RNS Number:3170V
Computerland UK PLC
08 December 2005
ComputerLand UK PLC
Interim results for the six months ended 31st October 2005
(ComputerLand provides essential IT services to medium and large organisations)
KEY POINTS
* Business remains focused on growing contracted services revenue
* Contracted revenues up 8% to #6.8m (2005 H1: #6.3m)
* Turnover as anticipated down 10% to #26.9m due to lower product sales
(2005 H1: #29.8m)
* Profit before tax and goodwill amortisation of #0.8m (2005 H1: #1.1m)
* Earnings per share before goodwill amortisation of 5.4p (2005 H1:
7.8p)
* Dividend per share up 6% to 1.8p (2005 H1: 1.7p)
* Net cash at period end up to #7.8m (2005 H1: #6.0m)
Graham Gilbert, Chairman and CEO commented:
"Managed services has made good progress during the half, increasing revenues
and profits...product sales in the second quarter showed a modest recovery and
this has been sustained in November"
"...we have recently won new contracts within the corporate and local government
sectors."
Press enquiries:
ComputerLand UK PLC Tel: 0115 931 8000
Graham Gilbert, Chairman & CEO
Mike Kent, Finance Director
Biddicks Tel: 020 7448 1000
Shane Dolan
Chairman's Statement
During the six months to 31 October 2005 our services business has continued to
grow, however, as previously announced, product sales have been impacted by
difficult trading conditions. We have continued to focus our sales efforts on
growing the Group's contracted services revenue. As a result of this activity we
have recently won new contracts within the corporate and local government
sectors. We are planning further sales investment in the second half of our
financial year to accelerate our growth in these markets.
Results
Lower product sales resulted in turnover decreasing by 10% to #26.9m (2004/5 H1
#29.8m). As a result, pre-tax profits* during the half were #0.80m, a decrease
of 29% on the comparable period last year (2004/5 H1 #1.13m). Earnings per share
* were 5.4p (2004/5 H1 7.8p). Operating cash inflow of #0.7m resulted in net
cash at the period end of #7.8m.
*Before goodwill amortisation of #0.1m (2004/05 H1: #0.1m) or 0.7p per share
Operating Review
Our strategy is to provide medium and large organisations with a "one stop shop"
for their business as usual IT support requirements. We seek to differentiate
ourselves by focusing on the quality and efficiency of our service delivery
model. Innovative use of proven technology and methodologies enables us to
deliver services which improve the effectiveness of our customers IT whilst
reducing their operating costs. To best achieve our objectives we organise our
business in to four units. These units are managed services, hardware support,
technology consulting and managed product supply.
Managed services has made good progress during the half, increasing revenues and
profits. At the start of the year we created a dedicated managed services sales
team. This team secured its first new contract win in the half, with service
delivery due to commence during December. Our pipeline of opportunities is
healthy and we are optimistic that our focus in this area will deliver future
benefits.
Our hardware support business has continued to make steady progress in a
competitive market place. Industry leading efficiency and quality will enable us
to continue to provide a compelling proposition in this market place and we are
investing to further enhance our service delivery model.
Contracted revenues, combining managed services and hardware support, reached a
record #6.8m during the half and are 8% ahead of the corresponding prior year
period.
Our technology consulting business has successfully delivered projects in the
growing market areas of server virtualisation, thin client computing, storage
infrastructure and messaging. We believe we are well positioned to take
advantage of the opportunities in these markets.
Our managed product supply business experienced difficult trading conditions
with sales falling 15% in line with the market reduction in average hardware
selling prices, which together with intense competition has lead to a
significant reduction in product margins. In response to these market conditions
we have taken action to reduce our selling costs and further increase the
automation of our supply chain. Our second quarter showed a modest recovery and
this has been sustained in November.
People
I would like to thank all of our staff for their continued hard work, innovative
attitude and overall contribution during the past six months.
In September Gary Barrett resigned from the Board and I would like to thank him
for his contribution during his time with us.
