RNS Number : 1627C
Computacenter PLC
28 August 2008
COMPUTACENTER PLC
Interim Results Announcement
Computacenter plc, the European IT infrastructure services provider, today announces interim results for the six months ended 30 June
2008.
FINANCIAL HIGHLIGHTS
* Group revenues increased 7.8% to �1.25 billion (2007: �1.16 billion)
* Profit before tax declined 14.2% to �11.0 million (2007: �12.8 million)
* Diluted earnings per share increased 10.6% to 5.2p (2007: 4.7p), due to the impact of share repurchases and a reduced tax rate
* Interim dividend increased 8.0% to 2.7p per share (2007: 2.5p)
* Net debt before customer-specific financing ('CSF') of �29.7 million (2007: net debt of �16.5 million)
* Net debt after CSF of �95.9 million (2007: net debt of �53.4 million)
OPERATING HIGHLIGHTS
* Positive Q2 followed a weak first six weeks of the year in UK and France
* Strongest UK organic revenue growth for a number of years led by Software, Technology Solutions and sales to the medium-sized
business sector
* Further operating loss reduction in France, driven by good services growth and increased product margins
* Continued improvement in German performance, driven partly by progress in our shift towards higher-margin services
Mike Norris, Chief Executive of Computacenter plc, commented:
"After a challenging start to the year we are encouraged by the sales performance we recorded in the first half which is a continuation
of the upward trend re-established in 2007.
"Although uncertainty remains in the marketplace there is a continuing need for customers to invest in information technology to improve
their competitiveness. The investments we have been making to improve our services capabilities and the cost effectiveness of our sales
operations position us well in a more difficult economic climate.
"While much remains to be done, management is confident of achieving its current expectations assuming no material deterioration in
market conditions."
For further information, please contact:
Computacenter plc.
Mike Norris, Chief Executive 01707 631 601
Tessa Freeman, Investor Relations 01707 631 514
www.computacenter.com
Tulchan Communications 020 7353 4200
Stephen Malthouse
Lizzie Morgan
www.tulchangroup.com
Computacenter's half-yearly financial report is available to view and download at www.computacenter.com/investor. High resolution
images are available for the media to view and download free of charge from www.computacenter.com/press.
Interim Management Report
Executive summary
Computacenter's sales performance in the first half of 2008 was encouraging, despite the more difficult economic climate. Helped
somewhat by the strength of the Euro, overall Group revenues grew 7.8% to �1.25 billion (2007: �1.16 billion), which represents an increase
of 1.4% at constant currency. This continues the upward trend in revenues re-established in 2007 and reflects the strongest organic growth
rate in the UK for a number of years.
As we anticipated, we saw a decline in Group profit before tax. The actual reduction was 14.2% to �11.0 million (2007: �12.8 million),
due partly to a particularly difficult start to the year in the UK and also to an increase of �0.4 million in the interest charge resulting
from �20.8 million expenditure on share repurchases since 1 July 2007. The decline was also attributable to the significant investments we
continue to make, in line with our strategic priorities, to enhance our services capability and build our position in the mid-market.
However, both UK and France profit performance improved in the second quarter, recording figures ahead of Q2 2007. German earnings were
consistently above last year throughout the first half.
Despite the decline in first half profits, the Group is pleased to announce an increase in diluted earnings per share (EPS) of 10.6% to
5.2p (H1 2007: 4.7p), as a result of a reduced number of shares in issue and a lower tax charge.
The balance sheet remains strong, with net borrowings prior to customer-specific financing ('CSF') of �29.7 million (2007 H1: �16.5
million) at the period end. This was after the expenditure of �20.8 million since 1 July 2007 on the purchase of our own shares in the
market. Good cash generation in the period meant that, excluding the buybacks and CSF, our net debt position would have improved by �7.6
million.
We are pleased to announce the payment of an increased interim dividend of 2.7p per share (2007: 2.5p) to be paid on 16 October 2008 to
shareholders on the register as at 19 September 2008. This is consistent with our policy of seeking to keep the interim dividend at a level
equal to one-third of the preceding year's total dividend.
On 1 July 2008 Greg Lock was appointed as non-executive Chairman, following the resignation of Ron Sandler in February. Greg has been
the Chairman at Kofax plc, the intelligence capture and exchange solution provider, previously Dicom Group plc, since March 2007. He is a
Non-Executive Director of private technology companies Liberata plc and Target Group and has more than 38 years experience in the software
and computer services industry.
