TIDMCCC
RNS Number : 1551N
Computacenter PLC
30 August 2011
Computacenter plc
Interim Results for Six Months Ended 30 June 2011
Computacenter plc, the European IT infrastructure services
provider, today announces unaudited results for the six months
ended 30 June 2011.
Financial Highlights:
-- Group Revenue, including acquisitions, of GBP1.37 billion (H1
2010: GBP1.29 billion) an increase of 5.9%
-- Group adjusted(1) profit before tax of GBP26.6 million (H1
2010: GBP21.3 million) an increase of 24.9%
-- Adjusted(1) diluted earnings per share (EPS) of 12.9p (H1
2010: 10.4p) an increase of 24.0%
-- After capital expenditure of GBP20.4 million, free cash flow
of GBP4.9 million
-- Net funds excluding customer-specific financing (CSF) of
GBP104.3 million (H1 2010: GBP95.6 million)
-- Interim dividend of 4.5p (H1 2010: 3.5p) an increase of
28.6%
Statutory Highlights:
-- Group profit before tax of GBP26.2 million (H1 2010: GBP21.0
million) an increase of 24.9%
-- Diluted EPS of 12.7p (H1 2010: 10.3p) an increase of
23.3%
-- Net funds after CSF of GBP80.9 million (H1 2010: GBP57.1
million)
Operational Highlights
-- Strong Product growth in Germany and France and continued
growth in Services, across all geographies, helped drive
improvement in Group profitability, offsetting a weaker Product
performance in the UK
-- Managed Services contract base increased by 5.8% to GBP570.1
million (H1 2010: GBP539.0 million) with a strong pipeline
-- Continued benefits from 'industrialisation' of service
offering
-- Roll out of ERP project on track
-- Multi-year contracts with new customers won across all
geographies
-- Significant investment in Product portfolio and Service
offerings
-- Two acquisitions successfully completed during the period
Mike Norris, Chief Executive of Computacenter plc,
commented:
"While much remains to be done and economic uncertainty
persists, we remain on track to achieve the Board's expectations
for 2011. We are not expecting our German business to grow at the
same rate in the second half of the year, as the comparatives
become materially more challenging. Conversely, but to a lesser
extent, comparatives in our UK business should be somewhat easier
than in the first half. The incremental depreciation charge in 2011
of GBP3.3 million for our new ERP system, is substantially second
half weighted, although a more meaningful contribution from the
acquisitions we have made in the first half of 2011 will help to
offset this. Overall therefore, we are unlikely to see the same
percentage of growth at the Group level, as experienced in the
first half.
Given the Contractual Services wins to date and the strong
pipeline for the second half of the year, 2011 could prove to be
the largest in absolute contract growth ever, resulting in our
highest Contracted Services revenue base to date. This bodes well
for growth in 2012 and beyond, as these new long-term contracts
come on board. Over time our increasing contractual services mix
means Computacenter is less reliant on capital projects, which tend
to be more exposed to economic uncertainty. We believe the
investments we have undertaken and continue to make into our
internal systems and services industrialisation, will substantially
aid the Group's ability to grow profitability in the years
ahead."
(1) Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
Enquiries:
Computacenter 01707 631000
Mike Norris
Tessa Freeman
Tulchan 020 7353 4200
Christian Cowley
James Macey White
Chairman's Statement
The fruits of our very considerable efforts to 'industrialise'
our service offerings and their delivery are becoming more evident,
as is the strength of our geographic diversity. The results for the
first half of 2011 demonstrate that we have improved our
profitability.
Our Product supply performance in Germany more than offset the
weakness in that business in the UK; our French business delivered
healthy growth in both Product and Services and closed the
acquisition of Top Info, giving us greater scale. The Services
contract base grew by nearly 6% on June 2010 and our relentless
focus on cost and expense gave us improved, as well as improving,
margins. Growth in our Services business was modest in the first
half compared to last year's performance, but we are confident of
our ability to grow at a greater rate in the second half of the
year. Despite the acquisitions we have made and with continuing
investment in our future capabilities, we closed the period with a
little more than GBP100 million in net cash excluding
customer-specific financing ('CSF').
We still have a lot of work to do to realise our full potential.
The second half of 2011 will see the implementation of our Group
ERP system in the UK and the benefits of this will begin to be
apparent in 2012. There remain many uncertainties in the business
environment, but our focus on profitability, cash and investing in
our future will continue apace.
I thank our customers for their business and our employees for
their skills and commitment. We face the future with confidence and
determination to improve everything that we do.
Greg Lock
August 2011
Operating review
During the first six months of 2011 Computacenter delivered
Group profitability well ahead of the same period last year,
increasing the adjusted(1) profit before tax by 24.9% to GBP26.6
million (H1 2010: GBP21.3 million), including acquisitions. Of the
acquisitions completed in this period, only Top Info in France had
sufficient time or scale to make a noticeable impact on the Group's
results.
Overall reported revenues, including acquisitions, increased by
5.9% to GBP1.37 billion (H1 2010: GBP1.29 billion) and without
acquisitions, the overall reported revenues were up by 3.1% to
GBP1.33 billion.
Adjusted(1) diluted earnings per share (EPS) for the period grew
by 24.0% to 12.9p (H1 2010: 10.4p). There were no exceptional
charges incurred in the period, as was the case during the same
period last year and we do not anticipate exceptional charges
during the rest of the year. Therefore, on a statutory basis, after
taking amortisation on acquired intangibles into account, profit
before tax increased significantly by 24.9% to GBP26.2 million (H1
2010: GBP21.0 million) and diluted EPS grew by 23.3% to 12.7p (H1
2010: 10.3p).
We are pleased to announce the payment of an increased interim
dividend of 4.5p per share (H1 2010: 3.5p). The interim dividend
will be paid on 14 October 2011 to shareholders on the register as
at 16 September 2011.
We saw Services revenue grow across all our businesses, with
pre-acquisition revenue increasing by 4.7% and post acquisition
revenue increasing by 5.4%, both in constant currency. Product
revenue growth of 2.6%, in constant currency and excluding all
acquisitions in the period, was largely due to a very strong
performance in Germany and strong Product revenue performance in
France. Including acquisitions, overall Group Product revenue grew
by 6.3% in constant currency.
The growth in our Contractual Services base, by 5.8% to GBP570.1
million (H1 2010: GBP539.0 million), in constant currency, has
already helped performance in the first half of 2011 with more
material contribution to come in the second half of the year and
beyond. The current pipeline is very strong with the likelihood of
an increased win rate during the second half of the year - which
has been an historical trend. We would expect these wins to deliver
contribution from around the middle of 2012.
