RNS Number:1115J
CMG PLC
29 August 2001
29 August 2001
CMG plc: Group interim results for six months to 30 June 2001
Summary
2001 2001 2000
Euros (m) #(m) #(m)
Turnover Euro735.3m #456.7m #349.4m
Operating profit* Euro40.7m #25.3m #51.5m
Profit before tax* Euro28.8m #17.9m #50.9m
(Loss) /profit after tax and minority Euro(25.6)m #(15.9)m #28.4m
interests
Earnings per share* Euro0.032 2.0p 6.8p
Interim dividend Euro0.018 1.1p 1.0p
(Payable on 16 November 2001 to all
shareholders on the register on 19
October 2001. Ex-dividend date is 17
October 2001.)
* Before goodwill amortisation of #28.1m (2000: #5.8m)
The effect of exchange rates on CMG's reported results is shown on page 8.
Organic growth rates are stated at constant currency exchange rates.
Highlights
* 31% growth in Group turnover (29% growth at constant exchange rates)
including the effect of acquisitions.
* 10% organic growth in ICT Services turnover - especially strong in
Benelux at 14%.
* Increased operating profit margin* for ICT Services business - up from
12.1% in 2000 to 12.5% in 2001.
* Signs of improvement beginning to be seen in WDS: results better than
expected in April.
* Annualised net increase in headcount of 12% with reducing attrition.
* Security and quality of earnings underpinned by managed services (which
grew organically by 24%), Government business (which grew by 11%) and
focused customer relationships.
On the outlook for the remainder of the year, CMG Chairman Cor Stutterheim
said:
"We recognise that there are uncertainties concerning economic performance in
Europe and that neither CMG nor its customers are immune from such trends. Some
87% of our business is in the delivery of ICT services and, as of today, demand
here remains good in our key territories, aided by the strength of our customer
relationships and the depth of knowledge and committed individuals that we
bring to them. We are growing significantly faster than last year in ICT
services. We have some important issues to address in our smaller territories
where we are taking firm action to minimise the financial impact and provide a
platform for future growth.
"Although the smaller part of our business, the performance at Wireless Data
Solutions is important to market perceptions and our results for the full year.
We have reduced the cost base and restructured the way the business operates to
ensure we get maximum focus and benefit from the skilled team we have built
there. The results are now beginning to come through, and whilst the full year
performance remains heavily dependent on the fourth quarter, we are aiming to
trade profitably throughout the second half.
"SMS volumes are growing and our revenues are returning in Europe, while at the
same time we are aggressively seizing new opportunities in developing markets
around the world. We are an early mover into new emerging technologies where we
are committed to being a major player. We have not allowed the short-term
actions that needed to be carried through to impede our strategic vision as can
be seen with our uOne and TDC Mobile International/Microsoft moves. We will
balance the ongoing R&D investment necessary to fuel long-term growth with the
need to deliver short and medium term profitability. We remain convinced that
this business has an excellent future and will deliver significant value to our
stakeholders.
"We have a clearly defined strategy for the Group as a whole which is based on
growth, both organic and by acquisition and trading alliances, and we remain
confident in its outcome."
< Ends >
For further information please contact:
Cor Stutterheim, Chairman, CMG plc
Tel: +31 (0)20 6720444
David Robbie, Finance Director, CMG plc
Tel: +44 (0)20 7592 4442
Tony Richards, Group Communications (London)
Tel: +44 (0)20 7592 4442
Toby Mountford, Citigate Dewe Rogerson
Tel: +44 (0)20 7638 9571
Chairman's Statement
Results
The interim results have delivered a mixed performance: strong top line growth
and profitability in the ICT Services businesses, partially offset by the
disappointing performance from CMG Wireless Data Solutions which has already
been communicated to the Market. In addition, our results include a full six
months contribution from the acquisition of Admiral, in May 2000. The table
below sets out a summary of the divisional performance, which is further
analysed on page 12.
2001 2000 Reported Organic**
#m #m Growth Growth
Turnover: 399.0 289.3 38% 10%
ICT Services 57.7 60.1 (4%) (17%)
WDS
456.7 349.4 31% 6%
Operating Profit/(loss)*: 49.7 35.0 42% 36%
ICT Services (22.6) 18.6 (222%) (219%)
WDS (1.8) (2.1)
Common Costs
25.3 51.5 (51%) (53%)
*Before goodwill amortisation.
