What stood out from your annual results – did anything particularly please you?
We’re pretty happy with the year. There are four points I’d raise.
One, due to the success of the organisation through the Covid period and the incremental profit we made through the Covid period – when we were more profitable than we would have been without Covid (I know it’s not politically correct to say, it’s just a fact, and we said it at the time) – you set a higher bar than you otherwise would have done. So to see our profits grow in 2022, and again in 2023, given that the base was inflated – I’m pretty happy with that.
Point two: as far as I can tell, Computacenter from a growth point of view outperformed every major VAR in the world last year. We did that for the same reason that the Nasdaq outperformed every other stock market in the world. A few – five, six – big customers performed very, very well. It wasn’t all customers. It was a few over-performing customers that helped our numbers dramatically. We still had to go out and win them – it wasn’t just luck – but that’s the second point I’d make about the results.
“As far as I can tell, Computacenter from a growth point of view outperformed every major VAR in the world last year”Mike Norris
The third and fourth points are about the issues that were highlighted 12 months ago, that we’ve dealt with. One, post the supply shortages of 2022 that eased in the second half of 2022, we saw a very, very large inventory position at Computacenter in December 2022. In fact it was even more in September 2022. And we were confident that that inventory would sell through to the customer base and go down, and that cash in the bank would go up. And that’s exactly what’s happened. So reversing the inventory position that was caused by the supply chain shortage was very pleasing.
Then, finally, because we have a so much higher percentage service delivery than most other VARs – not just selling them services but services we deliver – we were more exposed to inflationary driven salary increases than most people. It’s because we have more people – we have 20,000 people. And that affects us in our two ways. It obviously affects our SG&A, but more importantly it affects our services margins because people cost more and you can’t necessarily immediately charge your customer more. So your margins get squeezed on services. We saw quite a lot of margin decline in the first quarter of 2023 but we saw margins improve in our services business as we introduced price rises to our customers and productivity gains through our workforce. Services margins finished the year in a very pleasing position, after starting with a bit of a challenge.
“I don’t need to make more acquisitions in North America, but I’d like to” – see next page for Norris’ M&A views…
