RNS Number:4053N
Computerland UK PLC
07 December 2006
CPU.L
ComputerLand UK PLC
Interim results for the six months ended 31 October 2006
Highlights:
* Contracted revenues up 29% to #8.8m (2006 H1: #6.8m)
* Turnover up 15% to #30.8m (2006 H1: #26.9m)
* Profit before tax, share-based payments and goodwill amortisation up 75%
to #1.4m (2006 H1: #0.8m)
* Earnings per share before share-based payments and goodwill amortisation
up 74% to 9.4p (2006 H1: 5.4p)
* Dividend per share up 39% to 2.5p (2006 H1: 1.8p)
* Net cash at period end of #7.3m (2006 H1: #7.8m)
Graham Gilbert, Chairman & CEO commented:
"I am delighted to report our best ever interim results for the group. Sales,
profits and margins have all shown significant growth on the corresponding
period last year. These results have been driven by an excellent performance in
our managed services and hardware support businesses."
"Recent contract wins and the overall strength of our business lead us to be
optimistic of a successful outcome for the year as a whole."
Press enquiries:
ComputerLand UK PLC Tel: 0115 931 8000
Graham Gilbert, Chairman & CEO
Mike Kent, Finance Director
Biddicks Tel: 0207 448 1000
Shane Dolan
Chairman's Statement
I am delighted to report our best ever interim results for the group. Sales,
profits and margins have all shown significant growth on the corresponding
period last year. These results have been driven by an excellent performance in
our managed services and hardware support businesses. Overall contracted
services revenues have grown by 29%. Our project services business made good
progress with higher revenues and a lower fixed cost base leading to an improved
trading result. Gross profits achieved in our product reselling business were
broadly flat with slightly higher revenues compensating for a small decline in
percentage margins.
Contract news
During the course of the past six months we have won major new managed services
contracts with O2 and British Sugar. Service delivery on these contracts started
on the 4 September and 1 October respectively. O2, with whom we have signed a
five year contract, has become our largest managed services customer. In
addition to these new wins, Experian, who has now been a managed services client
for nearly six years, has extended their contract with us until the end of March
2009.
Results
During the half, pre-tax profits* increased 75% to #1.4m (2005/06 H1: #0.8m) on
sales up 15% to #30.8m (2005/06 H1: #26.9m). Earnings per share* rose 74% to
9.4p and operating profit margins* improved by 1.6% to 4.2%. Operating cash
inflow of #1.3m resulted in net cash at the period end of #7.3m (2005/06 H1:
#7.8m). A special dividend of #2.0m was paid to shareholders during the period.
*Before share-based payments and goodwill amortisation of #0.15m (2005/06 H1:
#0.12m) or 1.0p per share (2005/06 H1: 0.8p 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 achieve these objectives we organise our
business into four units; managed services, hardware support, project services
and managed product supply.
Managed services has had an excellent first half. Revenues and profits have
grown strongly on the back of new contract wins and a good performance from
existing accounts. In June, O2 selected us to provide a range of IT services
including the support of over 14,000 users and 1,000 servers as well as their
estate of over 300 retail outlets. After a very intensive mobilisation period
during July and August, we started delivering service under a five year
agreement on 4 September 2006. Our highly efficient service delivery model
involved transforming the way in which services were delivered from a
de-centralised "on-site" organisation to a highly integrated remote delivery
model. We have now been successfully delivering service to O2 for three months.
During the past six months we have also won and implemented a significant new
managed services contract with British Sugar. Under this contract we are
supplying 1,400 British Sugar and Silver Spoon employees with IT helpdesk and
desktop support services as well as managing the support of over 100 servers.
Service delivery on this contract started on 1 October and we are pleased with
the progress to date. In addition, within managed services, Experian agreed to
extend their long standing contract for an additional two years until the end of
March 2009.
Our hardware support business has performed well during the half with revenues
increasing by 27% compared with the year earlier period. We are continuing to
invest in this business to further enhance service quality and efficiency. New
systems are being implemented that will improve the process of scheduling jobs
and communicating with engineers in the field.
Contracted revenues, combining managed services and hardware support, reached a
record #8.8m during the half and are 29% ahead of the corresponding prior year
period.
