IBM reckons both the pandemic and Brexit could play to its strengths in 2021 – making a claim about turning threats into opportunity in the latest profit and loss accounts filed for its loss-making UK operation.
According to the financial document for the year ended 31 December 2020 [PDF] - filed at Companies House on 18 August - Big Blue said of its principal risks and uncertainties:
"Specifically, in the coming year the key business risks will still be about the COVID-19 pandemic and the impact on the economic environment. The end of the Brexit transition period and the new working relationship with the European Union will also have a short-term impact."
It added: "The pandemic continues to rapidly evolve with new variants posing threats to current treatments and vaccine effectiveness. The new Brexit deal and the pandemic both present an opportunity for the company, for example, data-enabled healthcare initiatives, scalable digital business models, reinventing ecommerce, supply chain, data compliance and also enabling and accelerating digital collaboration."
UK Gross Domestic Product – the value of everything produced by the UK economy – fell 9 per cent year-on-year in 2020, said the Office of National Statistics, as multiple lockdowns designed to curb the spread of the virus impeded economic activity.
The National Institute of Economic and Social Research said in May that the UK government's handling of the pandemic and Brexit indicated that local economy could see £727bn in lost output over the next half a decade.
By IBM's reckoning, Britain would need to "invest heavily in digital infrastructure" and push through reforms to "raise productivity if it is to repair long-term economic damage left by the COVID-19 crisis and the effects of Brexit."
The change in working patterns certainly forced companies to reassess their tech infrastructure last year, though IBM was not among the biggest beneficiaries of this, as evidenced by its 2020 global results.
As for the UK component, IBM's revenues declined 9.7 per cent in the year ended 31 December to £3.515bn. This, it said, "reflects the unprecedented macroeconomic environment that resulted for the COVID-19 pandemic with the company's clients focused on operational stability, flexibility and cash preservation."
Intercompany sales were down, as was Cloud & Cognitive, Global Business Services, Global Technology Services and Systems.
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In another great vanishing trick, IBM managed to turn its 2019 £57.7m profit before tax into a loss before tax of £114m, which it ascribed to a rise in admin expenses and impairment of investment charges.
The average number of people employed in the year fell to 10,501 versus 10,955 in the prior year. Those ranks will be thinned further once IBM spins out its GTS unit into a separately traded entity later this year. ®