Cash flow generation remained strong and net funds, excluding
customer-specific financing (CSF) increased to GBP104.3 million at
the period end (H1 2010: net funds of GBP95.6 million). This
increase was achieved despite the investment of GBP22.8 million in
two acquisitions, as well as an investment in ICS Solutions Ltd and
GBP10.7 million for the purchase of a freehold property in
Braintree, Essex, which will support the growth of RDC, our IT
recycling subsidiary. Including CSF, net funds were GBP80.9 million
(H1 2010: GBP57.1 million). We view this as a healthy net fund
position; especially considering the Product revenue growth in
Germany and a higher dividend payment during this period.
Capital expenditure of GBP20.4 million was incurred during the
period, including the RDC property purchase. The level of CSF has
reduced from GBP38.5 million, at the end of the first half of 2010,
to the current level of GBP23.5 million. As previously reported,
our cash position was enhanced by GBP30.8 million, due to the
ongoing extended credit terms offered by one of our major vendors,
which is set to continue for most of 2011.
We expect to complete the implementation of our new Group-wide
ERP system in Germany and the UK this year. Costs are estimated at
GBP35 million, the vast majority of which has already been
spent.
As previously reported, an increase in the depreciation charge
will bring some headwind to the anticipated performance during the
second half of the year, as the ERP system is rolled out, but
related efficiency benefits will not be realised until next year
and beyond.
On 21 July 2011, shortly after the close of this period, we
announced that we had acquired an 80% stake in DAMAX AG, based in
Switzerland. We will acquire the rest of DAMAX by the middle of
2015. We believe that DAMAX will strengthen our services capability
to existing Swiss customers, as well as expand our credibility
within this geography, through our ability to offer an 'in-country'
presence.
Outlook
While much remains to be done and economic uncertainty persists,
we remain on track to achieve the Board's expectations for 2011. We
are not expecting our German business to grow at the same rate in
the second half of the year, as the comparatives become materially
more challenging. Conversely, but to a lesser extent, comparatives
in our UK business should be somewhat easier than in the first
half. The incremental depreciation charge in 2011 of GBP3.3 million
for our new ERP system, is substantially second half weighted,
although a more meaningful contribution from the acquisitions we
have made in the first half of 2011 will help to offset this.
Overall therefore, we are unlikely to see the same percentage of
growth at the Group level, as experienced in the first half.
Given the contractual services wins to date and the strong
pipeline for the second half of the year, 2011 could prove to be
the largest in absolute contract growth ever, resulting in our
highest contracted services revenue base to date. This bodes well
for growth in 2012 and beyond, as these new long-term contracts
come on board. Over time our increasing contractual services mix
means Computacenter is less reliant on capital projects, which tend
to be more exposed to economic uncertainty. We believe the
investments we have undertaken and continue to make into our
internal systems and services industrialisation, will substantially
aid the Group's ability to grow profitability in the years
ahead.
United Kingdom
A reduction in overall UK revenue of 16.0% to GBP547.3 million
(H1 2010: GBP651.9 million), was due to a 22.6% decline in Product
revenue performance. This fall was prompted by a shift in the spend
profiles of certain large customers; we also experienced a
particularly buoyant first half last year, making for a more
challenging comparison.
Against the background of a relatively flat IT services market,
our Services revenues still increased by 0.7%, through a
combination of new contract revenue streams and the successful
renewal of certain existing service agreements.
The reduction in Product revenue has, in part, been offset by
the improved profitability of both the Product and Services
businesses. The absence of the larger deals with lower margin,
present in the first half of 2010, led to better Product margin. At
the same time, improved operational efficiency helped to contribute
to an increase in Services margin.
Adjusted(1) operating profit in the UK declined by 7.9%, to
GBP16.7 million (H1 2010: GBP18.1 million). Given the 16.0% decline
in revenue, the decrease in profitability points to stability and
increased resilience across the UK business as a whole.
SG&A expenses in the UK reduced marginally by 0.6%, compared
with the same period last year. This was achieved through continued
robust cost control, whilst investing into increased pre-sales
activity in support of the Managed Services pipeline.
We are however, continuing to invest in the UK business with a
specific focus on further developing our offerings, enhancing
pre-sales activity and improving Services profitability through the
implementation of best practice and efficiency measures.
This investment, combined with a renewed sales focus on a
well-defined target market and our portfolio of offerings, has
already helped to improve not only the Services margin, but also
increase the Services contract base by a further 5.7% on the first
half of 2010. The significant strength of the current managed
services pipeline adds to our optimism for the rest of the
year.
We believe that the trend for selective outsourcing of IT
infrastructure support continues as customers move away from
large-scale outsources or retaining the work in-house. This plays
to Computacenter's strengths, as our offerings are specifically
designed to satisfy this customer demand.
At the beginning of the period, we secured a five-year workplace
maintenance and helpdesk contract at a global investment bank
headquartered in Europe with staff in the UK, USA, Switzerland and
a variety of their operations in Asia and the Far East. This
demonstrates that there is increasing demand for our core services
on a global basis. This contract started encouragingly in the
second quarter of this year and should continue the positive trend
in the second half of the year.
Computacenter was also selected by Yorkshire Building Society to
provide infrastructure managed services under a five-year contract,
seeking to reduce cost and boost the customer's agility, in order
to support its own future growth aspirations. This contract further
strengthens our market leading position in the financial
marketplace, in addition to our already strong position within the
high street retail sector.
Customers' prime objectives when outsourcing to Computacenter
remain cost reduction and simplification of their IT
infrastructures. A good example being BSkyB, which has selected
Computacenter UK to deliver a five-year, multi-million pound
desktop lifecycle management contract.
This contract will drive operational efficiencies for BSkyB by
leveraging our industrialised best practices to cut costs and
complexity. The service encompasses product supply;
pre-configuration for standard builds and applications; asseting;
installation; support; disposal and application packaging.
Customers are increasingly undertaking technology change
projects in order to improve user agility and productivity, while
reducing support complexity and costs. Although adoption of
Microsoft Windows 7 into our large corporate and Government
customers is in its infancy, Computacenter is to date, responsible
for over two-thirds of all the current UK deployments.
Our industrialised deployment Service for Windows 7 provides
customers with an optimised workplace environment and attractive
cost-benefit opportunities. During the period, this service was
successfully utilised by a number of new, but also existing
customers such as Severn Trent Water. We helped Severn Trent Water
to deploy a Windows 7 business desktop to over 2,000 end users
through applying repeatable industrialised best practice. The new
solution also includes a virtualised desktop and application
infrastructure that will enable Severn Trent to support home
working and desk sharing, thereby bringing about, a more flexible
and mobile workforce. We expect such flexible workplace projects to
continue and extend to include Communications and Collaboration
Services, hence us recently securing a minority stake in a focused
expertise partner, ICS Solutions Ltd.