**2000 comparative results adjusted to include acquisitions' contribution to
results as though they had been owned for the whole of the period and organic
growth stated at constant currency exchange rates.
In overall Group terms, turnover in the six months to 30 June 2001 increased by
31% to #456.7 million. Operating profit* declined 51% to #25.3 million, an
operating profit margin* of 5.5%, down from 14.7% in the same period last year.
Profit before tax* was #17.9 million. Loss after tax, goodwill amortisation,
minority interests and interest charges was #(15.9) million, while diluted
earnings per share* were 2.0p compared to 6.4p in the first half of 2000. Our
employee numbers increased to over 13,800 by the end of June.
Overview
The majority of our business is in the provision of Information &
Communications Technology (ICT) services - some 87% of first half 2001 revenues
- and in this we achieved our stated goal of organic, double digit growth in
our key territories; 14% in Benelux and 11% in United Kingdom. In France, we
have focused on the delivery of profitable business, and profit margins have
significantly improved, together with organic top line growth of 8% at constant
exchange rates. Germany was weak due to economic slowdown and a poor industry
and financial market where we have disproportionate exposure: we are taking
firm action in the second half to realign our business there with future
opportunities. The small territories grouped under Rest of World experienced
somewhat mixed fortunes and we are making some modest investments to focus them
on international business where our European presence can be a differentiator.
Margins in ICT Services have remained strong at 12.5% (up from 12.1% in 2000).
This was especially the case in Benelux, which delivered a profit margin of
18.0% (2000: 17.8%). France has moved successfully to profitability with a
margin just short of 4%, and the UK is trending upwards. Germany only managed
to break even, due to very poor market conditions and resulting low
utilisation.
Performance at CMG Wireless Data Solutions was better than the expectation we
communicated in April. Revenue was just below last year's at #57.7 million, but
we were able to accelerate certain cost-savings and manage the R&D investment,
leading to a smaller than predicted loss of #(22.6) million.
The market environment for ICT services
In the first half of the year we faced a number of pressures in the markets
that we address. Moreover, there is concern that the US economic downturn could
create a ripple effect in Europe, causing projects to be frozen, delayed or
even abandoned. To date, we have not experienced this to any significant degree
in our key territories and sectors; but we remain vigilant and ready to act
quickly to reduce the cost base should we detect any concerted trend
developing. Our strong, long-term customer relationships have enabled us to
secure a larger share of available budgets in many cases, while the greater
emphasis on front office applications has additionally given us access to
non-IT budgets in some organisations. This has been supported by our strong
government business and managed services divisions, which have long-term
reliable revenues. The addition of Admiral's skills and resources has also
helped to improve our competitive positioning, most notably in the UK.
In a time of uncertainty, the most commonly used word in financial markets has
become "visibility". Delivering short term results is only partially reassuring
unless you can support your confidence in the short and medium term
performance. While we are not immune from macroeconomics, we do have a mix of
business in our services operations that brings significant security and
quality to our earnings:
* We generate some 14% of ICT services revenues from managed services which
is a business typified by long term contracts and recurring revenues. It is
also a market sector growing very strongly (24% organic growth in the
period under review) and one which provides fertile ground for the
cross-selling of other CMG services.
We derive 17% of our ICT revenues from the public sector, primarily national
Government ministries and agencies, which is again a market where long term
relationships and recurring revenues are the norm and which is not so directly
impacted by economic trends. We grew this business 11% organically in the first
half.
More difficult to describe but of equal significance are the relationships that
have been established with customers over decades of working successfully with
them. For many of these organisations, we are working as a trusted partner at
the heart of their business. We are involved in their long-term planning
process and are engaged on projects and ongoing applications management in many
different parts of their operations. We are therefore less vulnerable to short
term cancellation or postponement of projects. This way of working has always
been at the heart of CMG's business model and reaps additional benefits when
markets tighten.
One market sector that has continued to slow in the period under review is that
of general ICT services to the telecommunications sector. General systems and
integration work for the telcos was already slowing in the second half of last
year which enabled us to plan for reassigning some of our consultants to other
sectors.