We are encouraged by the Group's improved performance in the second quarter. Although there is much uncertainty in the marketplace,
there is a continuing need for customers to invest in information technology to improve their competitiveness. To answer that need,
Computacenter has made significant investments in the past three years in solutions and processes designed specifically to improve the
cost-effectiveness and efficiency of our customers' IT infrastructures. We believe these investments, together with our continuing
investment in the medium-sized business sector, position us well in a more difficult economic climate.
While much remains to be done, management is confident of achieving its current expectations assuming no material deterioration in
market conditions.
Operating review
UK
UK performance recovered after a challenging first six weeks to deliver a revenue increase of 5.5% to �708.1 million (H1 2007: �671.2
million), largely as a result of strong sales growth in our software and consulting/integration activities and in sales to the medium-sized
business sector. Adjusted* operating profit declined 21.2% to �8.9 million (H1 2007: �11.3 million), mainly due to the poor start to the
year, continued significant investment in our services capability and the resourcing of our sales operation targeting medium-sized
businesses. In addition, the merging of our Managed Services and Digica operations, together with a number of smaller cost-cutting
initiatives, resulted in an unusually high restructuring cost to the UK business, adversely affecting operating profit in H1 2008 by some
�1.0 million.
The success of the integration and consulting services provided by our Technology Solutions business was again a strong feature of UK
performance. Growth was particularly strong in the datacentre and storage marketplace, especially for the delivery of technology efficiency
projects that help clients reduce operating costs (such as power), improve environmental efficiency and reduce the time to deploy new
business applications. As a result, professional services revenues increased by 19.4%. This also helped drive product volumes, as we were
increasingly successful in attaching technology supply to these projects.
At the desktop we were successful in winning business with a number of organisations looking to standardise and unify their messaging
and collaboration systems. The cost certainty and benefits of our standardised approach to large scale migration programmes, developed
through our Shared Services Factory, were important factors in our recent win at the supermarket chain Morrisons. In addition, as Microsoft
Office 2007 and Vista begin to build momentum among corporate clients, a major pharmaceutical customer chose us to implement one of the
first significant deployments of Microsoft's Vista in the UK.
UK performance also benefited from the continuing success of our software business, which helps customers reduce cost and complexity
through better licence management. Software revenues increased 34.8% and Computacenter continued to grow its share of the Microsoft
licensing market, with our UK market share increasing from 8% to 11% in the twelve month period to June 2008. Significant software wins
include Cadbury plc, for which we are providing Microsoft licensing services to help the company reduce costs following the recent demerger
of its US drinks arm. For the future, we are making progress in developing a lighter touch sales model for our software business, which we
believe will enable us to target smaller businesses more effectively.
A key objective of Computacenter is to extend our presence in those sectors that represent the greatest opportunities for market share
growth. To that end, we continued to build momentum in the mid-market business sector, achieving 12.0% year on year revenue growth. Whilst
the trend is encouraging, this result falls below our plan for this business, which has yet to fully justify our investment.
We saw growing interest in our outsourcing offerings. This was the result of an increasing number of organisations looking to gain
cost-efficiencies from their infrastructure through partial, rather than whole IT department, outsourcing. In order to lower costs, remove
internal duplication and streamline our offerings we integrated the core operational activities of the Managed Services and Digica business
units under a single management structure. This also enables the combined business to offer a stronger, broader set of managed services,
covering the management of business critical applications and complete IT infrastructures.
A significant number of new outsourcing contracts were signed in H1, although these contracts are not expected to be fully
revenue-generating until the second half of the year.
Wins include the provision of a managed service, including desktop and datacentre support, to 3,000 users at Bentley Motors Limited and
the renewal of our existing managed service agreement with Agility, which now includes global desktop support across the UK, Ireland and
North America from our offshore facility in Cape Town. Similarly, we have extended our existing managed service with BAA, signing a
five-year deal which provides a complete package of end-user services to 13,500 staff across 19 UK sites.
We also had success with support services such as maintenance, installations and disaster recovery. Our renewals in these areas remain
high and we secured some important new contract revenue, with particular success in the mid-market. We saw significant contract extensions
with Savvis, Speedy Hire and a substantial multi-year renewal with a major North American investment bank. We also secured a two-year
contract with Hampshire Police, comprising product supply and refresh, together with support and maintenance of the entire IT estate and
end-of-life disposals.