Our project based, technology consulting business, has performed well during the
half. We have successfully delivered projects across a wide range of
technologies including server virtualisation, thin client computing, messaging
and storage infrastructure. During the past year we have taken steps to reduce
our fixed cost base, concentrating our permanent resources in the project
management and high end technical consultant areas, whilst making increased use
of temporary contractors to assist with systems deployment. These changes have
resulted in a more variable cost base without compromising our core competences
and capabilities.
Market conditions in our managed product supply business have been relatively
steady during the period. Stable average selling prices have enabled us to
achieve a modest improvement in revenues, however, a greater concentration of
sales to our larger customers has led to a slight erosion in margins. Overall
the gross profit we have achieved in our product reselling business has been
similar to the prior year period.
People
The past six months have been exceptionally busy for our company. All of our
major business units have experienced increased activity levels and we have
implemented two significant new managed services contracts. These achievements
would not have been possible without the dedication and hard work of our staff.
I would like to thank all our employees for their contribution to these record
results.
Dividend
Our increased profits, and confidence in the future, have enabled the Board to
declare an interim dividend of 2.5p per share (2005/06 H1: 1.8p), an increase of
39% on the previous year. The interim dividend will be paid on 1 March 2007 to
shareholders on the register at the close of business on 2 February 2007.
Current trading and outlook
Trading during November has been in line with our expectations. Recent contract
wins and the overall strength of our business lead us to be optimistic of a
successful outcome for the year as a whole.
Graham Gilbert
Chairman
6 December 2006
Group Profit and Loss Account
For the six months to 31 October 2006
Six months to Six months to Twelve months to
31 October 31 October 30 April
2006 2005 2006
Restated Restated
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Turnover 30,824 26,905 59,262
----------------- ------ ----------- ----------- -----------
Operating profit before
share-based payments and
goodwill amortisation 1,280 700 2,004
Share-based payments (40) (11) (22)
Goodwill amortisation (105) (105) (211)
----------------- ------ ----------- ----------- -----------
Operating profit 1,135 584 1,771
Net interest receivable 121 102 222
----------------- ------ ----------- ----------- -----------
Profit on ordinary
activities before
taxation 1,256 686 1,993
Taxation on profit on
ordinary activities 2 (408) (222) (635)
----------------- ------ ----------- ----------- -----------
Profit for the period 848 464 1,358
----------------- ------ ----------- ----------- -----------
Earnings per share - pence
- Basic 4 8.4 4.6 13.4
- Diluted 4 8.4 4.6 13.4
----------------- ------ ----------- ----------- -----------
All amounts relate to continuing activities.
Group statement of total recognised gains and losses
For the six months to 31 October 2006
Six months to Six months to Twelve months to
31 October 31 October 30 April
2006 2005 2006
Restated Restated
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Profit for the period 848 464 1,358
Prior year adjustment 1 18 - -
----------------- ------ ----------- ----------- -----------
Total recognised gains
for the period 866 464 1,358
----------------- ------ ----------- ----------- -----------
Group Balance Sheet
As at 31 October 2006
As at As at As at
31 October 31 October 30 April
2006 2005 2006
Restated Restated
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Non current assets
Intangible assets 940 1,156 1,048
Tangible assets 1,542 1,214 1,174
Deferred tax 10 - -
-------------------------- ------ -------- -------- --------
2,492 2,370 2,222
-------------------------- ------ -------- -------- --------
Current assets
Stocks 1,441 1,396 1,336
Debtors 8,923 5,947 8,054
Cash at bank and in hand 7,313 7,822 9,006
-------------------------- ------ -------- -------- --------
17,677 15,165 18,396
Creditors: amounts falling
due within one year (15,761) (12,293) (14,694)
-------------------------- ------ -------- -------- --------
Net current assets 1,916 2,872 3,702
-------------------------- ------ -------- -------- --------
Provision for liabilities and
charges - (8) (9)
-------------------------- ------ -------- -------- --------
Net assets 4,408 5,234 5,915
-------------------------- ------ -------- -------- --------
Capital and reserves
Called up share capital 204 204 204
Share premium 1,114 1,114 1,114
Investment in own shares (133) (226) (188)
Profit and loss account 3,223 4,142 4,785
-------------------------- ------ -------- -------- --------
Equity shareholders' funds 5 4,408 5,234 5,915
-------------------------- ------ -------- -------- --------
Group Cash Flow Statement
For the six months to 31 October 2006
Six months to Six months to Twelve months to
31 October 31 October 30 April
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Net cash inflow from
operating activities 6 1,349 697 2,471
Returns on investments and
servicing of finance
Net interest received 121 102 222
Taxation paid (365) (286) (561)
Capital expenditure
Purchase of own shares (18) (24) (114)
Sale of own shares 67 10 56
Purchase of tangible
fixed assets (403) (211) (422)
Equity dividends paid (2,444) (334) (514)
-------------------- ------- --------- ---------- ----------
(Decrease)/increase in
cash (1,693) (46) 1,138
-------------------- ------- --------- ---------- ----------
Reconciliation of net cash to movement in net funds
Six months to Six months to Twelve months to
31 October 31 October 30 April
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
(Decrease)/increase in cash (1,693) (46) 1,138
Opening net funds 9,006 7,868 7,868
-------------------- --------- --------- -----------
Closing net funds 7,313 7,822 9,006
-------------------- --------- --------- -----------
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 2006, except that during the period the Group has adopted
FRS 20: Share-based Payment.