There has been some commentary about reduced demand in the financial services
sector which is a key one for all IT services companies. The greatest impact to
date has been in the investment banking sector where CMG does not have a
significant exposure, our primary finance market being in wholesale and retail
banking. Our niche leadership in regulatory reporting and risk analysis is not
one that is particularly vulnerable to short-term cost-cutting and we are
investing in the next generation of products to extend our position. Merger and
acquisition discussions between client organisations can be disruptive to
short-term revenues as we have again experienced this year in Germany, but in
the longer term stimulates demand for consulting, systems development and
integration work.
Of particular importance in the first half, especially in our Benelux and
France operations, has been the continued strength of the Enterprise Resource
Planning (ERP) market, particularly in relation to the SAP product set and the
integration of Customer Relationship Management and Supply Chain Management
applications. Many organisations now consider these systems to be core
strategic investments that will need ongoing development, optimisation and
support for the foreseeable future.
Operations
Benelux
Our Benelux business reported turnover growth of 19% and operating profit
growth of 21%, most of it organic. Turnover was #196.3 million (2000: #164.5
million) with an operating profit of #35.3 million (2000: #29.2 million). The
operating margin was 18.0% compared to 17.8% in the first half of 2000,
demonstrating once again the management's ability to manage both people and
costs very efficiently.
Demand has remained strong in most areas except telecommunications services,
with our top ten customers collectively raising their expenditure with CMG by
more than 20% compared to last year. Those customers include banks, telecom
operators, insurance companies, Government ministries, oil, electronics and
media organisations, many of whom have been customers for years or even
decades. The strength of those customer relationships and our policy of
locating consultants and account managers very close to customers has enabled
us to extend our penetration of many major accounts. We now work for virtually
all major banks and insurance companies, all Government ministries, the
majority of telecom operators and large utilities, and many of the largest
corporations across trade and industry sectors. More than 50 of them spent
Euros 1 million or more with us in the first half of the year.
Managed and hosted services remain strong growth areas. We also further
strengthened our resources at both the consulting and implementation levels for
addressing new electronic and mobile business models.
UK & Ireland
The newly combined UK and Ireland operation delivered a good result in Europe's
most competitive market. Turnover was up 77% to #135.9 million (2000: #76.6
million) with an operating profit up 178% at #13.6 million (2000: #4.9
million). This growth includes the impact of a full 6 months trading from the
acquisition of Admiral in May 2000. Organic revenue growth was 11% with organic
operating profit growth of 147%. The operating margin of 10.0% is expected to
improve in the second half as we trend upwards.
Throughout the period, CMG Admiral (the trading name in the UK) operated as an
integrated business with a single management team and structure that combines
the best aspects and working disciplines of both CMG and the acquired Admiral
organisation.
Our increased strength and breadth of skills has enabled us to both deepen
existing client relationships and win new orders of a scale not often achieved
before. Notable examples include our role as the system development partner for
the new Financial Services Authority (FSA), the successful implementation of
Royal & SunAlliance's "MORE TH>N" portal and further development of our
relationship with Lloyds TSB in the area of online banking, including the
implementation of its Internet-based service in Spain. Our ability to win
long-term managed services or outsourced projects was demonstrated during the
period under review by the award of the highly significant Health & Safety
Executive (HSE) IT services contract, valued at #120 million, following an
exacting tender process. Our track-record of successful delivery was
influential in this as well as the extension of our contract with the
Department of Trade & Industry (DTI), in partnership with ICL, in term and
scope to include the provision of a major electronic document and record
management system.
Good progress was made in the areas of managed services in general where we
have continued to extend and develop new offerings to take advantage of
opportunities in application hosting. In addition, we have won our first
contracts to offer outsourced human resources services utilising a SAP based
platform.
Germany
The economic environment in Germany has deteriorated significantly during the
period with consequent impact on business confidence and available budgets. In
the finance sector, another round of merger discussions is ongoing between
banks and insurance companies seeking to create "all finance" or
"bancassurance" organisations, although this sector remains more solid overall
than industrial markets in terms of IT expenditure. For example, we secured the
design phase for a major Internet banking project during the period and are now
tendering for the implementation. In the broad trade and industry sector, the
more enlightened and internationally-focused companies are driving forward
their eCommerce and CRM strategies, but this business is not developing fast
enough in the current climate to replace the slow down in more traditional
systems work.