Key product wins include a desktop and laptop refresh for a leading food producer, where we were able to deliver substantial savings to
the organisation through our vendor relationships and approach to commercial management. A desire to deliver a more cost-effective service
to users and, ultimately, local tax payers, was also a key criterion in Telford and Wrekin Council's decision to contract us for the
management of its entire supply and logistics process, including asseting, configuration and disposals.
Our remarketing and recycling arm, RDC, continued to perform well, recording 27.8% revenue growth as customers increasingly sought to
address their concerns over environmental disposal, recycling and data security for their end-of-life equipment.
Our UK trade distribution arm, CCD, continues to suffer from a challenging and highly price-competitive market and saw revenue reduce
11.7%.
Germany
After achieving 8.2% full-year sales growth in 2007, revenue for the first six months of 2008 increased by 11.5% to �379.8 million (H1
2007: �340.7 million). However this represents a 3.0% decline in local currency, attributable in part to the non-renewal of a large
low-margin PC fulfilment contract. An increasingly competitive market impacted the products business in particular, which declined 7.7% in
local currency. However this was partly offset by 6.1% sales growth in services, accelerating the change of business mix over the past few
years towards higher-margin offerings.
Nevertheless the positive trend in profit performance continued, with adjusted* operating profits improving 5.0% in local currency,
which translates to an increase of 20.8% to �4.1 million.
As in the UK, the continued services growth came largely from our datacentre and networking solutions business, which is benefiting from
our ongoing investment in managed services and technology solutions. At the same time, our enhanced reputation in the outsourcing market is
delivering a robust pipeline of managed service opportunities for this year and next, a number of which have closed positively since the end
of the period.
Service margins again improved significantly as we continued to standardise service delivery and enhance our outsourcing capability. We
expect this trend to continue for the rest of 2008.
The product volume decline in H1 2008 was largely driven by a fall in expenditure on 'Wintel' servers by a significant, but small,
number of our larger accounts. However large enterprise server and storage sales remained strong, as did sales of software.
Despite the slowdown in product volumes, overall product margin percentage levels were unchanged on the previous year, due to a
continuing move towards higher-end, higher margin technology.
Significant wins in the period include a managed desktop services contract with SAP, covering 30,000 users across 31 sites and including
the transfer of 28 employees to Computacenter. We also secured a network operations contract for Daimler Financial Services Germany,
including technology supply and service provision, and a further two-year desktop services contract with the State Capital of Dusseldorf's
local government, covering 12,500 IT seats across the region's administrative offices and schools.
France
We continued to see a steady improvement in the performance of our French business. Operating loss reduced by 8.6% to �1.9 million (H1
2007: loss of �2.1 million) after a better second quarter helped compensate for a slow start to the year. A product market that remains
highly challenging contributed to a revenue decline of 5.3% in local currency, although this figure hides an increase in maintenance and
managed services revenues of 26.6%.
However, due to beneficial currency movements, reported revenue increased 8.8% to �147.2 million (H1 2007: �135.3 million).
As with 2007, the margin improvement was from across the business. Initiatives such as our more commercially selective approach to the
provisioning of hardware, a new focus on regional business, and more effective sales incentives helped achieve further growth in product
margins, while a similar selective approach to services and our continuing efforts towards improving customer satisfaction achieved the same
result in services. The continuing success of our maintenance services also made a significant improvement to our revenue and profit
performance.
The outlook is encouraging due to a number of significant wins. These include managed services and technology solutions contracts with
EDF, involving the roll-out of a Windows Vista environment to 75,000 users. We also won the supply of 28,000 PCs and peripherals to the
Ministre De L'Economie et des Finances and a two-year supply chain services contract with one of France's leading banks, including server
supply, integration and installation. For a company in the retail sector we have been contracted to replace a Windows server infrastructure
across 116 stores, including a virtualisation solution. It is important to note that future performance will be contingent to some extent on
our success in securing the renewal of our contract with the French Army, our largest French customer, which expires at the end of Q1 2009.
In addition, H1 2008 saw us renew supply contracts with France T�com and Brico Dpt and we extended the scope of our managed service with
Sanofi Pasteur in Lyon.