The market is moving closer to understanding more about the
scope and the implications of emerging technologies and trends such
as cloud computing and consumerisation of IT. We are supporting our
customers in their quest towards becoming 'cloud ready' and while
we have not yet seen a significant uptake of pure cloud
offerings-other than rebranded virtualisation solutions - there has
been such a marked interest, we are confident that cloud-based
solutions will make a greater contribution in the near future. In
this regard, we believe that our C(3) (Computacenter Cloud
Computing) solution suite of products addresses the needs of our
target market, offering a pragmatic approach.
RDC, our remarketing and recycling subsidiary, has continued its
strong performance with revenue materially up by 33.5% on the first
half of last year. To support this growth we have recently acquired
a property in Braintree, Essex, which will allow for the
consolidation of RDC's storage and logistics operation, thereby
improving efficiency.
Germany
Computacenter Germany experienced a very strong first half in
2011, with overall adjusted(1) operating profit, in local currency
and now including the performance of Luxembourg, up by 144.5%. In
sterling, this translates to a 144.0% increase in profitability to
GBP8.4 million (H1 2010: GBP3.4 million).
For 2010, we reported a slow start to the year, primarily due to
Services revenue decline, but also lower Services margins. The
measures taken since then halted the revenue decline and stabilised
the earnings margin. Additionally, some initial signs of recovery
in the German market - signalled initially by the increased demand
for consulting services - materialised. This not only offset the Q1
2010 situation, but also bolstered the growth momentum throughout
the whole of the year and into 2011.
Investments made into enhancing our skills and sales efficiency,
as well as a greater focus on vendor and customer relationships,
further strengthened our position in this improved market, where
our workplace and network solutions have been particularly well
received.
The weaker comparator is relevant only to the first quarter and
only to Services revenue. Services revenue growth was 9.9% in local
currency, over the whole of the first half of 2011. The Product
revenue growth of 36.8% in local currency, within this period, is
not flattered by the comparison and neither is the growth in the
consultancy and managed services businesses.
The Services contract base has grown by 6.1% in local currency,
increasing the base to EUR294.0 million (H1 2010: EUR277.0
million). Margins will benefit from these Services wins in 2012,
but this strong new business-take-on activity has had a minor
impact on the services margin rate during the first half of this
year.
We have seen that German companies are beginning to emerge from
a challenging economy, with an increased appetite to plan for their
growth by making investments in new technology offerings such as
the cloud-based services. The shift in IT investment in Germany
relates to both the Product and Services businesses, as well as
both the private and public sectors. There is increasing demand for
Windows 7 deployments, similar to the rest of the Group; these
deployments are often the precursor to an infrastructure upgrade
investment.
Through our Frame contract, we have secured an enterprise and
storage equipment contract, with reasonably clear and encouraging
revenue predictability, with Zentrum fur Informationsverarbeitung
und Informationstechnik. This public sector customer manages all
the IT infrastructure and public tenders on behalf of the Federal
Ministry of Finance and to an increasing extent, for the entire
German Federal Administration.
Not only are we detecting more appetite for outsourcing, we are
also noting a shift in customers' motivation for adopting an
outsourced model. In addition to the cost saving benefits,
customers are increasingly identifying the strategic value that
their internal IT resource can deliver, if freed from managing
their own infrastructure. Computacenter Germany has recently been
appointed long term, to manage the overall IT infrastructure and
operations of Koelnmesse, the tradefair and market events
organisation, commencing from 1 January 2012.
Our existing local customers are also engaging with us to expand
the services we currently deliver to their German operations to
international sites. An example of this increasing trend is a
five-year managed services contract with the global chemical
company WACKER CHEMIE AG. We will provide international service
desk support, onsite managed desktop services and deliver and
install hardware to all locations of WACKER CHEMIE AG,
worldwide.
We interpret these wins as growing out of the trust and
confidence we have established with our larger customers over time.
By proving the consistency of our delivery, they now wish to mirror
this across their international locations.
Although it is too early for the recent acquisition of HSD
Consult GmbH in May 2011 to have delivered any noteworthy
contribution to our Services or Product growth, demand among our
customers for secure integrated iPad and iPhone solutions has
surpassed initial anticipation.
The integration of this acquisition is progressing according to
plan and will provide us with the expertise to develop a
standardised and integrated secure mobility offering, which we hope
to launch in the near future.
While SG&A expenses in the German business, prior to the
amortisation on ERP, have increased by 10.7% during the first half
of 2011, compared to the same period last year, an element of this
increase is due to the reallocation of cost between indirect and
SG&A, related to Group standardisation of ERP expenses.
Certain investments aimed at supporting managed services growth,
made towards the end of last year, have only now shown the full
SG&A impact. The slow start to 2010 prompted expenditure plan
changes, whereas this was not the case during this period.
The improved sales resulted in higher commission payments, which
also contributed to the SG&A increase during this period.
Although less quantifiable, resource availability in the first half
of 2011 was at a significant premium, as we successfully migrated
onto the SAP platform during the first quarter of this year.
France
The adjusted(1) operating loss at Computacenter France,
excluding Top Info, reduced to EUR0.4 million (H1 2010: Loss EUR1.4
million). Together with the single quarter's contribution by Top
Info, the French business, for the first time in many years, is
reporting an adjusted(1) operating profit at the half year stage,
of EUR0.2 million.
Again, both Product and Services revenue, excluding Top Info,
saw strong growth of 16.8% and 2.4% respectively. In line with
expectation, Top Info added EUR34.7 million of Product revenue
during the second quarter of the year, resulting in an increase of
the total Product revenue within the period by 39.4% to EUR214.5
million (H1 2010: EUR153.9 million).
Excluding Top Info, the significant Product growth was once
again mirrored by strong improvement in professional services
revenue of 17.6%, which more than off-set a contractual services
decline of 5.0%.
In addition to expanding on our supply chain offerings, we have
also enhanced our operational efficiency. We believe there is
increased market confidence in our supply chain offerings, which is
filtering through to our services offerings. We have secured an
exclusive four-year contract for the supply of storage
infrastructure hardware and software, through the French Government
purchasing agency, SAE, into seven Ministries. The contract scope
also includes consulting, project management and maintenance
solutions.
