TIDMCCC
RNS Number : 1441L
Computacenter PLC
31 August 2012
Computacenter plc
Interim Results for Six Months ended 30 June 2012
Computacenter plc, the independent provider of IT infrastructure
services and solutions, today announces unaudited results for the
six months ended 30 June 2012.
"Encouraging Services revenue growth, good pipeline"
Financial Highlights:
-- Group revenue, including acquisitions, of GBP1.42 billion (H1
2011: GBP1.37 billion) an increase of 4.2%
-- Group adjusted(1) profit before tax of GBP24.0 million (H1
2011: GBP26.6 million), impacted by additional start-up
costs, primarily in Germany, associated with new business
wins
-- Adjusted(1) diluted earnings per share (EPS) of 11.7p (H1 2011: 12.9p)
-- Net funds excluding customer specific financing (CSF) of
GBP101.6 million (H1 2011: GBP104.3 million)
-- Interim dividend of 5.0p (H1 2011: 4.5p) an increase of 11.1%
Statutory Highlights:
-- Group profit before tax of GBP20.8 million (H1 2011: GBP26.2 million)
-- Diluted EPS of 10.0p (H1 2011: 12.7p)
-- Net funds after CSF of GBP83.8 million (H1 2011: GBP80.9 million)
Operational Highlights:
-- Revenue growth of more than 5% in constant currency across
all countries with double digit organic
revenue growth in Services in all countries
-- Contractual Services base increased by 9.4% to GBP595.0
million (H1 2011: GBP544.0 million)
-- Efficient integration of new Service contract wins in the UK
with continued strong UK Services contract
pipeline
-- Progress made in resolving integration issues relating to new
Services contracts in Germany to ensure the
earnings potential will be realised
-- Continued successful roll-out of Group wide ERP system with
operational benefits coming through
-- New warehouse and office installations in France, with
further fit-out at the new RDC facility, expansion of
the Spanish Service desk, as well as new German Service desk
Mike Norris, Chief Executive of Computacenter plc,
commented:
"Our Services revenue grew materially in the first half of the
year, reflecting our strategic emphasis on growing our Contractual
Services base. While we were encouraged to see double digit organic
revenue growth in Services in all countries, we must now replicate
the successful contract win integration achieved in the UK across
the Group.
This is not a simple or quick process and much work needs to be
done. However, our uncompromising approach to customer
satisfaction, whatever the short term consequences, we believe is
in the long term interest of all of our stakeholders, particularly
our shareholders.
The new Services business momentum we have built in our UK
Services business looks set to continue into the second half and
beyond. We are likely to see slower top line Services growth
outside the UK as we put our processes in order, but this should
improve our margins. We remain on track with the Board's revised
expectations for the year."
Enquiries:
Computacenter 01707 631000
Mike Norris
Tessa Freeman
Tulchan 020 7353 4200
Christian Cowley
Rebecca Scott
Chairman's Statement
We suffered growing pains, particularly in Germany, during the
first half of 2012. The challenge of implementing multiple
contracts simultaneously and delivering what our customers want, is
leading us to spend an incremental GBP7 million on additional staff
and related costs to ensure our future success.
We are confident in our services offerings and as part of our
decision to protect our long term prospects, we are planning
necessary improvements to our operating and management processes.
We were pleased to see that in the recently published UK KPMG
Outsourcing2 satisfaction survey, we were rated at the top of a
highly competitive sector.
We remain financially sound with GBP101.6 million of net funds,
excluding customer specific financing (CSF) at the end of the
period, no debt, paying an increased interim dividend and pleased
that our investments in our offerings, as well as our internal ERP
system are delivering strong Services growth. We are not pleased
that we did not properly anticipate the operational impact of
winning so many contracts at the same time, but growing pains are a
challenge we have the financial strength to absorb.
As previously reported in June, the investments in our contract
base referred to above and the negative impact of exchange rate
movements have reduced our profit expectations for 2012 by
approximately GBP10 million. However, our journey to grow our
Services revenue and improve long-term profitability takes
precedence in our decision-making.
Thanks to our customers and our employees for giving us further
confidence in our future.
Greg Lock
August 2012
(2) KPMG's UK Outsourcing Service Provider Performance and
Satisfaction (SPSS) Survey for 2012
Operating Review
Group
During the first six months of 2012, Computacenter's overall
revenues in constant currency grew by 7.6% to GBP1.42 billion and
by 4.2% on an as reported basis (H1 2011: GBP1.37 billion). At a
Group level the impact of acquisitions made in 2011 was not
material. This encouraging growth during the first half of 2012 was
delivered, with all countries increasing their revenues by more
than 5% in constant currency; although, excluding the Top Info
acquisition, like for like revenue in France declined by 4%.
As notified, Group profitability was down on the same period
last year, reducing the adjusted1 profit before tax by 9.6% to
GBP24.0 million (H1 2011: GBP26.6 million). Despite the good
revenue growth, new contract take-on volume in Germany and workload
strain in France more than offset the profit increase in the UK and
the substantial profit increase in Belgium.
As a result of the reduced profit and a broadly similar tax
rate, adjusted(1) diluted earnings per share (EPS) for the period
reduced by 9.3% to 11.7p (H1 2011: 12.9p). A total of GBP1.9
million of exceptional one-off charges, relating to the relocation
of our office and warehouse premises in France, as well as our IT
recycling subsidiary RDC, were incurred during the period.
Therefore, on a statutory basis, after taking both amortisation on
acquired intangibles and the exceptional items into account, profit
before tax reduced by 20.5% to GBP20.8 million (H1 2011: GBP26.2
million).
All our geographic segments have delivered organic double digit
percentage Services revenue growth, in constant currency. Overall
Supply Chain revenue grew by 4.3%, with all the segments improving
on their Supply Chain revenues in constant currency on the first
half of last year; although, the 1.3% improvement in the UK was
relatively small.
Supply Chain margins in the UK were held back, partly due to a
single one-off high margin deal during the first half of 2011, but
also due to a shift in the type of products purchased by our
customers. During the second quarter of this period, Supply Chain
revenue in Germany slowed, especially when compared to the
extraordinary growth experienced in the same period last year.
The growth in our constant currency Contractual Services base of
9.4% to GBP595.0 million (H1 2011: GBP544.0 million) is at a
strategic level, very positive and has already helped performance
in the UK during the period, with a more material contribution to
come in the second half of the year and beyond. In addition, the
current pipeline in the UK is particularly strong, which bodes well
for contract base growth in the second half of the year.