We continue to invest for sales growth while carefully managing costs. We believe that this approach, together with our focus on new
opportunities arising from a sustained new business generation programme and increased sales investment, leaves us well placed to continue
the positive trend in business performance through the rest of this year.
Benelux
Our Belgium and Netherlands business showed a small profit of �69,000 (H1 2007: loss of �16,000) on the back of broadly unchanged
revenues. Key wins include a procurement contract at UCB, an IP Telephony project at Truvo Corporate and an Enterprise Storage solution
implementation at Spadel.
Our small Luxembourg operation showed a slightly increased loss of �137,000 (H1 2007: �95,000), despite improved revenues of �2.1
million (H1 2007: �1.5 million). Key wins include a unified IP Communications project at Luxpet, and a System Monitoring project at Namsa.
Group risk statement
The principal risks to our business for the next six months remain as set out on page 20 of our 2007 Report and Accounts. The Group is
addressing these principal strategic risks and, more specifically, mitigating the risks of potential further economic slowdown and further
product price erosion. It does this through a combination of helping clients remove cost and risk from their IT expenditure, a continuing
focus on those sectors that offer the greatest opportunities for market share growth, and strengthened internal cost control. In addition,
we are addressing the market trend towards shorter term engagements and quantified cost savings by enhancing our ability to deliver higher
margin, higher value service offerings to a widening customer base. We continue to address the risk of deteriorating vendor terms through
our ongoing focus on expanding our vendor independent product portfolio.
* Adjusted operating profit is stated after charging costs on customer-specific financing.
Consolidated income statement
For the six months ended 30
June 2008
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Revenue 1,250,260 1,160,333 2,379,141
Cost of sales (1,080,722) (1,006,183) (2,053,333)
Gross profit 169,538 154,150 325,808
Distribution costs (10,578) (9,267) (18,344)
Administrative expenses (146,258) (131,819) (263,750)
Operating profit:
Before amortisation of 12,702 13,064 43,714
acquired intangibles
Amortisation of acquired (268) (240) (613)
intangibles
Operating profit 12,434 12,824 43,101
Finance revenue 1,502 2,157 3,910
Finance costs (2,946) (2,166) (4,952)
Profit before tax:
Before amortisation of 11,258 13,055 42,672
acquired intangibles
Amortisation of acquired (268) (240) (613)
intangibles
Profit before tax 10,990 12,815 42,059
Income tax expense (3,068) (5,319) (13,161)
Profit for the period 7,922 7,496 28,898
Attributable to:
Equity holders of the parent 7,922 7,496 28,888
Minority interests - - 10
7,922 7,496 28,898
Earnings per share
- basic for profit for the 5.3p 4.8p 18.5p
period
- diluted for profit for the 5.2p 4.7p 18.2p
period
Consolidated balance sheet
As at 30 June 2008
Unaudited six months Unaudited six months Year ended 31 Dec 2007
ended 30 June 2008 ended 30 June 2007
�'000 �'000 �'000
Non-current assets
Property, plant and equipment 114,407 102,116 116,444
Intangible assets 46,156 44,762 45,185
Deferred income tax asset 8,577 8,238 8,190
169,140 155,116 169,819
Current assets
Inventories 94,665 92,011 110,535
Trade and other receivables 477,082 410,222 454,155
Prepayments 51,648 41,369 27,936
Accrued income 44,028 24,764 33,445
Forward currency contracts - 167 -
Cash and short-term deposits 37,113 47,352 29,211
704,536 615,885 655,282
Total assets 873,676 771,001 825,101
Current liabilities
Trade and other payables 350,867 306,919 336,971
Deferred income 92,713 71,428 74,686
Financial liabilities 87,355 81,189 74,363
Forward currency contracts 59 - 369
Income tax payable 5,521 7,278 7,899
Provisions 2,133 2,166 2,180