Dividend
Our strong operating cash inflow and confidence in our future prospects has
enabled us to declare an interim dividend of 1.8p per share (2004/5 H1: 1.7p),
an increase of 6% over the previous year. The dividend will be paid on 1 March
2006 to shareholders on the register on 3 February 2006.
Current Trading and Outlook
Trading during November has been in line with our expectations. During the
course of the second half we expect our services business to continue to make
steady progress and we are cautiously optimistic that the recent improvement in
our product business will be sustained over the coming months. These factors,
combined with a healthy pipeline of opportunities, give the Board confidence
that the results for the second half of the financial year will be in line with
our expectations.
Graham Gilbert
Chairman
8 December 2005
Profit and Loss Account
Six months to 31 October 2005
Six months to Twelve months to
Six months to 31 October 30 April
31 October 2004 2005
2005 (Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
------------------------ -------- --------- --------- ----------
Turnover 26,905 29,760 59,456
Operating profit
before goodwill
amortisation 700 1,049 1,956
Goodwill amortisation (105) (105) (211)
Operating profit 595 944 1,745
Net interest receivable 102 78 171
------------------------ -------- --------- --------- ----------
Profit on ordinary
activities before
taxation 697 1,022 1,916
Taxation on profit on
ordinary activities 2 (225) (306) (553)
------------------------ -------- --------- --------- ----------
Profit for the period 472 716 1,363
------------------------ -------- --------- --------- ----------
Earnings per share - pence
- Basic 4 4.7 7.1 13.5
- Diluted 4 4.7 7.0 13.4
------------------------ -------- --------- --------- ----------
The group has no recognised gains nor losses in the period other than those
passing through the profit and loss account.
All amounts relate to continuing activities.
Balance sheet
As at 31 October 2005
As at As at
As at 31 October 30 April
31 October 2004 2005
2005 (Restated) (Restated)
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
------------------------ -------- --------- --------- ----------
Fixed assets
Intangible assets 1,156 1,372 1,264
Tangible assets 1,214 1,167 1,208
------------------------ -------- --------- --------- ----------
2,370 2,539 2,472
------------------------ -------- --------- --------- ----------
Current assets
Stocks 1,396 1,582 1,475
Debtors 5,947 7,633 5,811
Cash at bank and in hand 7 7,822 6,026 7,868
------------------------ -------- --------- --------- ----------
15,165 15,241 15,154
Creditors: amounts falling
due within one year (12,293) (13,158) (12,508)
------------------------ -------- --------- --------- ----------
Net current assets 2,872 2,083 2,646
------------------------ -------- --------- --------- ----------
Provision for liabilities
and charges (29) (23) (29)
------------------------ -------- --------- --------- ----------
Net assets 5,213 4,599 5,089
------------------------ -------- --------- --------- ----------
Capital and reserves
Called up share capital 204 204 204
Share premium 1,114 1,114 1,114
Investment in own shares (226) (275) (232)
Profit and loss account 4,121 3,556 4,003
------------------------ -------- --------- --------- ----------
Equity shareholders' funds 5 5,213 4,599 5,089
------------------------ -------- --------- --------- ----------
Cash Flow Statement
Six months to 31 October 2005
Six months to Six months to Twelve months to
31 October 31 October 30 April
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
------------------------ -------- --------- --------- ----------
Net cash
inflow/(outflow) from
operating activities 6 697 (759) 2,175
Returns on investments and
servicing of finance
Net interest received 102 78 171
Taxation paid (286) - (790)
Capital expenditure
Purchase of own shares (24) (417) (417)
Sale of own shares 10 41 55
Purchase of tangible
fixed assets (211) (122) (360)
------------------------ -------- --------- --------- ----------
(225) (498) (722)
Equity dividends paid (334) (305) (476)
------------------------ -------- --------- --------- ----------
Net cash flow before
financing (46) (1,484) 358
Financing
Issues of shares - 35 35
------------------------ -------- --------- --------- ----------
(Decrease)/increase in
cash (46) (1,449) 393
------------------------ -------- --------- --------- ----------
Reconciliation of net cash to movement in net funds
Six months to Six months to Twelve months to
31 October 31 October 30 April
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
------------------------ -------- --------- --------- ----------
(Decrease)/increase in
cash (46) (1,449) 393
Opening net funds 7,868 7,475 7,475
------------------------ -------- --------- --------- ----------
Closing net funds 7 7,822 6,026 7,868
------------------------ -------- --------- --------- ----------
Notes to the interim report
1. Basis of preparation
The interim financial statements have been prepared using accounting policies
consistent with those adopted in the statutory accounts of the Group for the
year ending 30 April 2005, except that during the period the Group has adopted
FRS 21: Events after the Balance Sheet Date and FRS 22: Earnings per Share.