The on-boarding of new contracts was, as notified in our release
on 14 June 2012, not executed as smoothly in Germany as in the UK.
The German business was under-resourced to cope with the extent of
the new activity and, in order to limit customer dissatisfaction,
significant additional cost had to be incurred through overstaffing
on some contracts, which impacted profitability. We remain
dedicated to resolving these issues and establishing stability in
the delivery of these Services, which will then release the earning
potential of these contracts.
We expect better earnings from the encouraging Services top-line
growth in France as we continue to optimise our processes and
facilities during the rest of this year. The challenges in France
are not similar to those in Germany, making us confident that as
the French team progresses through their busy agenda, improved
profitability should follow.
Our cash position remained strong and net funds, excluding CSF,
were GBP101.6 million at the period end (H1 2011: net funds of
GBP104.3 million). This healthy position was maintained despite the
investment of GBP3.9 million to acquire a majority stake in Damax
in the second half of 2011, as well as capital expenditure in the
first half of 2012 of GBP18.8 million, which included the new
warehouse and office installations in France, further fit-out at
the new RDC facility, expansion of the Spanish Service Desk as well
as a new German Service Desk. The level of CSF has reduced further
from GBP23.5 million, at the end of the first half of 2011, to
GBP17.9 million. Including CSF, net funds were GBP83.8 million (H1
2011: GBP80.9 million).
As reported on the last few occasions, our cash position
remains, but to a lesser degree, enhanced to the extent of GBP25.8
million (H1 2011: GBP30.8 million), by the provision of extended
credit terms from a major supplier. The level of cash improvement
arising from these terms clearly fluctuates based on the level of
purchases from that vendor. We view this as a healthy net fund
position, especially considering the higher dividend payment during
this period.
We are pleased to announce the payment of an increased interim
dividend of 5.0p per share (H1 2011: 4.5p). This is in line with
our stated policy that the interim dividend will be approximately
one third of the previous year's full dividend. The interim
dividend will be paid on 19 October 2012 to shareholders on the
register as at 21 September 2012.
We expect to migrate our French business onto our new Group-wide
ERP system during the middle of next year and have already made
good progress in preparing for the deployment. We are confident
that the experience gained during the migrations of both the UK and
German businesses will materially assist in migrating the French
operation onto the same platform. We are keen to complete the final
stage of the ERP transformation, as even at this relatively early
stage, we have already experienced operational benefit from the
single ERP system at a Group level.
Outlook
We remain on track with the Board's revised expectations for the
year. While we are clearly pleased with the Services revenue growth
in all countries, our success in business take-on in the UK must be
replicated across the Group. This is not a simple or quick process
and much work needs to be done. However, our uncompromising
approach to customer satisfaction, whatever the short-term
financial consequences, we believe is in the long-term interest of
all of our stakeholders, particularly our shareholders.
The new Services business momentum we have built in the UK looks
set to continue into next year and beyond. We are likely to see
slower top line Services growth outside the UK, as we put our
processes in order, but this should improve our margins. We believe
the growth we have achieved in Services has materially outstripped
the market. This growth has resulted in some shorter term
operational challenges, however, in the long term, our ability to
grow ahead of the market will continue to be highly positive for
Computacenter.
United Kingdom
We are encouraged by good overall revenue growth in the UK
despite the ongoing market challenges within the two key sectors of
public sector and investment banking. Overall UK revenue rose by
5.7% to GBP578.2 million (H1 2011: GBP547.3 million) and overall
adjusted1 operating profit improved by 5.2%, to GBP17.6 million (H1
2011: GBP16.7 million).
Our strategic shift towards emphasising our Services and
Solutions offerings is delivering value, as evidenced by 14.2%
growth in Services revenue, compared to growth of 0.7% in the first
half of 2011. As our customers increasingly value our independence
and ability to meet their demand for cost reduction, quality
improvements and access to skills, we are able to reduce our
dependence on Supply Chain activity with exposure to less
predictable capital expenditure. This enhances the quality of our
earnings through increased stability and predictability.
The UK profitability in the period owes much to the efficient
and effective take-on of the new contracts, which we won at the end
of last year and the beginning of this year. This demonstrates that
our investment into improving our take-on processes in the UK is
delivering returns.
KPMG's UK Outsourcing Service Provider Performance and
Satisfaction (SPSS) Survey for 2012 confirms that our
industrialised approach to relationship management, innovation,
pricing and business take-on, as well as service delivery, has
contributed to our number one ranking for customer
satisfaction.
Computacenter also took first place for customer
reference-ability in the survey. This demonstrates that we continue
to deliver value throughout our services engagements, further
fuelling growth of our contract base, which has increased by 10.5%
to GBP274.0 million (H1 2011: GBP248.0 million). This comes within
a market where Gartner has predicted no more than 2.8% growth for
2012.
Against the background of the relatively flat IT supply chain
market, our Supply Chain revenue increased marginally, albeit with
much of this growth coming from Windows 7-led sales, resulting in a
decline in Supply Chain contribution levels. In addition to this
shift, which may well reverse next year, a large one-off
high-margin deal in the first half of 2011 makes the comparison
more difficult.
As notified at the end of last year, we are well placed to meet
demand for Windows 7, Office 2010 and Exchange software migration,
as our customers seek to upgrade their legacy environments. We are
also experiencing strong growth for the broader workplace IT
transformation projects as part of these upgrade initiatives. This
has generated new customers and also fuelled transformational
project growth as part of existing Managed Services contracts over
the last year.
We have been awarded a GBP50 million, five-year contract to join
the new Rolls Royce ecosystem of strategic IT vendors, as the
provider of global desktop services. Our industrialised services
will help Rolls-Royce further enhance their operational
efficiencies and effectiveness through the delivery of new and
improved desktop services.
As mentioned, public sector spend has remained largely subdued,
but in some instances, spending on IT transformation projects
continued unabated. The North and South Wales Consortia have
appointed Computacenter UK as the sole supplier of Supply Chain
Services to 10 local authorities. We have further won a GBP1.8
million contract for the delivery of a VMware enterprise licence to
Transport for London.
We continue to strengthen our presence within the retail banking
sector. In the period, we were awarded a build, store, deploy and
support contract by a new global banking customer, covering 1,800
of their retail branch locations, with a value of GBP2.1 million
per year. Similarly, in the commercial sector, we have secured a
Windows 7 migration project with another new customer, a large
German insurance provider.