This has not been a good market context within which to carry through the
structural changes required in our own business which we identified during last
year. As a result, turnover only rose by 2% to #30.2 million (2000: #29.7
million) whilst at the operating profit level we achieved break even (2000: #1.3
million). Since market conditions are unlikely to improve significantly
this year, we are taking firm action to reduce the cost base and to ensure that
our business is properly focused on areas of emerging profitable demand. This
programme, which includes office relocations and a 6% headcount reduction, will
deliver annualised cost savings of Euros 3.8 million and will cost some Euros
3.4 million during the second half. It will provide a better platform for
future profitable growth.
France
We have focused our new management team in France, following the integration of
the CMG and Admiral operations, on improving profitability by getting our
fundamental business model working properly. We have concentrated our resources
more single-mindedly on key customers and opportunities that play best to our
core competencies and skills, including ERP and CRM applications. For example,
we secured outsourced payroll contracts from both Canal + (part of Vivendi
Universal) and Suez Lyonnaise, the utility group, as well as a B2B eCommerce
project from glass and packaging company, Saint-Gobain. At the same time, we
accelerated the process of recovering from our customers the costs associated
with the 35 hour week. The combination produced turnover of #28.9 million
(2000: #17.5 million), representing an organic, constant currency growth of 8%.
Operating profit was #1.1 million compared to last year's loss of #(0.4)
million.
Rest of World
The Rest of the World comprises CMG's ICT services businesses in Australia,
Singapore, Malaysia and Denmark, which were acquired as part of Admiral in
2000. With just over 400 employees, these territories are clearly at an early
stage of development. Whilst they generated some #7.7 million revenues, losses
of #(0.3) million were reported for the first half, due primarily to a client
withdrawing from a project in Australia and a poor trading performance in
Denmark. The Danish business is being reorganised to reduce the cost base and
is targeted to deliver a profitable result by the end of 2001.
CMG Wireless Data Solutions
Our telecom products business achieved turnover of #57.7 million (2000: #60.1
million) with an operating loss of #(22.6) million (2000 operating profit: #18.6
million). The loss was smaller than our April estimate of #(30) million
due to slightly higher than expected sales, accelerated cost reductions, and
lower than anticipated R&D investment.
As stated in April, the short-term issue for WDS is the timing of upgrades to
SMS systems by the major operators in Europe. We saw improvement in the second
quarter and indeed WDS has traded profitably since May. More importantly, we
have been booking orders for delivery during the second half and continue to
have those discussions with our customers. Although full year performance
remains heavily dependent on the fourth quarter, we are aiming to trade
profitably throughout the second half.
The continued success in both the Americas and Asia Pacific - which delivered
growth against last year of 194% and 236% respectively - included high profile
installations in Indonesia and Malaysia where we replaced the previous
messaging supplier as traffic volumes moved into the rapid growth phase. Our
new Pre-Paid Billing Support for SMS and Query & Reporting module are proving
highly effective in generating higher revenues for these and other operators of
our systems.
The period saw the launch of our high performance Multimedia Messaging Service
Centre (MMSC ), a critical element in our strategy for next generation mobile
networks (2.5/3G). The first order for the new system was received in June from
Telenor in Norway with shipment scheduled for the third quarter and customer
trials beginning at the turn of the year. We are in discussions with a number
of operators concerning potential trials of our MMSC.
We announced in February an alliance with Cisco to bring true Unified Messaging
systems to market. The key element which Cisco brought to the venture was its
uOne technology which delivers capabilities such as text-to-speech conversion,
voice recognition and XML based voice portals. Subsequent to the period end, we
concluded a further agreement with Cisco to acquire the uOne technology,
product set, people and facilities following Cisco's decision to dispose of
what it perceives to be non-core businesses. For CMG, this not only secures an
important part of our future product strategy, but also provides us with a
market-leading product set with applications both for today's Internet-based
networks and the high speed digital networks of tomorrow. The ongoing net R&D
investment associated with uOne will be subsumed within CMG's total 2001 stated
R&D expected investment of #60 million.
