financial year 2019, following the changes to our Articles of Association approved at our AGM on 16 May 2019, the Company, in
conjunction with our Registrar, conducted an asset reunification exercise during the year. A total of 21,458 shares were forfeited from 355
shareholders with a total of £0.2 million returned to the Company from the sale of the shares. These funds have been allocated by the Board to
be used to support the charitable partners selected by our employees.
Disclaimer: forward-looking statements
This Annual Report and Accounts includes statements that are, or may be deemed to be, ‘forward-looking statements’. These forward-looking
statements can be identified by the use of forward-looking terminology, including the terms ‘anticipates’, ‘believes’, ‘estimates’, ‘expects’, ‘intends’,
‘may’, ‘plans’, ‘projects’, ‘should’ or ‘will’, or, in each case, their negative or other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts.
They appear in a number of places throughout this Annual Report and Accounts and include, but are not limited to, statements regarding the
Group’s intentions, beliefs or current expectations concerning, amongst other things, results of operations, prospects, growth, strategies and
expectations of its respective businesses.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-
looking statements are not guarantees of future performance and the actual results of the Group’s operations and the development of the
markets and the industry in which they operate or are likely to operate and their respective operations may differ materially from those
described in, or suggested by, the forward-looking statements contained in this Annual Report and Accounts. In addition, even if the results
of operations and the development of the markets and the industry in which the Group operates are consistent with the forward-looking
statements contained in this Annual Report and Accounts, those results or developments may not be indicative of results or developments in
subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the
forward-looking statements, including, without limitation, those risks in the risk factor section of this Annual Report and Accounts, as well as
general economic and business conditions, industry trends, competition, changes in regulation, currency fluctuations or advancements in
research and development.
Forward-looking statements speak only as of the date of this Annual Report and Accounts and may, and often do, differ materially from actual
results. Any forward-looking statements in this Annual Report and Accounts reflect the Group’s current view with respect to future events and are
subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group’s operations, results of operations
and growth strategy.
Neither Computacenter plc nor any of its subsidiaries undertakes any obligation to update the forward-looking statements to reflect actual
results or any change in events, conditions or assumptions or other factors unless otherwise required by applicable law or regulation.
193
FINANCIAL STATEMENTSANNUAL REPORT AND ACCOUNTS 2020 Group five-year financial review and dates
Group five-year summary results
As of 31 December
Revenue
Adjusted1 operating profit
Adjusted1 profit before tax
Profit for the year
Adjusted1 diluted earnings per share
Adjusted net funds3
Headcount (monthly average)
Group five-year summary balance sheet
As at 31 December
Tangible assets
Right-of-use assets
Investment property
Intangible assets
Investment in associate
Deferred tax asset
Non-current prepayments
Inventories
Trade and other receivables (including income tax receivables)
Prepayments and accrued income
Derivative financial instruments
Current asset investment
Cash and short-term deposits
Current liabilities
Non-current liabilities
Net assets
Financial calendar
Title
AGM
Ex-dividend date
Dividend record date
Dividend payment date
Interim results announcement
194
2016
£m
3,245.4
86.2
86.4
63.8
54.0p
148.7
13,373
2016
£m
63.0
–
10.0
76.3
0.1
10.5
–
44.0
740.4
139.5
8.1
30.0
118.7
(804.8)
(7.9)
427.9
2017
£m
3,793.4
105.5
106.2
81.3
65.1p
195.2
14,026
2017
£m
77.9
–
–
80.3
0.1
9.1
–
69.3
835.4
162.6
8.2
–
206.6
(940.9)
(19.7)
488.9
2018
£m
4,352.6
118.8
118.2
80.9
75.7p
66.2
15,117
2018
£m
106.3
–
–
184.6
0.1
9.6
3.5
99.5
1,180.4
171.2
3.9
–
200.4
(1,351.1)
(160.6)
447.8
2019
£m
5,052.8
151.5
146.3
101.6
92.5p
137.1
15,816
2019
£m
101.4
110.9
–
175.6
0.1
9.2
3.5
122.2
996.5