Whilst winning contracts with new customers is important,
expanding the scope of offerings we deliver to existing customers
is equally encouraging. For example, international law firm
Eversheds has recently renewed its data centre managed services
outsourcing contract and additionally agreed a new contract valued
at GBP1.3 million for the delivery and management of the second
phase of the firm's datacenter transformation project.
Our cabling division has been particularly busy this period on
one notable major project. In addition, it has been awarded two new
framework agreements, which bodes well for the continuing success
of this division over the rest of this year and beyond.
We believe the SG&A increase in the UK of 3.2%, compared to
the same period last year, is controlled and stable, in light of
the business increase, contract base growth and improved Services
and Solutions profitability. This follows targeted investment into
supporting our increasing Services business. We are also continuing
to invest in the UK business to support future growth, through
enhancing our current offerings and increasing our pre-sales
activity, as we enter the second half of the year with a very
encouraging business pipeline.
Germany
Total revenue for the German segment increased by 7.5% to
EUR718.7 million (H1 2011: EUR668.6 million). We view this as
encouraging in the overall context of the German market, where the
exceptional spending seen in 2011 has evidently slowed,
particularly during Q2 2012.
Market conditions and a difficult comparator have undoubtedly
impacted our Supply Chain business, where growth over the period
was 3.7% to EUR478.6 million (H1 2011: EUR461.6 million), compared
to an increase of 36.8% growth achieved in the first half of 2011.
This impact has been felt most acutely within the second quarter of
2012 during which Supply Chain revenues reduced by 9.8% compared to
the second quarter of 2011. Nevertheless, we feel that our Supply
Chain business has held up well, especially within the datacenter
market. This is largely due to our strong customer relationships
and our established pan-European vendor relationships.
We believe that the widely reported issues of economic
instability within the Euro zone have contributed towards the
general slowdown in Supply Chain growth. However, our Supply Chain
business performed extremely well in the same period last year,
leading us to believe that this rate of decline is unlikely to
continue during the rest of the year.
Services revenue in Germany increased by 16.0% to EUR240.1
million (H1 2011: EUR207.0 million). This growth has been delivered
largely from the significant number of contracts won during the
latter part of 2011. However, these wins, as noted in our 2011
final results and the announcement of 14 June 2012, have presented
our German business with a sudden and material increase in business
delivery demand. The consequential take-on issues have proven
challenging to address, given the limited availability of
specialist skills in Germany.
In order to try and address these challenges, we are making
significant investments, primarily into additional people. We
believe the deployment of this additional resource is essential to
ensure that we successfully implement these contracts and delight
our customers.
Whilst this additional investment and focus on stabilising the
new contracts does not bode well for profitability in Germany this
year, we expect an improvement in 2013. We view the resolution of
these challenges as crucial to the relationships with these
customers, as well as the long-term success of the business. We
will ensure that we consistently embed the lessons learnt from
these growing pains.
This significant investment to assist our business take-on
processes has had an impact on the gross margin levels and as such,
our adjusted1 operating profit has reduced to EUR6.6 million (H1
2011: EUR9.7 million). It is worth noting that the first half's
profitability is still more than 50% ahead of the same period in
2010. We are also able to report in this context that a 15-month
trend of increasing SG&A in Germany has now been reversed and
in Q2 2012 we have seen a modest reduction.
We remain encouraged by the performance of our workplace
offerings and it is evident that our full desktop Managed Service
remains attractive to our customers. We have sourced more than
9,000 new devices for Evonik, the multinational speciality
chemicals company, in preparation of rolling-out Windows 7 and
Office 2010 to approximately 18,000 devices.
We are also seeing a wider scope and higher volume of
assignments being awarded to us by our existing customers. For
example, a global soft drinks manufacturer has increased its total
expenditure with us by some 650% to EUR2.6 million. In addition to
equipping their office-based staff with desktop devices, we have
been selected to source and supply their field staff with
technologies that enable greater mobility.
Our Professional Services business remains upbeat, due to our
current strong pipeline, despite the potential signs of a slower
economy and a Supply Chain business that showed decline towards the
end of the period.
While 2012 will be a year of re-establishing stability for
Computacenter Germany, we are confident that the increased
geographic footprint enabled by our recent global Services contract
wins, will provide us with an excellent foundation to pursue
further opportunities for growth over the course of 2013 and
beyond.
France
During the first half of 2012, total revenue in France,
including Top Info, increased by 9.0% in constant currency to
EUR275.8 million (H1 2011: EUR253.1 million). The comparator only
includes Top Info revenue for Q2 2011, following the acquisition.
If the full H1 2011 revenue is included, there is a revenue decline
of 4.0%. Adjusted(1) operating profit during the first half of this
year reduced by EUR1.1 million in constant currency, to an
operating loss of EUR0.9 million (H1 2011: operating profit EUR0.2
million).
Services revenue over the period, in constant currency,
including Top Info for the whole of the first half of both 2011 and
2012, increased by an encouraging 15.6%. This growth has been
driven by the contracts won last year and reflects the materiality
of the business take-on volume that we have managed. This volume
led to some challenges, but all the new contracts have the
potential of delivering improved profitability as they bed in.
Total Supply Chain revenue increased by 7.8% in constant
currency to EUR231.2 million during the period (H1 2011: EUR214.5
million), but declined by 7.0% taking account of Top Info's full H1
2011 Supply Chain revenue. We believe this performance has been
stronger than the market, which slowed significantly in reaction to
the uncertainty brought by the French presidential election.
However, our customers continue to trade with us and some of the
decline is delayed backlog, which bodes well for Supply Chain
revenue over the rest of the year.
We have also seen a shift in how our customers currently buy
their products. They are increasingly ordering fewer items at
higher frequency, turning our logistics capability into an
'outsourced' resource. This shift in order frequency has brought
some logistics challenges and we have responded by introducing an
additional shift in our warehouse to maintain delivery
schedules.
We are confident that these issues and the incremental employee
overhead will be remedied during the slower summer months and by
our relocation to a new and more efficient warehouse facility,
anticipated to be fully operational from the third quarter of this
year.
Customers are increasingly seeking to outsource all aspects
relating to the IT lifecycle, including the sourcing of hardware
and software, logistic services, maintenance and end-of life
disposal. For example, the large energy supplier EDF (SA) has
recently appointed Computacenter France as one of its suppliers of
full outsourced 'workplace' service offering within the whole of
their South-East region.
We believe we are better placed than many of our competitors to
provide our customers with flexible end-to-end workplace offerings.
We are also encouraged by the fact that we are gaining solid
customer reference-ability within certain industry sectors, for
both our Services and Supply Chain offerings. This is evidenced by
recent wins with three large France based international
organisations in the banking and financial services sector.