That investment in R&D spans a broad range of applications which together are
transforming our telecom products operation from one dominated by a single
product to a portfolio business capable of delivering complete wireless data
solutions. The key areas of activity are:
* Enhancements to SMSC, including fraud-free, pre-paid usage and customer
analysis tools
* Multimedia messaging (MMSC) for 2.5/3G networks
* Unified Messaging, including voice mail, text-to-voice conversion and voice
over IP
* EPPIX customer care and billing rescaled for tier one operators with
additional support for GPRS and UMTS networks, including content/value billing
and cross-service rating/discounting
* Wireless Service Broker as an application engine for secure services (e.g.
payment), i-mode support (e.g. entertainment/infotainment), location-based and
other push/pull services
* Cell Broadcasting System (CBS) rescaled for 3G networks where CBS is a defined
standard
Also following the period end, we established a joint venture with TDC Mobile
International to create a pan-European messaging portal for Internet service
and content providers. The first contracted customer for this service is
Microsoft who ultimately wishes to make Hotmail on the Microsoft Network
available via two-way SMS following initial service trials in Switzerland and
Denmark. While some start-up fees are being paid by Microsoft, the business
model of the venture is fundamentally based on revenue sharing. We see good
opportunities for this venture in the medium and longer term, initially in SMS
messaging, but migrating into Unified and Multimedia Messaging in line with
market demands and CMG's product offering.
Board changes
Following the AGM, Wim Dik took up his position as a non-executive director,
bringing his wealth of experience to the Board. Wim Dik is a professor in the
Faculty of Technology and Management at the Technical University of Delft and
the former Chairman and CEO of KPN, the Dutch telecom operator. In July,
Alistair Crawford joined the Group Board in the executive position of Chief
Operating Officer. Again, Alistair brings substantial experience in sales,
marketing and general management. His track-record in organisations such as
Computer Sciences (CSC) and Oracle will be very important in helping the Board
achieve its ambitious strategy for growth.
Dividend
The Board has declared an interim dividend of 1.1p per share. This represents a
10% increase over the 2000 interim dividend, underlining the Board's confidence
in our business prospects. The dividend will be paid on 16 November 2001 to
shareholders on the register on 19 October 2001.
Outlook
We recognise that there are uncertainties concerning economic performance in
Europe and that neither CMG nor its customers are immune from such trends. Some
87% of our business is in the delivery of ICT services and, as of today, demand
here remains good in our key territories, aided by the strength of our customer
relationships and the depth of knowledge and committed individuals that we
bring to them. We are growing significantly faster than last year in ICT
services. We have some important issues to address in our smaller territories
where we are taking firm action to minimise the financial impact and provide a
platform for future growth.
Although the smaller part of our business, the performance at Wireless Data
Solutions is important to market perceptions and our results for the full year.
We have reduced the cost base and restructured the way the business operates to
ensure we get maximum focus and benefit from the skilled team we have built
there. The results are now beginning to come through, and whilst the full year
performance remains heavily dependent on the fourth quarter, we are aiming to
trade profitably throughout the second half.
SMS volumes are growing and revenues are returning in Europe, while at the same
time we are aggressively seizing new opportunities in developing markets around
the world. We are an early mover into new emerging technologies where we are
committed to being a major player. We have not allowed the short-term actions
that needed to be carried through to impede our strategic vision as can be seen
with our uOne and TDC Mobile International/Microsoft moves. We will balance the
ongoing development costs necessary to fuel long term growth with the need to
deliver short and medium term profitability. We remain convinced that this
business has an excellent future and will deliver significant value to our
stakeholders.
We have a clearly defined strategy for the Group as a whole which is based on
growth, both organic and by acquisition and trading alliances, and we remain
confident in its outcome.
Cor Stutterheim
Chairman
Exchange Rates
CMG's reported results can be significantly influenced by movements in exchange
rates, which can hinder understanding of the underlying financial performance.
To provide a more meaningful basis of comparison, the table below provides key
financial information expressed both at 2001 exchange rates ("constant exchange
rates") and at the exchange rates used for 2000 ("actual exchange rates").