Over the last 18 months, much work has been done to reorganise
the sales force, create specific customer sector focus and alter
the incentive mechanisms. It is evident that these initiatives are
already delivering returns. In particular, we have gained further
traction within the retail banking sector through a product supply,
configuration, installation and project management contract into
150 locations of a new customer, Credit Agricole Franche-Comte.
The refocused sales activity also contributed to the 2.1%
increase in our Services contract base, which includes a new win
for the deployment of our maintenance and service desk support
offerings to DCNS, the French naval shipbuilder, for its installed
printers and 15,000 workstations.
We are even more encouraged that this revived sales activity has
resulted in a solid pipeline of business, which we believe will
start to bear fruit within the second half of the year and continue
through 2012 and beyond.
To ensure a high-quality delivery for this enhanced pipeline, a
new leadership team has recently been appointed to optimise the
efficiency of business-take-on processes and develop an expanded,
but leaner services offering that can be deployed on an
international scale.
Compared to the same period last year, excluding Top Info,
SG&A expenses increased by 6.4%. This is primarily due to the
investments into our pre-sales and sales efficiency work. While a
large portion of these investments were made towards the end of
2010, the full impact on the SG&A only became apparent during
this period. The SG&A increase also includes the one-off
acquisition cost for Top Info and higher commission payments due to
enhanced performance.
Following the Top Info acquisition the coordination of the two
sales forces and the various vendors is progressing well, with
clear signs of a strong synergy already emerging. This is evidenced
by a recent win within the health sector, where the combined
capability significantly enhanced our offering. Top Info has
completed the merger of all its various subsidiaries into a single
entity, which will not only deliver tax and cost benefits during
the second half of this year, but also aid in the total integration
into Computacenter France.
Belgium and the Netherlands
Our Belgium and Netherlands operations recorded an adjusted(1)
operating profit of GBP359,000 (H1 2010: GBP280,000). Overall
revenue increased by 15.5%, with a significant increase in Product
sales by more than 20%. A main driver for the strong profitability
compared with the revenue, was the growth in our managed services
business, which increased our contract base by 14.2%.
This strong performance follows investment into enhancing our
pre-sales resource; we have also expanded our sales force by a
third. Our offerings and buying power best suit a pan-European
organisation with staff numbers between 500 and 15,000, as
evidenced by wins during this period for product supply and
services to a global manufacturer and distributor of skin-care and
cosmetic products and enterprise product supply to the leading GPS
device provider, Tom Tom.
In Services, we are encouraged by a recent win for the
deployment of a storage infrastructure at the Flemish broadcaster,
VRT, the benefits of which will mainly be apparent from the second
half of this year.
Risk
The principal risks to our business and our approach to
mitigating those risks remain as set out on pages 22 and 23 of our
2010 Report and Accounts.
Stability in the global economy remains uncertain and even
presents wider challenges, such as the destabilisation of entire
currencies. Our balance sheet strength and ability to control costs
provides some comfort, should we need to weather any storm. We are
also witnessing the benefit of operating within various geographies
and we continue to feel confident that our offerings, designed
specifically to help customers remove cost and risk from their IT
expenditure, continue to be Computacenter's primary line of attack
against this threat.
Our strategies to mitigate operational risks to the
implementation of complex end-to-end service contracts are proving
effective, as evidenced by improved profitability within our
Services Business. However, these mitigation strategies and
services processes remain crucial to our business success and need
to be deployed without fail, especially as we enter a period of
noteworthy pipeline strength.
As we prepare to migrate both the UK's and Germany's systems
onto the Group ERP platform, over the remaining months of 2011, we
derive a degree of confidence from the extensive testing programme
being undertaken. However, we are well aware of the scale and
significance of the change. Accordingly, our ERP training programme
has been rolled-out widely and is aimed at minimising disruption
through familiarising everyone, at an early stage, with those parts
of the system that they will interface with. The risk of not
realising the full return on the ERP investment is, as the post
migration phase nears, receiving more focused attention and
incentivisation and targets are now formally within all the
relevant pay plans.
Mike Norris
26 August 2011
(1) Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
Responsibility statement
The Directors confirm that to the best of their knowledge:
-- This financial information has been prepared in accordance
with IAS 34;
-- This interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);and
-- This interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein.)
MJ Norris FA Conophy
Chief Executive Finance Director
26 August 2011 26 August 2011
On behalf of the Board
Independent review report to Computacenter plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2011 which comprises of the Consolidated
income statement, Consolidated statement of comprehensive income,
Consolidated balance sheet, Consolidated statement of changes in
equity, Consolidated cash flow statements and related notes 1 to
13. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2011 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
26 August 2011
Consolidated income statement
For the six months ended 30 June
2011
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
Note GBP'000 GBP'000 GBP'000
Revenue 4 1,365,253 1,288,780 2,676,495
Cost of sales (1,176,010) (1,115,022) (2,310,682)
------------ -------------- --------------
Gross profit 189,243 173,758 365,813
Distribution costs (10,277) (9,384) (18,978)
Administrative expenses (152,541) (142,434) (280,288)
Share of associates' losses (48) - -
Operating profit:
Before amortisation of acquired
intangibles and exceptional
items 26,377 21,940 66,547
Amortisation of acquired
intangibles (368) (299) (655)
---------------------------------- ----- ------------ -------------- --------------
Operating profit 26,009 21,641 65,892
Finance revenue 1,353 1,249 2,329
Finance costs (1,166) (1,914) (2,823)
Profit before tax:
Before amortisation of acquired
intangibles and exceptional
items 26,564 21,275 66,053
Amortisation of acquired
intangibles (368) (299) (655)
---------------------------------- ----- ------------ -------------- --------------
Profit before tax 26,196 20,976 65,398
Income tax expense 6 (6,350) (5,208) (15,078)
Profit for the period 19,846 15,768 50,320
============ ============== ==============
Attributable to:
Equity holders of the parent 19,845 15,768 50,321
Non-controlling interest 1 - (1)
Profit for the period 19,846 15,768 50,320
============ ============== ==============
Earnings per share
- basic for profit for the period 7 13.3p 10.7p 34.1p
- diluted for profit for the 7 12.7p 10.3p 32.6p
period
Consolidated statement of comprehensive income