The first half of 2012 has been a period of consolidation, with
Top Info now fully integrated into the French business without the
loss of any key customers or key members of staff. Additionally, we
have relocated all Paris office staff to a single building, without
any material disruption to customers and we are preparing to
complete the relocation of all our warehouses into the consolidated
and upgraded logistics facility in Gonesse, due for completion in
the third quarter of 2012. The one off cost of EUR1.8 million that
has been incurred in relation to the move has been reported as an
exceptional charge. Our agenda for the rest of the year remains
busy, with the preparatory work already underway for migration to
the Group ERP system, during the middle of next year.
Belgium
Our Belgium and Netherlands operation has delivered very strong
performance during the period, with increased adjusted1 operating
profit of EUR1.3 million (H1 2011: EUR0.4 million). Overall revenue
increased by 54.3%, with an encouraging Services growth of 35.8%
and a very healthy Supply chain growth of 60.2%.
We view this positive performance as a response to the
investment we have made into enhancing our sales capabilities. Our
expanded sales force now has a wider and more compelling portfolio
of both Services and Supply Chain offerings, including more
enterprise and unified IP communication and collaboration
offerings. This improved sales force has also augmented our managed
services contract base by 19.6%, compared to the same period last
year, bringing better stability and predictability to our
earnings.
In this environment, where Euro zone uncertainty continues to
challenge the market, both our vendors and customers are
increasingly viewing our operation as one capable of delivering
high value projects on a pan-European scale.
Shurgard, the leader in self storage in Europe and an existing
Supply Chain customer, has recently entrusted Computacenter Belgium
with the replacement of its centralised virtual storage
infrastructure at its European datacenter. We have also been
awarded the Windows 7 and Office 2010 roll-out for the Belgium
locations of UCB, the global leader in biopharmaceuticals.
We will continue to invest in our sales operation; however, the
rate of growth we are currently experiencing is not sustainable
during the second half of 2012, especially as we saw exceptional
performance in the same period in 2011.
(1) Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
Risk
The principal risks to our business and our approach to
mitigating those risks, largely remain as set out on pages 20 and
21 of our 2011 Report and Accounts.
During the first half of 2012, the Group Risk Committee, led by
the Group CEO, undertook a comprehensive review of our Strategic
Risk Log (SRL). This exercise refocused the activities of the Group
Risk Committee and reprioritised some risks on the SRL, such as the
potential that, inadvertently, or maliciously, customer data could
be lost, or their IT systems harmed through the introduction of a
software virus. Mitigation, including encryption and securing data
and applying security screening of staff with access to customer
networks, have been introduced, or enhanced.
We had foreseen that through driving our strategic objective to
accelerate the growth in our contractual services business, a
resource demand could arise when transitioning multiple new Service
contracts at the same time, which could result in making it more
difficult to achieve our strategic objective of growing our profit
margin. In the UK, a significant amount of new business take-on
activity proceeded without any material challenges, largely due to
a more established contractual service transition and
transformation capability, combined with the fact that in many
cases, the staff required to run the service on a day to day basis,
are transferred from the existing service provider or the customer,
as the case may be.
Conversely, the business take-on challenges faced in Germany
have been less well executed, partly due to the volume of business,
less established transition and transformation capability and the
fact that, in many cases, new staff had to be recruited into the
organisation, who clearly have limited experience of the customers'
operating environment and procedures. This resulted in us
over-resourcing to avoid customer dissatisfaction, particularly
apparent at the centralised IT help desk service in Barcelona,
which has almost doubled in size in the last six months, as well as
our newly established IT help desk in Berlin. Early review of the
level of new resource required is being built into the Risk
Management programme, as well as further review of customer
specific requirements.
Our strategies to mitigate the risks of implementing complex
end-to-end service contracts continue to be effective, as evidenced
by improved profitability within our UK Services business. The
challenges experienced during the new business take-on phases in
Germany were not related to the management of end-to- end complex
IT infrastructure, but due to volume of simultaneous new business,
as described above. However, these mitigation strategies and
services processes remain crucial to our business success and need
to be deployed without fail, especially as we continue to face a
strong pipeline of business in particularly the UK, France and
Belgium.
Stability in the global economy remains uncertain and even
presents wider challenges, such as the destabilisation of entire
currencies. Our balance sheet strength and ability to control
costs, provides some comfort, should we need to weather any storm.
We are witnessing the upside of operating within various
geographies and we continue to feel confident that our offerings,
designed specifically to help customers remove cost and risk from
their IT expenditure, continue to be Computacenter's primary
mitigation strategy against this threat. We also aim to maintain
our structure of invoicing in the currency of the country within
which we deliver, thereby ring-fencing this exposure to a
degree.
We are also cognisant and active in mitigating as best we can,
the financial risks brought by currency fluctuations and tax rate
impacts.
We have assessed the potential impact to our business in the
event of a Euro currency break-up and we recognise the unfortunate
consequences which could flow from a general loss of business
confidence in the event of a large scale currency fragmentation.
However, as we do not have sales activities within those countries
most at risk, we believe that this helps to reduce our overall risk
position.
Following the successful migration of both the UK and German
systems onto the Group ERP platform, preparations are underway to
migrate the French system during the middle of next year. The
experience gained over the last two more material migrations gives
us confidence for the French implementation. Accordingly, the
migration risk has reduced in size and our focus has primarily
turned to realising the full potential in optimising all the upside
a single system holds for the Group, in its entirety.
Mike Norris
30 August 2012
Responsibility statement
The Directors confirm that to the best of their knowledge:
-- This financial information has been prepared in accordance
with IAS 34;
-- This interim management report includes a fair review of the
information required by DTR 4.2.7R
(indication of important events during the first six months and
description of principal risks and
uncertainties for the remaining six months of the year); and
-- This interim management report includes a fair review of the
information required by DTR 4.2.8R
(disclosure of related party transactions and changes
therein.)