Under FRS 20 an expense is recognised in the profit and loss account where the
Group buys goods or services in exchange for shares or rights over shares
(equity-settled transactions), or in exchange for other assets equivalent in
value to a given number of shares or rights over shares (cash-settled
transactions). The main impact of FRS 20 on the Group is the expensing of share
options and other share-based incentives by using an option pricing model. The
Group has taken advantage of the transitional provisions of FRS 20 and has only
applied FRS 20 to equity-settled awards granted after 7 November 2002 that had
not vested on or before 1 January 2006. The effect of implementing FRS 20 is to
reduce profit before tax for the year ended 30 April 2006 by #22,000 and by
#11,000 in respect of the six months ended 31 October 2005, with a corresponding
increase in equity. The tax charge reflects a deferred tax credit. A prior year
adjustment, giving rise to a credit to reserves of #18,000, has been made for
the deferred tax asset arising on the cumulative share-based payment charge at 1
May 2005 of #60,000, such charge being reflected as a debit and credit to
reserves.
The interim financial statements for the six months ended 31 October 2006 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 2006 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. These
results have been restated as detailed above.
The interim financial statements for the six months ended 31 October 2006 were
approved by the Board on 6 December 2006.
2. The tax charge for the period is based on the anticipated effective rate of
tax for the year to 30 April 2007.
3. After the balance sheet date, the directors declared an interim dividend of
2.5p per share (2006 H1: 1.8p per share).
4. The calculation of earnings per ordinary share is based on a profit of
#848,000 (2006 H1: profit of #464,000) and on a weighted average of 10,107,588
(2006 H1: 10,101,390) ordinary shares in issue during the period. The
calculation of diluted earnings per ordinary share is based on a profit of
#848,000 (2006 H1: profit of #464,000) and weighted average ordinary shares of
10,136,088 (2006 H1: 10,135,849).
The calculation of earnings per ordinary share before share-based payments and
goodwill amortisation is based on a profit of #950,000 (2006 H1: profit of
#545,000), which excludes share-based payments of #40,000 (2006 H1: #11,000),
goodwill amortisation of #105,000 (2006 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
2006 2005 2006
Restated Restated
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Opening equity
shareholders' funds 5,915 5,089 5,089
Prior year adjustment for
deferred tax on cumulative
share-based payment charge - 18 18
------------------------- ---------- --------- ----------
Opening equity shareholders'
funds restated 5,915 5,107 5,107
Profit for the financial
period 848 464 1,358
Share-based payments 40 11 22
Dividends (2,444) (334) (514)
Movement in investment in
own shares 49 (14) (58)
------------------------- ---------- --------- ----------
Closing equity
shareholders' funds 4,408 5,234 5,915
------------------------- ---------- --------- ----------
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
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating profit 1,135 584 1,771
Share-based payments 40 11 22
Depreciation and
amortisation 315 339 675
Movement in working capital (141) (237) 3
------------------------- ---------- --------- ----------
Net cash inflow from
operating activities 1,349 697 2,471
------------------------- ---------- --------- ----------
7. 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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