Six months to 30 June 2001 2000 2000 % change % change
at constant at actual at constant at actual
exchange exchange exchange exchange
rates rates rates rates
#'m #'m #'m
Turnover
- Benelux 196.3 167.5 164.5
- United Kingdom 135.9 76.6 76.6
- Germany 30.2 30.3 29.7
- France 28.9 17.8 17.5
- Rest of World 7.7 1.0 1.0
ICT Services 399.0 293.2 289.3 36% 38%
- Wireless Data 57.7 61.4 60.1
Solutions
Total 456.7 354.6 349.4 29% 31%
Operating profit *
- Benelux 35.3 29.7 29.2
- United Kingdom 13.6 4.9 4.9
- Germany - 1.3 1.3
- France 1.1 (0.4) (0.4)
- Rest of World (0.3) - -
ICT Services 49.7 35.5 35.0 40% 42%
- Wireless Data (22.6) 18.9 18.6
Solutions
Total Operations 27.1 54.4 53.6 (50%) (49%)
Common costs (1.8) (2.1) (2.1)
25.3 52.3 51.5 (52%) (51%)
Profit before tax * 17.9 51.7 50.9 (65%) (65%)
(Loss)/Profit after tax (15.8) 29.0 28.5 (154%) (155%)
Earnings per share (basic)
- before goodwill 2.0p 6.9p 6.8p (71%) (71%)
amortisation
- after goodwill (2.7)p 5.7p 5.6p (147%) (148%)
amortisation
*before goodwill amortisation
Key exchange rates used above:
Euro 1.61 1.61 1.64
Consolidated Profit & Loss Account
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2001 2000 2000
Notes #'m #'m #'m
Turnover 3 456.7 349.4 810.4
Net operating costs (459.5) (303.7) (718.8)
Operating (loss)/profit
Before goodwill amortisation 25.3 51.5 125.5
Goodwill amortisation (28.1) (5.8) (33.9)
(2.8) 45.7 91.6
Net interest payable (7.4) (0.6) (8.5)
(Loss)/profit on ordinary activities (10.2) 45.1 83.1
before tax
Tax on profit on ordinary activities 5 (5.6) (16.6) (37.9)
(Loss)/profit on ordinary activities after (15.8) 28.5 45.2
tax
Minority interests (equity) (0.1) (0.1) (0.2)
(Loss)/profit for the period (15.9) 28.4 45.0
Dividends - ordinary shares 6 (6.6) (5.8) (16.5)
Retained (loss)/profit for the period (22.5) 22.6 28.5
Earnings per share 7
- basic
- before goodwill amortisation 2.0p 6.8p 14.5p
- after goodwill amortisation (2.7)p 5.6p 8.3p
- diluted
- before goodwill amortisation 2.0p 6.4p 13.7p
- after goodwill amortisation (2.6)p 5.3p 7.8p
Consolidated Statement of Total Recognised Gains and Losses
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2001 2000 2000
#'m #'m #'m
(Loss)/profit for the period (15.9) 28.4 45.0
Currency translation differences on
foreign currency net investments (5.7) 3.6 3.6
Total recognised (losses)/gains for the (21.6) 32.0 48.6
period
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 June 30 June 31
December
2001 2000 2000
Notes
#'m #'m #'m
Fixed assets
Goodwill 1,056.7 1,070.4 1,086.9
Tangible assets 32.5 27.3 28.9
Investments - own shares 3.4 2.8 2.8
1,092.6 1,100.5 1,118.6
Current assets
Stock 7.0 2.5 3.9
Debtors 275.3 237.6 236.2
Cash at bank and in hand 9 23.7 31.4 52.2
306.0 271.5 292.3
Creditors - amounts falling due within
one year
Short term borrowings 9 (1.0) (6.9) (9.6)
Other creditors (189.5) (192.6) (170.5)
(190.5) (199.5) (180.1)
Net current assets 115.5 72.0 112.2
Total assets less current liabilities 1,208.1 1,172.5 1,230.8
Creditors - amounts falling due after
more than one year
Long term borrowings 9 (237.2) (172.4) (230.9)
Provisions for liabilities and charges (3.3) (3.5) (4.3)
(240.5) (175.9) (235.2)
Net assets 967.6 996.6 995.6
Capital and reserves
Called up equity share capital 10 15.3 15.0 15.3
Share premium account 10 7.4 3.7 7.2
Shares to be issued 10 - 40.8 -
Reserves of Employee Trust 10 3.7 2.8 3.1
Profit and loss account 10 104.9 128.1 133.7
Merger reserve 10 836.3 806.2 836.3
Shareholders' funds - equity 967.6 996.6 995.6
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
Notes 2001 2000 2000
#'m #'m #'m
Net cash inflow from operating activities 8 3.0 20.9 95.9
Returns on investments and servicing of