MJ Norris FA Conophy
Chief Executive Finance Director
30 August 2012 30 August 2012
On behalf of the Board
Independent review report to Computacenter plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2012 which comprises of the Consolidated
Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in
Equity, Consolidated Cash Flow Statement and related notes 1- 15.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2012 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
30 August 2012
Consolidated income statement
For the six months ended 30 June
2012
Restated
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
Note GBP'000 GBP'000 GBP'000
Revenue 4 1,422,264 1,365,253 2,852,303
Cost of sales (1,241,696) (1,186,287) (2,470,932)
------------ -------------- --------------
Gross profit 180,568 178,966 381,371
Administrative expenses (156,776) (152,589) (307,377)
Operating profit:
Before amortisation of acquired
intangibles and exceptional items 23,792 26,377 73,994
Amortisation of acquired intangibles (1,316) (368) (1,986)
Exceptional items 6 (1,882) - (131)
-------------------------------------- ----- ------------ -------------- --------------
Operating profit 20,594 26,009 71,877
Finance revenue 1,023 1,353 2,361
Finance costs (801) (1,166) (2,136)
Profit before tax:
Before amortisation of acquired
intangibles and exceptional items 24,014 26,564 74,219
Amortisation of acquired intangibles (1,316) (368) (1,986)
Exceptional items 6 (1,882) - (131)
-------------------------------------- ----- ------------ -------------- --------------
Profit before tax 20,816 26,196 72,102
Income tax expense:
Before amortisation of intangibles
and exceptional items (5,958) (6,453) (16,125)
Tax on amortisation of intangibles 272 103 433
Tax on exceptional items 6 322 - 174
Exceptional tax items -- - 4,427
-------------------------------------- ----- ------------ -------------- --------------
Income tax expense 7 (5,364) (6,350) (11,091)
Profit for the period 15,452 19,846 61,011
============ ============== ==============
Attributable to:
Equity holders of the parent 15,452 19,845 61,013
Non-controlling interest - 1 (2)
Profit for the period 15,452 19,846 61,011
============ ============== ==============
Earnings per share
- basic for profit for the period 8 10.3p 13.3p 41.0p
- diluted for profit for the period 8 10.0p 12.7p 39.3p
Consolidated statement of comprehensive income
For the six months ended 30 June 2012
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Profit for the period 15,452 19,846 61,011
Gain/(loss) arising on cash flow hedge 233 - (464)
Income tax effect (58) - 116
Exchange differences on translation
of foreign operations (5,542) 7,951 (4,495)
Total comprehensive income for the
period 10,085 27,797 56,168
========== ========== ==========
Attributable to:
Equity holders of the parent 10,085 27,796 56,166
Non-controlling interest - 1 2
10,085 27,797 56,168
========== ========== ==========
Consolidated balance sheet
As at 30 June 2012
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 101,365 97,216 98,261
Intangible assets 101,758 100,675 104,242
Investment in associates 495 501 497
Deferred income tax asset 17,040 17,325 15,928
220,658 215,717 218,928
---------- ---------- ----------
Current assets
Inventories 87,992 82,807 97,440
Trade and other receivables 496,852 465,116 548,968
Prepayments 49,602 50,313 43,042
Accrued income 80,740 61,557 47,019
Forward currency contracts - - 296
Current asset investment 14 10,000 25,000 10,000
Cash and short-term deposits 14 91,747 120,056 128,437
---------- ----------
816,933 804,849 875,202
---------- ---------- ----------
Total assets 1,037,591 1,020,566 1,094,130
========== ========== ==========
Current liabilities
Trade and other payables 507,204 455,187 530,953
Deferred income 99,481 97,096 115,350
Financial liabilities 7,356 54,366 12,247
Forward currency contracts 226 48 464
Income tax payable 6,097 6,713 4,700
Provisions 12 2,551 2,801 2,689
622,915 616,211 666,403
---------- ---------- ----------
Non-current liabilities
Financial liabilities 10,631 9,825 12,554
Provisions 12 7,404 10,340 9,059
Other non-current liabilities 31 31 831
Deferred income tax liabilities 684 2,604 1,536
18,750 22,800 23,980
---------- ---------- ----------
Total liabilities 641,665 639,011 690,383
Net assets 395,926 381,555 403,747
========== ========== ==========
Capital and reserves
Issued capital 9,233 9,233 9,233
Share premium 3,717 3,717 3,717
Capital redemption reserve 74,957 74,957 74,957
Own shares held (12,211) (13,217) (10,962)
Foreign currency translation
reserve 2,096 20,088 7,638
Retained earnings 318,122 286,766 319,152
---------- ---------- ----------
Shareholders' equity 395,914 381,544 403,735
Non-controlling interest 12 11 12
Total equity 395,926 381,555 403,747
========== ========== ==========
Approved by the Board on 30 August 2012
MJ Norris, Chief Executive FA Conophy, Finance Director
Consolidated statement of changes in equity
Attributable to equity holders of the parent
--------------------------------------------------------------------------------------------
Foreign
Capital Own currency
Issued Share redemption shares translation Retained Non-controlling Total
capital premium reserve held reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 9,233 3,697 74,957 (10,146) 12,137 279,674 369,552 10 369,562
Profit for the
period - - - - - 19,845 19,845 1 19,846
Other
comprehensive
income - - - - 7,951 - 7,951 -- 7,951
--------- ---------- ----------- --------- ------------ -------------- --------------- ---------------- --------------------
Total
comprehensive
income - - - - 7,951 19,845 27,796 1 27,797
Cost of
share-based
payments - - - - - 1,301 1,301 - 1,301
Deferred
taxation
on share
based
payments - - - - - 941 941 - 941
Exercise of
options - 20 - 535 - (535) 20 - 20
Purchase of
own
shares - - - (3,606) - - (3,606) - (3,606)
Equity
dividends - - - - - (14,460) (14,460) - (14,460)
--------- ---------- ----------- --------- ------------ -------------- --------------- ---------------- --------------------
At 30 June
2011 9,233 3,717 74,957 (13,217) 20,088 286,766 381,544 11 381,555
Profit for the
period - - - - - 41,168 41,168 (3) 41,165
Other
comprehensive
income - - - - (12,450) (348) (12,798) 4 (12,794)
--------- ---------- ----------- --------- ------------ -------------- --------------- ---------------- --------------------
Total
comprehensive
income - - - - (12,450) 40,820 28,370 1 28,371
Cost of
share-based
payments - - - - - 1,175 1,175 - 1,175
Deferred
taxation
on share
based
payments - - - - - (645) (645) - (645)
Exercise of
options - - - 2,255 - (2,255) - - -
Purchase of - -
own
shares - - - - - - -
Equity
dividends - - - - - (6,709) (6,709) - (6,709)
--------- ---------- ----------- --------- ------------ -------------- --------------- ---------------- --------------------
At 31 December