538,648 468,980 496,468
Non-current liabilities
Financial liabilities 45,699 20,511 34,652
Provisions 12,143 11,653 12,225
Other non-current liabilities 1,355 731 1,685
Deferred income tax 1,818 2,486 1,875
liabilities
61,015 35,381 50,437
Total liabilities 599,663 504,361 546,905
Net assets 274,013 266,640 278,196
Capital and reserves
Issued capital 9,181 9,585 9,504
Share premium 2,890 2,776 2,890
Capital redemption reserve 74,950 74,542 74,627
Own shares held (11,273) (2,503) (11,380)
Foreign currency translation 5,393 (2,381) 1,507
reserve
Retained earnings 192,859 184,594 201,035
Shareholders' equity 274,000 266,613 278,183
Minority interest 13 27 13
Total equity 274,013 266,640 278,196
Approved by the Board on 27 August 2008
MJ Norris, Chief Executive FA Conophy, Finance Director
Consolidated statement of changes in equity
Attributable to equity holders of the parent
Issued capital Share premium Capital redemption Own shares held Foreign currency Retained
earnings Total Minority interest Total equity
reserve translation reserve
�'000 �'000 �'000 �'000 �'000
�'000 �'000 �'000 �'000
At 1 January 2007 9,571 2,247 74,542 (2,503) (2,455)
183,700 265,102 27 265,129
Exchange differences on - - - - 74
- 74 - 74
retranslation of foreign
operations
Net income recognised directly - - - - 74
- 74 - 74
in equity
Profit for the period - - - - -
7,496 7,496 - 7,496
Total recognised income for - - - - 74
7,496 7,570 - 7,570
the period
Cost of share-based payment - - - - -
1,269 1,269 - 1,269
Exercise of options 14 529 - - -
- 543 - 543
Equity dividends - - - - -
(7,871) (7,871) - (7,871)
14 529 - 74
894 1,511 - 1,511
-
At 30 June 2007 9,585 2,776 74,542 (2,503) (2,381)
184,594 266,613 27 266,640
Exchange differences on - - - - 3,888
- 3,888 - 3,888
retranslation of foreign
operations
Net income recognised directly - - - - 3,888
- 3,888 - 3,888
in equity
Profit for the period - - - - -
21,392 21,392 10 21,402
Total recognised income for - - - - 3,888
21,392 25,280 10 25,290
the period
Cost of share-based payment - - - - -
1,390 1,390 - 1,390
Exercise of options 4 114 - 49 -
- 167 - 167
Purchase of own shares - - - (11,332) -
- (11,332) - (11,332)
Cancellation of own shares (85) - 85 2,406 -
(2,406) - - -
Equity dividends - - - - -
(3,935) (3,935) - (3,935)
Acquisition of minority - - - - -
- - (24) (24)
interests
(81) 114 85 (8,877) 3,888
16,441 11,570 (14) 11,556
At 1 January 2008 9,504 2,890 74,627 (11,380) 1,507
201,035 278,183 13 278,196
Exchange differences on - - - - 3,886
- 3,886 - 3,886
retranslation of foreign
operations
Net income recognised directly - - - - 3,886
- 3,886 - 3,886
in equity
Profit for the period - - - - -
7,922 7,922 - 7,922
Total recognised income for - - - - 3,886
7,922 11,808 - 11,808
the period
Cost of share-based payment - - - - -
1,573 1,573 - 1,573
Purchase of own shares - - - (9,501) -
- (9,501) - (9,501)
Cancellation of own shares (323) - 323 9,608 -
(9,608) - - -
Equity dividends - - - - -
(8,063) (8,063) - (8,063)
(323) - 323 107 3,886
(8,176) (4,183) - (4,183)
At 30 June 2008 9,181 2,890 74,950 (11,273) 5,393
192,859 274,000 13 274,013
Consolidated cash flow
statement
For the six months ended 30
June 2008
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Operating activities
Operating profit 12,434 12,824 43,101
Adjustments to reconcile Group
operating profit to net cash
inflows from operating
activities
Depreciation 17,514 11,124 27,130
Amortisation 2,145 1,648 3,633
Share-based payment 1,573 1,269 2,659
Loss on disposal of property, 273 60 190
plant and equipment
(Profit)/loss on disposal of (23) 36 -
intangible assets
Decrease/(increase) in 19,954 4,897 (8,724)
inventories
(Increase)/decrease in trade (42,235) 16,234 (1,470)
and other receivables
Increase/(decrease) in trade 16,447 (36,233) (19,976)
and other payables
Currency and other adjustments 2,090 (72) (218)
Cash generated from operations 30,172 11,787 46,325