For the six months ended 30 June 2011
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Profit for the period 19,846 15,768 50,320
Exchange differences on translation
of foreign operations 7,951 (8,149) (4,076)
Total comprehensive income for the
period 27,797 7,619 46,244
========== ========== ==========
Attributable to:
Equity holders of the parent 27,796 7,626 46,250
Non-controlling interest 1 (7) (6)
27,797 7,619 46,244
========== ========== ==========
Consolidated balance sheet
As at 30 June 2011
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 97,216 96,241 88,882
Intangible assets 100,675 77,336 78,531
Investment in associates 9 501 52 47
Deferred income tax asset 17,325 17,647 15,577
215,717 191,276 183,037
---------- ---------- ----------
Current assets
Inventories 82,807 69,062 81,569
Trade and other receivables 465,116 410,479 471,133
Prepayments 50,313 52,247 44,219
Accrued income 61,557 51,631 39,971
Forward currency contracts - 588 562
Current asset investment 11 25,000 - -
Cash and short-term deposits 120,056 129,571 159,269
---------- ----------
804,849 713,578 796,723
---------- ---------- ----------
Total assets 1,020,566 904,854 979,760
========== ========== ==========
Current liabilities
Trade and other payables 455,187 384,637 440,790
Deferred income 97,096 93,769 100,840
Financial liabilities 54,366 55,971 37,936
Forward currency contracts 48 - -
Income tax payable 6,713 5,768 5,941
Provisions 2,801 2,202 2,644
616,211 542,347 588,151
---------- ---------- ----------
Non-current liabilities
Financial liabilities 9,825 16,503 10,320
Provisions 10,340 10,338 10,749
Other non-current liabilities 31 47 -
Deferred income tax liabilities 2,604 1,556 978
22,800 28,444 22,047
---------- ---------- ----------
Total liabilities 639,011 570,791 610,198
Net assets 381,555 334,063 369,562
========== ========== ==========
Capital and reserves
Issued capital 9,233 9,231 9,233
Share premium 3,717 3,168 3,697
Capital redemption reserve 74,957 74,950 74,957
Own shares held (13,217) (10,377) (10,146)
Foreign currency translation
reserve 20,088 8,066 12,137
Retained earnings 286,766 249,016 279,674
---------- ---------- ----------
Shareholders' equity 381,544 334,054 369,552
Non-controlling interest 11 9 10
Total equity 381,555 334,063 369,562
========== ========== ==========
Approved by the Board on 26 August 2011
MJ Norris, Chief Executive FA Conophy, Finance Director
Consolidated statement of changes in equity
Attributable to equity holders of the parent
--------------------------------------------------------------------------------
Foreign
Capital Own currency
Issued Share redemption shares translation Retained Non-controlling Total
capital premium reserve held reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2010 9,186 2,929 74,950 (9,657) 16,208 244,940 338,556 16 338,572
Profit for the
period - - - - - 15,768 15,768 - 15,768
Other
comprehensive
income - - - - (8,142) - (8,142) (7) (8,149)
-------- -------- ----------- --------- ------------ --------- ---------- ---------------- ---------
Total
comprehensive
income - - - - (8,142) 15,768 7,626 (7) 7,619
Cost of
share-based
payments - - - - - 1,320 1,320 - 1,320
Deferred
taxation on
share based
payments - - - - - 131 131 - 131
Exercise of
options 45 239 - 1,332 - (1,332) 284 - 284
Purchase of own
shares - - - (2,052) - - (2,052) - (2,052)
Equity
dividends - - - - - (11,811) (11,811) - (11,811)
-------- -------- ----------- --------- ------------ --------- ---------- ---------------- ---------
At 30 June 2010 9,231 3,168 74,950 (10,377) 8,066 249,016 334,054 9 334,063
Profit for the
period - - - - - 34,553 34,553 (1) 34,552
Other
comprehensive
income - - - - 4,071 - 4,071 2 4,073
-------- -------- ----------- --------- ------------ --------- ---------- ---------------- ---------
Total
comprehensive
income - - - - 4,071 34,553 38,624 1 38,625
Cost of
share-based
payments - - - - - 1,300 1,300 - 1,300
Deferred
taxation on
share based
payments - - - - - 658 658 - 658
Exercise of
options 1 25 - 231 - (231) 26 - 26
Issue of share
capital 8 504 - - - - 512 - 512
Purchase of own
shares - - - (449) - - (449) - (449)
Cancellation of
own shares (7) - 7 449 - (449) - - -
Equity
dividends - - - - - (5,173) (5,173) - (5,173)
-------- -------- ----------- --------- ------------ --------- ---------- ---------------- ---------
At 31 December
2010 9,233 3,697 74,957 (10,146) 12,137 279,674 369,552 10 369,562
Profit for the
period - - - - - 19,845 19,845 1 19,846
Other
comprehensive
income - - - - 7,951 - 7,951 - 7,951
-------- -------- ----------- --------- ------------ --------- ---------- ---------------- ---------
Total
comprehensive
income - - - - 7,951 19,845 27,796 1 27,797
Cost of
share-based
payment - - - - - 1,301 1,301 - 1,301
Deferred
taxation on
share based
payments - - - - - 941 941 - 941
Exercise of
options - 20 - 535 - (535) 20 - 20
Purchase of own
shares - - - (3,606) - - (3,606) - (3,606)
Equity
dividends - - - - - (14,460) (14,460) - (14,460)
-------- -------- ----------- --------- ------------ --------- ---------------- ---------
At 30 June 2011 9,233 3,717 74,957 (13,217) 20,088 286,766 381,544 11 381,555
======== ======== =========== ========= ============ ========= ========== ================ =========
Consolidated cash flow statement
For the six months ended 30 June 2011
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Operating activities
Profit before tax 26,196 20,976 65,398
Net finance (income)/costs (187) 665 494
Depreciation 13,664 16,066 31,722
Amortisation 3,303 2,433 6,550
Share-based payments 1,301 1,320 2,620
Loss on disposal of property, plant
and equipment 15 18 815
Profit on disposal of property, plant
and equipment (19) - -
Decrease/(increase) in inventories 5,931 (6,171) (16,400)
Decrease/(increase) in trade and other
receivables 19,816 24,358 (3,660)
(Decrease)/increase in trade and other
payables (26,886) (3,529) 46,435
Other adjustments - (23) (49)
---------- ---------- ----------
Cash generated from operations 43,134 56,113 133,925
Income taxes paid (5,809) (4,568) (11,281)
Net cash flow from operating activities 37,325 51,545 122,644
---------- ---------- ----------
Investing activities
Interest received 1,307 1,122 2,284
Increase in current asset investment (25,000) - -
Acquisition of subsidiaries, net of
cash acquired (22,265) - -
Acquisition of associate (500) - -
Sale of property, plant and equipment 29 50 372
Purchases of property, plant and
equipment (14,545) (7,983) (12,856)
Purchases of intangible assets (5,844) (8,137) (12,774)
Net cash flow from investing activities (66,818) (14,948) (22,974)
---------- ---------- ----------
Financing activities
Interest paid (1,543) (1,914) (3,200)
Dividends paid to equity shareholders
of the parent (14,460) (11,811) (16,984)
Proceeds from issue of shares 20 284 822
Purchase of own shares (3,606) (2,052) (2,501)
Repayment of capital element of finance
leases (10,003) (10,339) (20,641)
Repayment of loans (1,964) (8,781) (12,622)
New borrowings - 6,019 5,957
(Decrease)/increase in factor financing (16,446) 17,142 1,568
Net cash flow from financing activities (48,002) (11,452) (47,601)
---------- ---------- ----------
(Decrease)/increase in cash and cash
equivalents (77,495) 25,145 52,069
Effect of exchange rates on cash and
cash equivalents 890 (1,987) (1,090)
Cash and cash equivalents at the
beginning of the period 155,933 104,954 104,954
Cash and cash equivalents at the end
of the period 79,328 128,112 155,933
========== ========== ==========
Notes to the accounts
1 Corporate information
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2011 were authorised for
issue in accordance with a resolution of the Directors on 26 August
2011.
Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
2 Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2011 have been preparedin accordance with
International Accounting Standard 34 'Interim Financial Reporting',
as adopted by the European Union. They do not include all of the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
annual financial statements as at 31 December 2010 which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
The Group's strong cash position, combined with the strong cash
flows generated by the business, support the Directors' view that
the Group has sufficient funds available for it to meet its
foreseeable working capital requirements. The directors have
concluded therefore that the going concern basis remains
appropriate.
3 Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for
the year ended 31 December 2010, except for the adoption of new
standards and interpretations as of 1 January 2011, noted
below:
IAS 24 Related Party Transactions (Amendment)
The IASB has issued an amendment to IAS 24 that clarifies the
definitions of a related party. The new definitions emphasise a
symmetrical view of related party relationships as well as
clarifying in which circumstances persons and key management
personnel affect related party relationships of an entity.
Secondly, the amendment introduces an exemption from the general
related party disclosure requirements for transactions with a
government and entities that are controlled, jointly controlled or
significantly influenced by the same government as the reporting
entity. The adoption of the amendment did not have any impact on
the financial position or performance of the Group.
Improvements to IFRSs (issued May 2010)
In May 2010, the IASB issued its third omnibus of amendments to
its standards, primarily with a view to removing inconsistencies
and clarifying wording. There are separate transitional provisions
for each standard. The adoption of the following amendments
resulted in changes to accounting policies, but did not have any
impact on the financial position or performance of the Group.
IAS 1 Presentation of Financial Statements: The amendment
clarifies that an option to present an analysis of each component
of other comprehensive income may be included either in a statement
of changes in equity or in the notes to the financial
statements.
A number of other new, revised or amended standards and
interpretations are effective for the current period, but none of
them has had any material impact on the interim condensed financial
statements.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
4 Segment information
For management purposes, the Group is organised into
geographical segments, with each segment determined by the location
of the Group's assets and operations. The Group's business in each
geography is managed separately and held in separate statutory
entities.
No operating segments have been aggregated to form the above
reportable operating segments.
Management monitors the operating results of its geographical
segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance
is evaluated based on adjusted operating profit or loss which is
measured differently from operating profit or loss in the
consolidated financial statements. Adjusted operating profit or
loss takes account of the interest paid on customer-specific
financing ('CSF') which management consider to be a cost of sale.
Excluded from adjusted operating profit is the amortisation of
acquired intangibles and exceptional items as management do not
consider these items when reviewing the underlying performance of a
segment.
From 1 January 2011, the management of Computacenter Luxembourg
has been transferred from Belgium to Germany. As a consequence, CC
Luxembourg is reported as part of the German segment. The
comparative segmental information has been restated to reflect this
change. Adjusted operating profit of GBP87,674 (2010 H1: Adjusted
operating loss of GBP297,619; Year 2010: Adjusted operating loss of
GBP820,343) has been reclassified.
Segmental performance for the periods to H1 2011, H1 2010 and
Full Year 2010 were as follows:
Six months ended 30 June 2011
(unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 547,269 580,375 219,700 17,909 1,365,253
--------- --------- --------- -------- ----------
Results
Adjusted gross profit 90,044 72,608 23,873 1,970 188,495
Adjusted net operating
expenses (73,352) (64,208) (23,694) (1,611) (162,865)
--------- --------- --------- -------- ----------
Adjusted operating
profit 16,692 8,400 179 359 25,630
--------- --------- --------- --------
Adjusted net interest 934
----------
Adjusted profit before
tax 26,564
----------
Six months ended 30 June 2010
(unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 651,859 457,169 164,252 15,500 1,288,780
--------- --------- --------- -------- ----------
Results
Adjusted gross profit 91,932 60,472 18,315 1,740 172,459
Adjusted net operating
expenses (73,805) (57,030) (19,523) (1,460) (151,818)
--------- --------- --------- -------- ----------
Adjusted operating
profit/(loss) 18,127 3,442 (1,208) 280 20,641
--------- --------- --------- --------
Adjusted net interest 634
----------
Adjusted profit before
tax 21,275
----------
Year ended 31 December 2010
(audited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 1,265,431 1,008,890 359,611 42,563 2,676,495
---------- ---------- --------- -------- ----------
Results
Adjusted gross
profit 189,614 132,819 37,815 3,445 363,693
Adjusted net
operating expenses (146,277) (113,143) (36,825) (3,021) (299,266)
---------- ---------- --------- -------- ----------
Adjusted operating
profit 43,337 19,676 990 424 64,427
---------- ---------- --------- --------
Adjusted net
interest 1,626
----------
Adjusted profit
before tax 66,053
----------
Reconciliation to adjusted results
Management reviews adjusted measures of performance as shown in
the tables above. Adjusted profit before tax excludes exceptional
items and the amortisation of acquired intangibles as shown
below:
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Adjusted profit before tax 26,564 21,275 66,053
Amortisation of acquired intangibles (368) (299) (655)
Profit before tax 26,196 20,976 65,398
========== ========== ==========
Management also reviews adjusted measures for gross profit,
operating expenses, operating profit and net interest, which in
addition takes account of interest costs of CSF within cost of
sales (as these are considered to form part of the gross profit
performance of a contract). The reconciliation for adjusted
operating profit to operating profit, as disclosed in the
Consolidated Income Statement, is as follows:
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Adjusted operating profit 25,630 20,641 64,427
Add back interest on CSF 747 1,299 2,120
Amortisation of acquired intangibles (368) (299) (655)
Segment operating profit 26,009 21,641 65,892
========== ========== ==========
Sources of revenue
Each geographical segment principally consists of a single
entity with shared assets, liabilities and capital expenditure. The
Group has three sources of revenue, which are aggregated and shown
in the table below. The sale of goods is recorded within Product
revenues and the rendering of services is split into Professional
and Support and Managed Services.