2011 9,233 3,717 74,957 (10,962) 7,638 319,152 403,735 12 403,747
Profit for the
period - - - - - 15,452 15,452 - 15,452
Other
comprehensive
income - - - - (5,542) 175 (5,367) - (5,367)
--------- ---------- ----------- --------- ------------ -------------- --------------- ---------------- --------------------
Total
comprehensive
income - - - - (5,542) 15,627 10,085 - 10,085
Cost of
share-based
payments - - - - - 648 648 - 648
Deferred
taxation
on share
based
payments - - - - - 338 338 - 338
Exercise of
options - - - 1,918 - (1,918) - - -
Purchase of
own
shares - - - (3,167) - - (3,167) - (3,167)
Equity
dividends - - - - - (15,725) (15,725) - (15,725)
--------- ---------- ----------- --------- ------------ -------------- ---------------- --------------------
At 30 June
2012 9,233 3,717 74,957 (12,211) 2,096 318,122 395,914 12 395,926
========= ========== =========== ========= ============ ============== =============== ================ ====================
Consolidated cash flow statement
For the six months ended 30 June 2012
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Operating activities
Profit before tax 20,816 26,196 72,102
Net finance income (223) (187) (225)
Depreciation 11,620 13,664 27,417
Amortisation 3,971 3,303 7,844
Impairment reversal - - (398)
Share-based payments 648 1,301 2,476
(Profit)/loss on disposal of property,
plant and equipment (266) (4) 545
Loss on disposal of intangibles - - 33
Decrease/(increase) in inventories 7,510 5,931 (13,698)
(Increase)/decrease in trade and other
receivables (1,509) 19,816 (67,372)
(Decrease)/increase in trade and other
payables (29,523) (26,886) 87,687
Other adjustments 4 - (3)
---------- ---------- ----------
Cash generated from operations 13,048 43,134 116,408
Income taxes paid (4,126) (5,809) (14,384)
Net cash flow from operating activities 8,922 37,325 102,024
---------- ---------- ----------
Investing activities
Interest received 755 1,307 2,316
Increase in current asset investment - (25,000) (10,000)
Acquisition of subsidiaries, net of
cash acquired - (22,265) (24,840)
Acquisition of associate - (500) (500)
Sale of property, plant and equipment 291 29 1,449
Purchases of property, plant and equipment (15,561) (14,545) (24,181)
Purchases of intangible assets (3,576) (5,844) (10,487)
Net cash flow from investing activities (18,091) (66,818) (66,243)
---------- ---------- ----------
Financing activities
Interest paid (1,039) (1,543) (2,513)
Dividends paid to equity shareholders
of the parent (15,725) (14,460) (21,169)
Proceeds from issue of shares - 20 20
Purchase of own shares (3,167) (3,606) (3,606)
Repayment of capital element of finance
leases (5,534) (10,003) (17,415)
Repayment of loans (1,750) (1,964) (1,971)
New borrowings 726 -- -
Decrease in factor financing - (16,446) (16,500)
Net cash flow from financing activities (26,489) (48,002) (63,154)
---------- ---------- ----------
Decrease in cash and cash equivalents (35,658) (77,495) (27,373)
Effect of exchange rates on cash and
cash equivalents 484 890 (1,776)
Cash and cash equivalents at the beginning
of the period 126,784 155,933 155,933
Cash and cash equivalents at the end
of the period 91,610 79,328 126,784
========== ========== ==========
Notes to the accounts
1 Corporate information
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2012 were authorised for
issue in accordance with a resolution of the Directors on 30 August
2012.
Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
2 Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2012 have been preparedin accordance with
International Accounting Standard 34 'Interim Financial Reporting',
as adopted by the European Union. They do not include all of the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
annual financial statements as at 31 December 2011 which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
The Group has maintained its strong cash position through
generation of operating cash flows. The Group's forecast and
projections, which allow for reasonably possible variations, show
that the Group will continue to maintain its strong cash position,
and therefore supports the Directors' view that the Group has
sufficient funds available to meet its foreseeable requirements.
The directors have concluded therefore that the going concern basis
remains appropriate.
3 Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for
the year ended 31 December 2011, except for the adoption of new
standards and interpretations as of 1 January 2012, which did not
have any impact on the accounting policies, financial position or
performance of the Group, as noted below:
-- IAS12 - Deferred Tax: Recovery of underlying assets (Amendment)
-- IFRS 7 - Disclosures - Transfers of financial assets (Amendment)
-- IFRS 1 - Severe Hyperinflation and Removal of Fixed Dates for
First-time Adopters (Amendment)
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
4 Segment information
For management purposes, the Group is organised into
geographical segments, with each segment determined by the location
of the Group's assets and operations. The Group's business in each
geography is managed separately and held in separate statutory
entities.
No operating segments have been aggregated to form the below
reportable operating segments.
Management monitors the operating results of its geographical
segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance
is evaluated based on adjusted operating profit or loss which is
measured differently from operating profit or loss in the
consolidated financial statements. Adjusted operating profit or
loss takes account of the interest paid on customer-specific
financing ('CSF') which management consider to be a cost of sale.
Excluded from adjusted operating profit is the amortisation of
acquired intangibles and exceptional items as management do not
consider these items when reviewing the underlying performance of a
segment.
Restatement and classification of costs
In the first half of 2011, distribution costs were shown below
gross profit, however, management monitor the performance of the
business by including such costs within gross profit, and reports
accordingly to the Chief Operating Decision Maker. As a result,
these costs have been included in cost of sales in H1 2011 and for
the year ended 31 December 2011.
Following our ERP implementation in the UK and Germany, the
Group has been able to further align its structure and therefore
how it classifies departmental costs between cost of sales and
administrative expenses. The Group estimates that the net impact of
these changes, principally related to pre-sales costs, has resulted
in approximately GBP2.2m costs being reported in administrative
expenses in H1 2012 that were reported in cost of sales in H1 2011.
This represents the Group's best estimate of the impact of the
changes made in the H1 2012 reported results.