finance
Dividends paid to minority interests (0.2) (0.2) (0.2)
Interest received 1.0 0.7 1.7
Interest paid (8.7) (1.3) (9.4)
Interest element of finance lease rental (0.2) - (0.3)
payments
Net cash outflow from returns on (8.1) (0.8) (8.2)
investments and servicing of finance
Taxation (7.5) (13.5) (42.4)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (5.9) (4.2) (11.2)
Sale of own shares by employee share 2.2 - -
trusts
Purchase of own shares by employee share (1.3) - -
trusts
Acquisitions (0.9) (170.4) (239.7)
Equity dividends paid (10.8) (7.1) (12.9)
Net cash outflow before management of 9 (29.3) (175.1) (218.5)
liquid resources and financing
Management of liquid resources - 5.0 5.0
Financing activities
Proceeds from issue of shares 0.2 0.1 3.7
Increase in loans 9.8 170.0 228.4
Capital element of finance lease rental (0.7) (0.1) (0.6)
payments
Cost of bonus issue and share split - - (0.4)
(Decrease)/increase in cash (20.0) (0.1) 17.6
Notes to the interim report
1. Basis of preparation
The unaudited results have been prepared in accordance with the accounting
policies set out in the Annual Report for the year ended 31 December 2000.
The financial information in this interim report does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 2000 upon which the
auditors gave an unqualified opinion, have been delivered to the Registrar
of Companies.
2. Exchange rates
The most important exchange rate for the Group is the Euro. The relevant
exchange rates for translation are:-
30 June 2001 30 June 2000 31 December 2000
Period end Average Period end Average Year end Average
Euro 1.66 1.61 1.60 1.64 1.59 1.64
The primary reporting currency of the Group is UK Pounds Sterling.
3. Segmental information
Analysis of turnover and profit before tax is given below :
Turnover Profit before tax
30 30 June 31 30 30 31
June December June June December
2001 2000 2000 2001 2000 2000
#'m #'m #'m #'m #'m #'m
- Benelux 196.3 164.5 335.6 35.3 29.2 62.9
- United Kingdom 135.9 76.6 206.1 13.6 4.9 21.1
- Germany 30.2 29.7 58.8 - 1.3 1.8
- France 28.9 17.5 44.5 1.1 (0.4) (0.2)
- Rest of World 7.7 1.0 10.1 (0.3) - 0.9
ICT Services 399.0 289.3 655.1 49.7 35.0 86.5
- Wireless Data Solutions 57.7 60.1 155.3 (22.6) 18.6 42.3
Total Operations 456.7 349.4 810.4 27.1 53.6 128.8
Common costs (net of profit in - - - (1.8) (2.1) (3.3)
Employee Trust)
Goodwill amortisation - - - (28.1) (5.8) (33.9)
Net interest payable - - - (7.4) (0.6) (8.5)
456.7 349.4 810.4 (10.2) 45.1 83.1
#25.1 million of the goodwill amortisation is attributable to the UK which
includes the amortisation of goodwill arising on the acquisition of Admiral
Limited (2000: #4.7 million); #0.6 million is attributable to Germany (2000:
#0.4 million); #0.5 million is attributable to Benelux (2000: #0.4 million);
#1.5 million is attributable to WDS (2000: #nil) and the remaining #0.4 million
to France (2000: #0.3 million).
Turnover analysed by country of destination shows #204.7 million arising in
the Benelux (#169.8 million for the half year 2000; #348.3 million for the
full year 2000); and #55.1 million in the Rest of the World (#41.0 million for
the half year 2000; #116.0 million for the full year 2000). In the other
geographic areas, turnover by destination is not materially different from
turnover by country of origin.
4. Employees 30 June 30 June 31 December
2001 2000 2000
The average number of employees during the period was:
Benelux 7,133 5,899 6,233
United Kingdom 3,684 1,962 2,752
Germany 903 821 853
France 1,086 625 844
Rest of World 691 152 377
13,497 9,459 11,059
Average employee numbers include employees in subsidiaries acquired for the
period during which they are members of the Group.