176.3
3.3
–
217.9
(1,257.8)
(166.6)
492.5
2020
£m
5,441.3
206.5
200.5
154.2
126.4p
188.6
16,764
2020
£m
107.0
129.6
–
274.7
0.1
10.1
23.6
211.3
1,105.8
228.2
1.6
–
309.8
(1,586.2)
(184.7)
630.9
Date
20 May 2021
03 June 2021
04 June 2021
02 July 2021
09 September 2021
Corporate information
Board of Directors
Peter Ryan (Non-Executive Chairman)
Mike Norris (Chief Executive Officer)
Tony Conophy (Group Finance Director)
Rene Haas (Non-Executive Director)
Philip Hulme (Non-Executive Director)
Ljiljana Mitic (Non-Executive Director)
Peter Ogden (Non-Executive Director)
Minnow Powell (Non-Executive Director)
Ros Rivaz (Senior Independent Director)
Principal banker
Barclays Bank plc
1 Churchill Place
Canary Wharf
London
E14 5HP
United Kingdom
Tel: +44 (0) 345 7345 345
HSBC Bank plc
8 Canada Square
London
E14 5HQ
United Kingdom
Tel: +44 (0) 345 740 4404
Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
United Kingdom
Tel: +44 (0) 20 7311 1000
Company Secretary
Raymond Gray
Registered office
Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom
Tel: +44 (0) 1707 631000
Stockbrokers and investment bankers
Credit Suisse
One Cabot Square
London
E14 4QJ
United Kingdom
Tel: +44 (0) 20 7888 8888
Investec Investment Banking
30 Gresham Street
London
EC2V 7QP
United Kingdom
Tel: +44 (0) 20 7597 4000
Registrar and transfer office
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Tel: +44 (0) 371 384 2027
(Calls to this number cost 8p per minute plus
network extras)
Solicitor
Linklaters
One Silk Street
London
EC2Y 8HQ
United Kingdom
Tel: +44 (0) 20 7456 2000
Company registration number
3110569
Internet address
Computacenter Group
www.computacenter.com
195
Hungary
Computacenter Services Kft
Haller Gardens, Building D. 1st Floor
Soroksári út 30-34
Budapest 1095
Hungary
Tel: +36 1 777 7488
India
Computacenter India Private Limited,
4th Floor, Purva Premiere,
Residency Road,
Bangalore 560025
India
Tel: +91 95386 11122
Malaysia
Computacenter Services (Malaysia) Sdn Bhd
Level 9, Tower 1
Puchong Financial Corporate Centre
Jalan Puteri 1/2, Bandar Puteri
47100 Puchong
Selangor Darul Ehsan
Malaysia
Tel: +603 7724 9626
Mexico
Computacenter México S.A. de C.V.
Av. Paseo de la Reforma, No. 412-5
Col. Juarez
Delegacion Cuauhtemoc
CP 06600
México City
Mexico
Tel: +52 (55) 6844 0700
Spain
Computacenter Services (Iberia) S.L.U.
Carrer de Sancho De Avila 52-58
08018 Barcelona
Spain
Tel: +34 936 207 000
Switzerland
Computacenter AG
Riedstrasse 14
CH-8953 Dietikon
Switzerland
Tel: +41 (0) 43 322 40 80
USA
Computacenter (U.S.), Inc.
17th Floor, 462 7th Avenue
New York, NY 10018
United States of America
Tel: +1 800-228-8324
Computacenter Fusionstorm Inc.
1 University Avenue
Suite 102, Westwood
MA 02090
United States of America
Tel:+ 1 800-228-8324
Pivot Technology Solutions, Inc.
6026 The Parkway, Suite 100
Norcross, GA 30092
United States of America
Tel: +1 800-228-8324
Netherlands
Computacenter B.V.
Gondel 1
1186 MJ Amstelveen
Netherlands
Tel: +31 (0) 88 435 8000
South Africa
Computacenter (Pty) Ltd
Building 1
Klein D’Aria Estate
97 Jip de Jager Drive
Bellville, 7535
Cape Town
South Africa
Tel: +27 (0) 21 957 4900
Principal offices
UK and Group headquarters
Computacenter plc
Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom
Tel: +44 (0) 1707 631000
Belgium
Computacenter NV/SA
Ikaroslaan 31
B-1930 Zaventem
Belgium
Tel: +32 (0) 2 704 9411
France
Computacenter France SAS
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
Germany
Computacenter AG & Co. oHG
Computacenter Park 1
50170 Kerpen
Germany
Tel: +49 (0) 2273 5970
Computacenter AG
Kattenbug 2
50667 Köln
Germany
Tel: +49 (0) 22142 07430
Computacenter Germany AG & Co. oHG
Werner-Eckert-Str. 16-18
81829 München
Germany
Tel: +49 (0) 8945 7120
196
Design and production:
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+44 (0) 20 7610 6140
www.gather.london
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Computacenter is a leading independent technology
partner, trusted by large corporate and Public Sector
organisations. We help our customers to Source,
Transform and Manage their IT infrastructure to
deliver digital transformation, enabling people and
their business. Computacenter is a public company
quoted on the London FTSE 250 (CCC.L) and employs
over 17,000 people worldwide.
Computacenter plc
Hatfield Avenue, Hatfield, Hertfordshire AL10 9TW, United Kingdom
Tel: +44 (0) 1707 631000
www.computacenter.com
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