Segmental performance for the periods to H1 2012, H1 2011 and
Full Year 2011 were as follows:
Six months ended 30 June 2012 (unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 578,242 591,032 226,815 26,175 1,422,264
--------- --------- --------- -------- ----------
Results
Adjusted gross profit 87,264 68,929 20,918 2,905 180,016
Adjusted net operating expenses (69,698) (63,516) (21,697) (1,865) (156,776)
--------- --------- --------- -------- ----------
Adjusted operating profit 17,566 5,413 (779) 1,040 23,240
--------- --------- --------- --------
Adjusted net interest 774
----------
Adjusted profit before tax 24,014
----------
Other segment information
Share-based payments 551 70 27 - 648
--------- --------- --------- -------- ----------
Six months ended 30 June 2011 (unaudited and restated)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 547,269 580,375 219,700 17,909 1,365,253
----------- ----------- --------- -------- -----------
Results
Adjusted gross profit 84,080 70,201 22,075 1,862 178,218
Adjusted net operating expenses (67,388) (61,800) (21,896) (1,504) (152,588)
----------- ----------- --------- -------- -----------
Adjusted operating profit/(loss) 16,692 8,401 179 358 25,630
----------- ----------- --------- --------
Adjusted net interest 934
-----------
Adjusted profit before tax 26,564
-----------
Other segment information
Share-based payments 1,039 191 71 - 1,301
----------- ----------- --------- -------- -----------
Year ended 31 December 2011 (audited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,102,184 1,228,574 478,583 42,962 2,852,303
----------- ----------- --------- -------- -----------
Results
Adjusted gross profit 167,305 157,355 50,636 4,610 379,906
Adjusted net operating expenses (130,040) (129,633) (44,651) (3,053) (307,377)
----------- ----------- --------- -------- -----------
Adjusted operating profit 37,265 27,722 5,985 1,557 72,529
----------- ----------- --------- --------
Adjusted net interest 1,690
-----------
Adjusted profit before tax 74,219
-----------
Other segment information
Share-based payments 1,842 471 163 - 2,476
----------- ----------- --------- -------- -----------
Reconciliation to adjusted results
Management reviews adjusted measures of performance as shown in
the tables above. Adjusted profit before tax excludes exceptional
items and the amortisation of acquired intangibles as shown
below:
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Adjusted profit before tax 24,014 26,564 74,219
Amortisation of acquired intangibles (1,316) (368) (1,986)
Exceptional items (1,882) - (131)
---------- ---------- ----------
Profit before tax 20,816 26,196 72,102
========== ========== ==========
Management also reviews adjusted measures for gross profit,
operating expenses, operating profit and net interest, which in
addition takes account of interest costs of CSF within cost of
sales (as these are considered to form part of the gross profit
performance of a contract). The reconciliation for adjusted
operating profit to operating profit, as disclosed in the
Consolidated Income Statement, is as follows:
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Adjusted operating profit 23,240 25,630 72,529
Add back interest on CSF 552 747 1,465
Amortisation of acquired intangibles (1,316) (368) (1,986)
Exceptional items (1,882) - (131)
---------- ---------- ----------
Segment operating profit 20,594 26,009 71,877
========== ========== ==========
Sources of revenue
Each geographical segment principally consists of a single
entity with shared assets, liabilities and capital expenditure. The
Group has three sources of revenue, which are aggregated and shown
in the table below. The sale of goods is recorded within Product
revenues and the rendering of services is split into Professional
and Support and Managed Services.
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Sources of revenue
Product revenue
Total product revenue 971,919 963,289 2,015,582
Services revenue
Professional services 107,528 99,427 216,906
Support and managed services 342,817 302,537 619,815
----------------- --------------- ---------
Total services revenue 450,345 401,964 836,721
----------------- --------------- ---------
Total revenue 1,422,264 1,365,253 2,852,303
----------------- --------------- ---------
5 Seasonality of operations
Historically revenues have been higher in the second half of the
year than in the first six months. This is principally driven by
customer buying behaviour in the markets in which we operate.
Typically this leads to a more pronounced effect on operating
profit. In addition the effect is compounded further by the
tendency for the holiday entitlements of our employees to accrue
during the first half of the year and to be utilised in the second
half.
6 Exceptional items
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Operating profit
Acquisition related costs - - (999)
Costs in relation to relocation of premises (1,882) - -
Deferred consideration reversed - - 868
---------- ---------- ----------
(1,882) - (131)
Income tax
Exceptional tax items - - 4,427
Tax on exceptional items included in operating
profit 322 - 174
---------- ---------- ----------
-322 - 4,601
Exceptional items after taxation (1,560) - 4,470
========== ========== ==========
2012
In the first half of 2012, Computacenter France consolidated its
operations in a new Office and began the move to a new Warehouse.
In January 2012, RDC located to new premises in Braintree. The
one-off costs in relation to the relocation of these premises of
GBP1.9 million that have been disclosed as an exceptional item
relate principally to:
-- operating lease rental expense charged on new properties
during the fit out period and prior to occupation,
-- redundancy expenses paid as a result of the relocation, and
-- rental expense related to legacy properties once they had been vacated.
2011
Included within the year ended 31 December 2011 are:
-- acquisition related costs of GBP1.0 million, incurred in the
period for both successful and aborted acquisitions. This cost
comprised of consultancy, legal and professional and tax fees
regarding the acquisitions; and
-- due to circumstances arising after the acquisition date, the
performance criteria required to trigger deferred consideration of
EUR1 million that were previously expected to be achieved, were not
met. As a result, deferred consideration recognised has been
reversed, with the gain in the 2011 income statement disclosed as
an exceptional item.
The exceptional income tax credit for the 2011 year comprises
two items which, due to their size are disclosed separately as
follows:
-- the deferred tax asset in respect of losses in Germany was
re-assessed in line with management's view of the entity's future
performance. Where the reassessment exceeds the losses utilised in
the year, the change in the recoverable amount of the deferred tax
asset is shown as an exceptional item.
-- a deferred tax asset in respect of losses in France was recognised for the first time.
The income statement impact of the above items have been shown
as an exceptional tax item.
7 Income tax
The charge based on the profit for the
period comprises:
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
UK corporation tax 4,851 6,163 10,484
Foreign tax 1,535 1,217 5,122
Adjustments in respect of prior periods (124) - (1,425)
Deferred tax (898) (1,030) (3,090)
5,364 6,350 11,091
========== ========== ==========
In his budget of 21 March 2012, the Chancellor of the Exchequer
announced that the main rate of UK Corporation tax will be reduced
by 2% to 24% with effect from 1 April 2012. As this change has been
substantively enacted, and in accordance with accounting standards,
the change has been reflected in the Group's interim financial
statements as at 30 June 2012. The Chancellor also confirmed that
the previously proposed reductions of 1% per year will be
maintained resulting in the main UK Corporation tax rate reducing
to 22% by 2014.
8 Earnings per ordinary share
Earnings per share (EPS) amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held).
Diluted earnings per share amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held) adjusted for the effect of dilutive
options.
Adjusted basic and adjusted diluted EPS are presented to provide
more comparable and representative information. Accordingly the
adjusted basic and adjusted diluted EPS figures exclude the
amortisation of acquired intangibles and exceptional items.