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Sources of revenue
Product revenue
Total product revenue 963,289 907,078 1,888,362
Services revenue
Professional services 99,427 90,313 192,448
Support and managed services 302,537 291,389 595,685
--------- --------- ---------
Total services revenue 401,964 381,702 788,133
--------- --------- ---------
Total revenue 1,365,253 1,288,780 2,676,495
--------- --------- ---------
5 Seasonality of operations
Historically revenues have been higher in the second half of the
year than in the first six months. This is principally driven by
customer buying behaviour in the markets in which we operate.
Typically this leads to a more pronounced effect on operating
profit. In addition the effect is compounded further by the
tendency for the holiday entitlements of our employees to accrue
during the first half of the year and to be utilised in the second
half.
6 Income tax
The charge based on the profit for the
period comprises:
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
UK corporation tax 6,163 6,082 12,917
Foreign tax 1,217 316 3,306
Adjustments in respect of prior periods - - (1,682)
Deferred tax (1,030) (1,190) 537
6,350 5,208 15,078
========== ========== ==========
In his budget of 23 March 2011, the Chancellor of the Exchequer
announced that the main rate of corporation tax will be reduced by
2% to 26% with effect from 1 April 2011. As this change has been
substantively enacted, and in accordance with accounting standards,
the change has been reflected in the Group's interim financial
statements as at 30 June 2011. The Chancellor also confirmed that
the previously proposed reductions of 1% per year will be
maintained resulting in the main corporation tax rate reducing to
23% by 2014.
7 Earnings per ordinary share
Earnings per share (EPS) amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held).
Diluted earnings per share amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held) adjusted for the effect of dilutive
options.
Adjusted basic and adjusted diluted EPS are presented to provide
more comparable and representative information. Accordingly the
adjusted basic and adjusted diluted EPS figures exclude the
amortisation of acquired intangibles and exceptional items.
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Profit attributable to equity holders of
the parent 19,845 15,768 50,321
Amortisation of acquired intangibles
attributable to equity holders of the
parent 368 299 655
Tax on amortisation of acquired
intangibles (103) (84) (187)
Adjusted profit after tax 20,110 15,983 50,789
---------- ---------- ----------
No '000 No '000 No '000
Basic weighted average number of shares
(excluding own shares held) 148,778 147,563 147,752
Effect of dilution:
Share options 6,916 6,256 6,370
Diluted weighted average number of shares 155,694 153,819 154,122
========== ========== ==========
H1 2011 H1 2010 Year 2010
pence pence pence
Basic earnings per share 13.3 10.7 34.1
Diluted earnings per share 12.7 10.3 32.6
Adjusted basic earnings per share 13.5 10.8 34.4
Adjusted diluted earnings per share 12.9 10.4 33.0
-------- -------- ----------
8 Dividends paid and proposed
A final dividend for 2010 of 9.7p per ordinary share was paid on
10 June 2011. An interim dividend in respect of 2011 of 4.5p per
ordinary share, amounting to a total dividend of GBP6,925,000, was
declared by the Directors at their meeting on 26 August 2010. This
interim report does not reflect this dividend payable.
9 Business combinations
9 a) Subsidiaries
Top Info SAS ('Top Info')
On 1 April 2011 the Group acquired 100 per cent of the voting
shares of Top Info SAS for an initial consideration of EUR37.7
million and a deferred consideration of EUR1.0 million dependant on
future performance on a debt free basis. The net book value of the
assets acquired included EUR18.7 million of net cash and short-term
deposits. The costs of acquisition amounted to EUR248,000 and are
included in the income statement. Top Info SAS is based in France
and is an information technology reseller of hardware, software and
services. The acquisition has been accounted for using the purchase
method of accounting. The 2011 consolidated financial statements
include the results of Top Info for the period from the acquisition
date.
The book and provisional fair values of the net assets at date
of acquisition were as follows:
2011
Provisional
2011 fair value
Book value to Group
GBP'000 GBP'000
Intangible assets
Comprising:
Existing customer relationships - 5,019
Total intangible assets - 5,019
Property, plant and equipment 125 125
Inventories 1,203 3,125
Trade and other receivables 22,146 19,564
Prepayments 324 324
Cash and short-term deposits 16,511 16,511
Trade and other payables (18,031) (18,044)
Deferred income (328) (328)
Deferred tax liability - (1,706)
Net assets 21,950 24,590
Goodwill arising on acquisition 9,610
----------------------------------- --------------- ----------------
34,200
----------------------------------- --------------- ----------------
Discharged by:
----------------------------------- --------------- ----------------
Cash paid 33,317
Deferred consideration 883
34,200
Cash and cash equivalents acquired
Cash and short-term deposits (16,511)
Cash outflow on acquisition 17,689
----------------------------------- --------------- ----------------
From the date of acquisition to 30 June 2011, Top Info
contributed GBP32,528,547 to the Group's revenue and GBP669,152 to
the Group's profit after tax.
The provisional fair values include adjustments to the book
values to recognise differences in accounting policies between Top
Info and the Group principally relating to revenue recognition, the
principal effect of which is a reclassification from trade
receivables to inventory.
Included in the GBP9,610,000 of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
HSD Consult GmbH ('HSD')
On 11 April 2011 the Group acquired 100 per cent of the voting
shares of HSD Consult GmbH for an initial consideration of EUR4.9
million and a contingent consideration of EUR0.5 million dependant
on the level of acquired skills retained at the end of 2011. HSD is
based in Germany and is an Apple Integrator. The acquisition has
been accounted for using the purchase method of accounting. The
2011 consolidated financial statements include the results of HSD
for the period from the acquisition date.