Income taxes paid (5,527) (6,345) (13,853)
Net cash flow from operating 24,645 5,442 32,472
activities
Investing activities
Interest received 1,872 1,988 3,885
Acquisition of subsidiaries, - (32,596) (32,600)
net of cash acquired
Sale of property, plant and 11 306 336
equipment
Purchases of property, plant (2,471) (6,173) (8,620)
and equipment
Purchases of intangible assets (2,922) (2,934) (5,619)
Acquisition of minority - - (30)
interests
Net cash flow from investing (3,510) (39,409) (42,648)
activities
Financing activities
Interest paid (3,536) (2,069) (5,333)
Dividends paid to equity (8,063) (7,871) (11,806)
shareholders of the parent
Proceeds from issue of shares - 543 661
Purchase of own shares (9,501) - (11,332)
Repayment of capital element (10,281) (2,061) (12,195)
of finance leases
Repayment of loans (7,265) (6,742) (11,103)
New borrowings 7,509 6,203 19,832
Increase/(decrease) in factor 18,818 (8,381) (8,743)
financing
Net cash flows from financing (12,319) (20,378) (40,019)
activities
Increase/(decrease) in cash 8,816 (54,346) (50,195)
and cash equivalents
Effect of exchange rates on (1,477) 1 (1,521)
cash and cash equivalents
Cash and cash equivalents at 7,266 58,982 58,982
beginning of period
Cash and cash equivalents at 14,605 4,637 7,266
end of period
Analysis of net funds
Cash and cash equivalents 14,605 4,637 7,266
Factor financing (44,324) (21,148) (23,453)
Net debt prior to customer-specific (29,719) (16,511) (16,187)
financing
Finance leases (50,004) (30,218) (47,642)
Other loans (16,218) (6,707) (15,975)
Net debt (95,941) (53,436) (79,804)
Notes to the accounts
1 Accounting policies
Basis of preparation
The unaudited interim financial statements have been prepared on the basis of the accounting policies set out in the Group's statutory
accounts for the year ended 31 December 2007, and in accordance with International Accounting Standard 34 'Interim Financial Reporting', as
adopted by the European Union. The taxation charge is calculated by applying the Directors' best estimate of the annual tax rate to the
profit for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts.
2 Segment information
The Group's primary reporting format is geographical segments and its secondary format is business segments.
The Group's geographical segments are 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.
Revenues are usually expected to be 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.
Segmental performance for the period to 30 June 2008 was as follows:
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Revenue by geographic market
UK 708,099 671,154 1,357,305
Germany 379,777 340,680 708,581
France 147,211 135,309 285,698
Benelux 15,173 13,190 27,557
Total 1,250,260 1,160,333 2,379,141
Gross profit by geographic
market
UK 98,924 95,324 197,185
Germany 51,959 43,339 94,202
France 16,961 14,178 31,501
Benelux 1,694 1,309 2,920
Total 169,538 154,150 325,808
Operating profit/(loss) by
geographic market
UK 10,112 11,267 33,957
Germany 4,320 3,779 10,942
France (1,930) (2,111) (1,754)
Benelux (68) (111) (44)
Total 12,434 12,824 43,101
Revenue by business segment
Product 923,193 873,628 1,774,164
Professional services 83,993 71,088 158,488
Support and managed services 243,074 215,617 446,489
Total 1,250,260 1,160,333 2,379,141
3 Finance costs
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Bank loan and overdrafts 1,220 1,537 2,624
Finance charges payable on 1,726 629 2,025
customer-specific financing
Other interest - - 303
2,946 2,166 4,952
4 Income tax
The charge based on the profit
for the period comprises:
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
UK corporation tax 4,087 5,388 13,420
Foreign tax 101 38 113
Adjustments in respect of (651) - (385)
prior periods
Deferred tax (469) (107) 13
3,068 5,319 13,161
5 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 amortisation of acquired intangibles.