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Profit attributable to equity holders of the
parent 15,452 19,845 61,013
Amortisation of acquired intangibles attributable
to equity holders of the parent 1,316 368 1,986
Tax on amortisation of acquired intangibles (272) (103) (433)
Exceptional items within operating profit 1,882 - 131
Tax on exceptional items included in operating
profit (322) - (174)
Exceptional tax items - - (4,427)
---------- ---------- ----------
Adjusted profit after tax 18,056 20,110 58,096
---------- ---------- ----------
No '000 No '000 No '000
Basic weighted average number of shares (excluding
own shares held) 149,415 148,778 148,793
Effect of dilution:
Share options 4,702 6,916 6,639
Diluted weighted average number of shares 154,117 155,694 155,432
========== ========== ==========
H1 2012 H1 2011 Year 2011
pence pence pence
Basic earnings per share 10.3 13.3 41.0
Diluted earnings per share 10.0 12.7 39.3
Adjusted basic earnings per share 12.1 13.5 39.0
Adjusted diluted earnings per share 11.7 12.9 37.4
-------- -------- ----------
9 Dividends paid and proposed
A final dividend for 2011 of 10.5p per ordinary share was paid
on 15 June 2012. An interim dividend in respect of 2012 of 5.0p per
ordinary share, amounting to a total dividend of GBP7,470,000, was
declared by the Directors at their meeting on 30 August 2012. This
interim report does not reflect this dividend payable.
10 Property, plant and equipment
During the six months ended 30 June 2012, the Group acquired
assets with a cost of GBP15.5 million (2011: GBP14.5 million).
GBP5.0 million of this capital expenditure related to the move of
offices and warehouses in France and a further GBP3.0 million in
relation to the move of premises in RDC and the fit out of
additional space in service desks in Spain and Germany to support
contractual services growth.
11 Business combinations
During H1 2011, the Group acquired Top Info SAS and HSD Consult
GmbH. The book and provisional fair values of the net assets
acquired that are disclosed in note 16 of the 31 December 2011
Annual Report and Accounts are now final and are unchanged.
During H2 2011, the Group acquired Damax AG. There are no
changes to the book and provisional fair values that are disclosed
in the Annual Report and Accounts at 31 December 2011.
12 Provisions
Unaudited
Property provisions GBP'000
At 1 July 2011 13,141
Arising during the period 514
Utilised (560)
Amounts unused reversed (951)
Exchange adjustment (396)
----------
At 31 December 2011 11,748
Arising during the period 413
Utilised (1,032)
Amounts unused reversed (1,021)
Exchange adjustment (153)
At 30 June 2012 9,955
----------
Assumptions used to calculate the property provisions are based
on the market value of the rental charges plus any contractual
dilapidation expenses on empty properties and the Directors' best
estimates of the likely time before the relevant leases can be
reassigned or sublet, which ranges between one and seven years. The
provision 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.
13 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain
how management view the cash performance of the business. There are
two primary differences to this presentation compared to the
statutory cash flow statement, as follows:
1) Factor financing and current asset investment, where cash is
placed on deposit but is not available on demand, is not included
within the statutory definition of cash and cash equivalents, but
operationally is managed within the total net funds/borrowings of
the businesses; and
2) Items relating to customer-specific financing ("CSF") are adjusted for as follows:
a. Interest paid on CSF is reclassified from interest paid to adjusted operating profit; and
b. Where customer-specific assets are financed by finance leases
and the liabilities are matched by future amounts receivable under
customer operating lease rentals, the depreciation of leased assets
and the repayment of the capital element of finance leases are
offset within net working capital; and
c. Where assets are financed by loans and the liabilities are
matched by amounts receivable under customer operating lease
rentals, the movement on loans within financing activities is also
offset within working capital.
3) Net funds excluding CSF is stated inclusive of current asset
investments. Current asset investments consists of a deposit held
for a term of greater than 3 months from the date of deposit which
is available to the Group with 30 days notice. The fair value of
the current asset investment as at 30 June 2012 is not materially
different to the carrying value.
Adjusted management cash flow statement
For the six months ended 30 June 2012
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Adjusted profit before tax 24,014 26,564 74,219
Net finance income (774) (934) (1,690)
Depreciation and amortisation 10,443 8,746 20,596
Share-based payments 648 1,301 2,476
Working capital movements (27,675) (5,213) 281
Other adjustments (722) (45) (358)
---------- ---------- ----------
Adjusted operating cash inflow 5,934 30,419 95,524
Net interest received 269 512 1,268
Income taxes paid (4,126) (5,809) (14,384)
Capital expenditure and investments (18,846) (20,360) (33,186)
Acquisitions - (22,765) (25,340)
Equity dividends paid (15,725) (14,460) (21,169)
---------- ---------- ----------
Cash (outflow)/inflow before financing (32,494) (32,463) 2,713
Proceeds from issue of shares - 20 20
Purchase of own shares (3,167) (3,606) (3,606)
---------- ---------- ----------
Decrease in net funds excluding CSF in
the period (35,661) (36,049) (873)
---------- ---------- ----------
Decrease in net funds excluding CSF (35,661) (36,049) (873)
Effect of exchange rates on cash and cash
equivalents 487 938 (1,782)
Net funds excluding CSF at beginning of
period 136,784 139,439 139,439
---------- ---------- ----------
Net funds excluding CSF at end of period 101,610 104,328 136,784
========== ========== ==========
14 An Analysis of net funds
Unaudited Unaudited Audited
H1 2012 H1 2011 Year 2011
GBP'000 GBP'000 GBP'000
Cash and short term deposits 91,747 120,056 128,437
Bank overdraft (137) (40,728) (1,653)
------------ -------------- ------------
Cash and cash equivalents 91,610 79,328 126,784
Current asset investment 10,000 25,000 10,000
------------ -------------- ------------
Net funds excluding CSF 101,610 104,328 136,784
Finance leases (17,294) (21,813) (21,624)
Other loans (556) (1,650) (1,524)
Total CSF (17,850) (23,463) (23,148)
------------ -------------- ------------
Net funds 83,760 80,865 113,636
============ ============== ============
15 Publication of non-statutory accounts
The financial information contained in the interim statement
does not constitute statutory accounts as defined in section 435 of
the Companies Act 2006. The auditors have issued an unqualified
opinion on the Group's statutory financial statements under
International Accounting Standards for the year ended 31 December
2011 and did not include a statement under section 498(2) or (3) of
the Companies Act 2006. Those accounts have been delivered to the
Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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