The book and fair values of the net assets at date of
acquisition were as follows:
2011
Provisional
2011 fair value
Book value to Group
GBP'000 GBP'000
Intangible assets
Comprising:
Existing customer relationships 36 402
Other intangibles 46 46
----------------------------------- --------------- ----------------
Total intangible assets 82 448
Property, plant and equipment 146 146
Inventories 940 940
Trade and other receivables 2,140 2,140
Cash at bank 190 190
Trade and other payables (2,326) (2,326)
Provisions and accruals (400) (400)
Deferred tax liabilities - (110)
-----------------------------------
Net assets 772 1,028
Goodwill arising on acquisition 3,738
----------------------------------- --------------- ----------------
4,766
----------------------------------- --------------- ----------------
Discharged by:
----------------------------------- --------------- ----------------
Cash paid 4,325
Deferred consideration 441
----------------------------------- --------------- ----------------
4,766
Cash and cash equivalents acquired
Cash and short-term deposits (190)
----------------------------------- --------------- ----------------
Cash outflow on acquisition 4,576
----------------------------------- --------------- ----------------
From the date of acquisition to 30 June 2011, HSD contributed
GBP3,987,183 to the Group's revenue and GBP12,540 to the Group's
profit after tax.
There were no differences between the provisional fair values
and the book values at acquisition other than the recognition of
intangible assets at acquisition and the related deferred tax
liabilities.
Included in the GBP3,738,000 of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
If the acquisition of Top Info and HSD had taken place at the
beginning of 2011, Group revenues for the period ended 30 June 2011
would have been GBP1,401,998,000 and profit after tax would have
been GBP20,426,000.
In the period prior to acquisition in 2011, Top Info and HSD
reported profits of GBP568,576 and GBP10,555 respectively.
9 b) Associates
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Share of net assets
Opening balance 57 57 57
Share of associates' losses (48) -- -
Acquisition 500 - -
Exchange rate adjustment 2 (5) -
---------- ---------- ----------
Closing balance 511 52 57
Impairment
Opening balance (10) - -
Charged during the period -- - (10)
---------- ---------- ----------
Closing balance (10) - (10)
---------- ---------- ----------
Carrying value 501 52 47
========== ========== ==========
ICS Solutions Limited ('ICS')
On 1 April 2011 the Group acquired a 25 per cent interest in ICS
Solutions Limited for a cash consideration of GBP500,000. The
acquisition will allow the Group to pursue wider opportunities in
the deployment of its Microsoft Collaboration service and solution
offerings. The reporting date of ICS is 30 June.
10 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain
how management view the cash performance of the business. There are
two primary differences to this presentation compared to the
statutory cash flow statement, as follows:
1) Factor financing and current asset investment, where cash is
placed on deposit but is not available on demand, is not included
within the statutory definition of cash and cash equivalents, but
operationally is managed within the total net funds/borrowings of
the businesses; and
2) Items relating to customer-specific financing ("CSF") are
adjusted for as follows:
a. Interest paid on CSF is reclassified from interest paid to
adjusted operating profit; and
b. Where customer-specific assets are financed by finance leases
and the liabilities are matched by future amounts receivable under
customer operating lease rentals, the depreciation of leased assets
and the repayment of the capital element of finance leases are
offset within net working capital; and
c. Where assets are financed by loans and the liabilities are
matched by amounts receivable under customer operating lease
rentals, the movement on loans within financing activities is also
offset within working capital.
Adjusted management cash flow statement
For the six months ended 30 June 2011
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Adjusted profit before tax 26,564 21,275 66,053
Net finance income (934) (634) (1,626)
Depreciation and amortisation 8,746 8,817 19,506
Share-based payments 1,301 1,320 2,620
Working capital movements (5,213) 13,188 21,358
Other adjustments (45) 9 293
---------- ---------- ----------
Adjusted operating cash inflow 30,419 43,975 108,204
Net interest received 512 507 1,204
Income taxes paid (5,809) (4,568) (11,281)
Capital expenditure and investments (20,360) (16,069) (25,258)
Acquisitions (22,765) - -
Equity dividends paid (14,460) (11,811) (16,984)
---------- ---------- ----------
Cash (outflow)/inflow before financing (32,463) 12,034 55,885
Proceeds from issue of shares 20 284 822
Purchase of own shares (3,606) (2,052) (2,501)
---------- ---------- ----------
(Decrease)/increase in net funds
excluding CSF in the period (36,049) 10,266 54,206
---------- ---------- ----------
(Decrease)/increase in net funds
excluding CSF (36,049) 10,266 54,206
Effect of exchange rates on cash and cash
equivalents 938 (1,089) (1,170)
Net funds excluding CSF at beginning of
period 139,439 86,403 86,403
---------- ---------- ----------
Net funds excluding CSF at end of period 104,328 95,580 139,439
========== ========== ==========
11 Analysis of net funds
Unaudited Unaudited Audited
H1 2011 H1 2010 Year 2010
GBP'000 GBP'000 GBP'000
Cash and short term deposits 120,057 129,571 159,269
Bank overdraft (40,729) (1,459) (3,336)
--------------- --------------- -----------
Cash and cash equivalents 79,328 128,112 155,933
Current asset investment 25,000 - -
Other loans non-CSF - (1,442) -
Factor financing - (31,090) (16,494)
--------------- --------------- -----------
Net funds excluding CSF 104,328 95,580 139,439
Finance leases (21,813) (32,759) (24,894)
Other loans (1,650) (5,725) (3,532)
Total CSF (23,463) (38,484) (28,426)
--------------- --------------- -----------
Net funds 80,865 57,096 111,013
=============== =============== ===========
Net funds excluding CSF is also stated inclusive of current
asset investments. Current asset investments consists of a deposit
held for a term of greater than 3 months from the date of deposit
which is available to the Group with 30 days notice. The fair value
of the current asset investment as at 30 June 2011 is not
materially different to the carrying value.
12 Post balance sheet events
On 21 July 2011 the Group announced that it had acquired a
majority stake in the Swiss IT services provider, Damax AG. The
Group acquired the majority stake in Damax which will enable the
Group to strengthen its long-term relationships with customers
present in Switzerland. The Group acquired 80% of the equity, and
in addition, in excess of CHF 2 million net cash on the balance
sheet for a debt free cash consideration of CHF 7.2 million. The
Group will purchase the remaining 20% stake of the equity by mid
2015 for a cash consideration of up to CHF 3.2 million subject to
the achievement of agreed performance criteria over the next 3
[1/2] years. At the reporting date, the provisional fair values to
the Group of the assets and liabilities purchased have not been
fully assessed.
13 Publication of non-statutory accounts
The financial information contained in the interim statement
does not constitute statutory accounts as defined in section 435 of
the Companies Act 2006. The auditors have issued an unqualified
opinion on the Group's statutory financial statements under
International Accounting Standards for the year ended 31 December
2010 and did not include a statement under section 498(2) or (3) of
the Companies Act 2006. Those accounts have been delivered to the
Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UNRNRAVAWUAR
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