Under FRS 21, dividends declared after the balance sheet date should not be
reported as liabilities at the balance sheet date. The effect of implementing
FRS 21 is to reduce creditors falling due within one year and increase
shareholders' funds by the dividend accrued but not declared at the balance
sheet date. Such dividends amounted to #171,000 at 31 October 2004 and #334,000
at 30 April 2005. Comparative figures have been restated.
The interim financial statements for the six months ended 31 October 2005 are
unaudited and do not constitute statutory accounts within the meaning of Section
240 of the Companies Act 1985. The results for the year ended 30 April 2005 have
been extracted from the financial statements of the Group on which an
unqualified auditors' report has been received and which has been delivered to
the Registrar of Companies.
The interim financial statements for the six months ended 31 October 2005 were
approved by the Board on 7 December 2005.
2. The tax charge for the period is based on the anticipated effective rate of
tax for the year to 30 April 2006.
3. After the balance sheet date, the directors declared an interim dividend of
1.8p per share (2005 H1: 1.7p per share).
4. The calculation of earnings per ordinary share is based on a profit of
#472,000 (2005 H1: profit of #716,000) and on a weighted average of 10,101,390
(2005 H1: 10,124,261) ordinary shares in issue during the period. The
calculation of diluted earnings per ordinary share is based on a profit of
#472,000 (2005 H1: profit of #716,000) and weighted average ordinary shares of
10,135,849 (2005 H1: 10,255,383).
The calculation of earnings per ordinary share before goodwill amortisation is
based on a profit of #546,000 (2005 H1: profit of #790,000), which excludes
goodwill amortisation of #105,000 (2005 H1: #105,000) and tax thereon at 30%.
The weighted average number of shares in issue during the period remains
unaltered.
5. Reconciliation of movements in equity shareholders' funds
Six months to Six months to Twelve months to
31 October 31 October 30 April
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
-------------------------------- -------- --------- ---------
Opening equity
shareholders' funds 5,089 4,224 4,224
Prior year adjustment for
2004 final dividend not
declared at 30 April 2004 - 305 305
-------------------------------- -------- --------- ---------
Opening equity
shareholders' funds restated 5,089 4,529 4,529
Share issues - 35 35
Profit for the financial period 472 716 1,363
Dividends (334) (305) (476)
Movement in investment in
own shares (14) (376) (362)
-------------------------------- -------- --------- ---------
Closing equity
shareholders' funds 5,213 4,599 5,089
-------------------------------- -------- --------- ---------
6. Reconciliation of operating profit to net cash inflow from operating activities
Six months to Six months to Twelve months to
31 October 31 October 30 April
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
-------------------------------- -------- --------- ---------
Operating profit 595 944 1,745
Depreciation and amortisation 339 356 700
Movement in working capital (237) (2,059) (270)
-------------------------------- -------- --------- ---------
Net cash inflow/(outflow)
from operating activities 697 (759) 2,175
-------------------------------- -------- --------- ---------
7. Analysis of net funds
As at As at As at
31 October 31 October 30 April
2005 2004 2005
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
-------------------------------- --------- --------- ---------
Cash at bank and in hand 7,822 5,806 7,868
Medium term deposit - 220 -
-------------------------------- --------- --------- ---------
Net funds 7,822 6,026 7,868
-------------------------------- --------- --------- ---------
8. Copies of this interim report are being sent to all shareholders and will be
available to the public from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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