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Profit attributable to equity 7,922 7,496 28,888
holders of the parent
Amortisation of acquired 268 240 613
intangibles attributable to
equity holders of the parent
Tax on amortisation of (67) - (184)
acquired intangibles
Profit before amortisation of 8,123 7,736 29,317
acquired intangibles
attributable to equity holders
of the parent
No '000 No '000 No '000
Basic weighted average number 150,850 157,272 156,117
of shares (excluding own
shares held)
Effect of dilution:
Share options 2,769 2,616 2,202
Diluted weighted average 153,619 159,888 158,319
number of shares
Unaudited six months Unaudited six months Year ended 31 Dec 2007
ended 30 June 2008 ended 30 June 2007
pence pence pence
Basic earnings per share 5.3 4.8 18.5
Diluted earnings per share 5.2 4.7 18.2
Adjusted basic earnings per 5.4 4.9 18.8
share
Adjusted diluted earnings per 5.3 4.8 18.5
share
6 Dividends paid and proposed
The proposed final dividend for 2007 of 5.5p per ordinary share was approved at the AGM in May 2008 and was paid on 12 June 2008. An
interim dividend in respect of 2008 of 2.7p per ordinary share, amounting to a total dividend of �3,960,000, was declared by the Directors
at their meeting on 27 August 2008. This interim report does not reflect this dividend payable.
7 Financial liabilities
Factor financing
On 13 May 2008, the Group entered into a �60m Sterling and Euro Receivables Financing Agreement with a bank. Under the terms of the
arrangement certain trade debts are sold to the bank who in turn advances cash payments in relation to these debts. Interest is charged on a
daily basis at a rate of ECB base rate +65 basis points. The facility is committed for a minimum period of three years. At the end of the
period 25% of the facility was drawn down.
8 Adjusted operating profit
Reconciliation of adjusted operating profit
Management measure the Group's operating performance using adjusted operating profit which is stated prior to amortisation of acquired
intangibles and after charging finance costs on customer-specific financing for which the Group receives regular rental income.
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Operating profit 12,434 12,824 43,101
Add back
Amortisation of acquired 268 240 613
intangibles
After charging
Finance costs on (1,726) (629) (2,025)
customer-specific financing
Adjusted operating profit 10,976 12,435 41,689
Adjusted operating profit/(loss) by geographic market
Unaudited six months Unaudited six months Year ended 31 Dec 2007
ended 30 June 2008 ended 30 June 2007
�'000 �'000 �'000
UK 8,874 11,263 33,099
Germany 4,100 3,394 10,388
France (1,930) (2,111) (1,754)
Benelux (68) (111) (44)
Total 10,976 12,435 41,689
9 Adjusted cash flow statement
The adjusted 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 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 are adjusted for as follows:
a. Interest paid on customer-specific financing is reclassified from interest paid
to adjusted operating profit;
b. Assets held under finance leases, which are matched by amounts receivable under
customer operating lease rentals, are netted off against each other. This
impacts the depreciation of leased assets, the repayment of capital element of
finance leases and net working capital; and
c. Assets financed by loans, which are matched by amounts receivable under customer
operating lease rentals, are netted off against each other. This impacts the
movement on loans within financing activities and also net working capital.
Adjusted cash flow statement
For the six months ended 30 June 2008
Unaudited six months Unaudited six months Year ended 31 Dec
ended 30 June 2008 ended 30 June 2007 2007
�'000 �'000 �'000
Adjusted operating profit 10,976 12,435 41,689
Adjustments to reconcile Group
adjusted operating profit to
adjusted operating cashflow
Depreciation and amortisation 8,976 8,589 16,603
Share-based payment 1,573 1,269 2,659
Working capital movements (5,456) (13,759) (20,089)
Currency and other adjustments (1,190) 43 (4,196)
Adjusted operating cashflow 14,879 8,577 36,666
Income taxes paid (5,527) (6,345) (13,853)
Net interest received 62 549 577
Capital expenditure and (5,382) (8,801) (13,933)
investments
Acquisitions and disposals - (32,596) (32,600)
Equity dividends paid (8,063) (7,871) (11,806)
Cash outflow before financing (4,031) (46,487) (34,949)
Financing
Proceeds from issue of shares - 543 661
Purchase of own shares (9,501) - (11,332)
Decrease in net debt pre CSF (13,532) (45,944) (45,620)
in the period
Decrease in net debt pre CSF (13,532) (45,944) (45,620)
Net debt pre CSF at beginning (16,187) 29,433 29,433
of period
Net debt pre CSF at end of (29,719) (16,511) (16,187)
period
10 Publication of non-statutory accounts
The financial information contained in the interim statement does not constitute statutory accounts as defined in section 240 of the
Companies Act 1985. The auditors have issued an unqualified opinion on the Group's statutory financial statements under International
Accounting Standards for the year ended 31 December 2007. 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
IR PUURARUPRGQM
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