30 30 31
June June December
The number of employees at the end of the period 2001 2000 2000
was:
Benelux 7,377 6,205 6,796
United Kingdom 3,772 3,247 3,608
Germany 888 876 899
France 1,081 1,021 1,095
Rest of World 740 465 672
13,858 11,814 13,070
5. Taxation
The tax charge for the half year has been based on the estimated effective
tax rate for the full year of 31.3%, excluding goodwill amortisation. The
charge includes overseas tax of #3.6 million (2000: #15.6 million).
6. Dividends on ordinary shares
An interim dividend of 1.1 pence (2000: 1.0 pence) will be paid on 16
November 2001 to shareholders on the register on 19 October 2001.
7. Earnings per share
30 June 30 June 31 December
2001 2000 2000
Earnings (#'m) - basic (15.9) 28.4 45.0
- add back goodwill amortisation 28.1 5.8 33.9
- before goodwill amortisation 12.2 34.2 78.9
Number of shares (million)
- weighted average number of shares in issue 613.7 527.9 566.6
- shares held by the employee share trusts (16.2) (22.2) (22.3)
Shares used to calculate basic earnings per 597.5 505.7 544.3
share
Effect of dilutive potential ordinary shares 13.3 31.6 29.9
- share options
Shares used to calculate diluted earnings per 610.8 537.3 574.2
share
At 30 June 2001, the total number of shares in issue was 614.0 million.
8. Reconciliation of operating (loss)/profit to net cash inflow from operating
activities
30 June 30 June 31 December
2001 2000 2000
#'m #'m #'m
Operating (loss)/ profit (2.8) 45.7 91.6
Goodwill amortisation 28.1 5.8 33.9
Depreciation of tangible fixed assets 5.5 3.4 8.9
Increase in debtors (49.5) (44.3) (37.0)
Increase/(decrease) in creditors and provisions 21.7 10.3 (1.5)
Net cash inflow from operating activities 3.0 20.9 95.9
9. Reconciliation of cash flow to change in net (debt)/net funds
30 30 31
June June December
2001 2000 2000
#'m #'m #'m
Net (debt)/funds as at 1 January
Cash 52.2 26.2 26.2
Liquid resources - 5.0 5.0
Overdrafts (7.5) - -
Finance lease obligations (3.7) - -
Loans and borrowings due after more than one year (229.3) - -
(188.3) 31.2 31.2
Net cash outflow before use of liquid resources and (29.3) (175.1) (218.5)
financing
Debt and financing acquired with subsidiary - (3.8) (3.8)
Other movements (0.1) 0.4 2.0
Exchange differences 3.2 (0.6) 0.8
(26.2) (179.1) (219.5)
Net (debt)/funds as at period end
Cash 23.7 31.4 52.2
Overdrafts - (5.9) (7.5)
Finance lease obligations (3.1) (3.8) (3.7)
Loans and borrowings due after more than one year (235.1) (169.6) (229.3)
(214.5) (147.9) (188.3)
10. Reconciliation of group reserves
Share Share Reserves of Profit Merger Total
capital premium Employee and Reserve
account Trust loss
account
#'m #'m #'m #'m #'m #'m
Balance at 1 January 15.3 7.2 3.1 133.7 836.3 995.6
2001
Change in value due to - - - (5.7) - (5.7)
currency fluctuations
Retained loss for the - - - (22.5) - (22.5)
period
Transfer in respect of - - 0.6 (0.6) - -
Employee Trust
Shares issued during - 0.2 - - - 0.2
the period
Balance at 30 June 15.3 7.4 3.7 104.9 836.3 967.6
2001
11. Post balance sheet event
On 27 July 2001, CMG acquired Cisco's uOne Unified Communications software
platform for the service provider market and the research and development
team supporting this technology for nil consideration. Approximately 100
employees in the USA will become a part of CMG Wireless Data Solutions.
12. Interim report
This Interim Report was approved by the Board of Directors on 28 August
2001 and copies are available from CMG plc, Parnell House, 25 Wilton Road,
London SW1V 1LW and CMG BV, Antareslaan 11, 2132 JE Hoofddorp, The
Netherlands.
Croma Grp (LSE:CMG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Croma Grp (LSE:CMG)
Historical Stock Chart
From Jul 2023 to Jul 2024