RNS No 2283w
COMPUTACENTER PLC
19 August 1999
Computacenter plc
Interim Results for six months ended 30 June 1999
Computacenter plc, the UK's largest company specialising in the provision
of distributed information technology and related services to large
corporate and public sector organisations, announces interim results.
Financial highlights:
* Turnover - up 16.6 per cent to #904.8 million (1998:
#775.7m)
* Pre-tax profit - up 30 per cent to #40.7 million (1998:
#31.3m)
* Earnings per share - up 28.1 per cent to 14.6p per share (1998:
diluted 11.4p)
* Net funds position - up to #33.0 million (Dec'1998: #21.1m)
* Dividend - as anticipated at flotation, any dividend
payable in the current year will be declared
at year end
Commenting on the results, Philip Hulme, Chairman, said:
"This is another record set of results for the Group. Turnover, profits and
operating profit margins are up significantly on the same period last year
and the Group's balance sheet remains strong."
"In line with our long term strategy, the Group has continued to invest
heavily in expanding its service operations resulting in accelerated growth
in this area of our business in the first half."
Mike Norris, Chief Executive of the Group, said:
"In the first half we have extended the range of services offered to
existing customers and won a number of significant new contracts."
"We have continued to develop our European operations by expanding our
market share in France and Germany and making an acquisition in Belgium."
"There has been some evidence of a slowdown in the corporate market across
Europe as the Millennium approaches. However, we believe there is
significant pent up demand in our customer base which will be released next
year. The Group will continue to invest to ensure we are well positioned to
take advantage of this and future demand."
Enquiries:
Computacenter plc
Mike Norris, Chief Executive Tel: 0171 620 2222
Tony Conophy, Finance Director
Media enquiries:
Phil Williams, Corporate Tel: 0171 593 4554
Development Manager
Analyst enquiries:
Melanie Leibert, Tel: 0171 593 4635
Investor Relations
Brunswick
Rob Pinker Tel: 0171 404 5959
Sara Musgrave
CHAIRMAN'S STATEMENT
I am pleased to be able to report another set of record results for the
Group in the half year to June 30.
Group turnover, at #904.8 million, was up 16.6 per cent over the same
period last year and profit before tax, at #40.7 million, was up 30.0 per
cent. The Group's net margin as a percentage of sales increased from 4.0
per cent to 4.5 per cent and diluted earnings per share grew by 28.1 per
cent to 14.6 pence. The Group's balance sheet remains strong. The net cash
position, after debt, was #33.0 million at the half year compared to #21.1
million at the end of 1998.
The rate of growth in Computacenter's service businesses accelerated in the
first half of 1999. Total Group staff numbers have grown by 39.1 per cent
over the past year. The number of personnel providing support services on
customer sites has grown by 46.1 per cent and the number of staff engaged
in other service activities has grown by 32.3 per cent over the past year.
This strong performance contributed to an overall growth of 32.2 per cent
in gross profit.
The growth in overall sales, although substantial, is lower than last year,
reflecting slower growth in product sales. This was due to an accelerated
decline in hardware prices, combined with some uncertainty in the corporate
marketplace as the Year 2000 approaches. The long-term decline in hardware
prices is to be welcomed as it opens up new applications for distributed IT
fuelling demand for the Group's services.
The Group has continued to invest heavily in expanding its service
operations. These investments take the form of recruitment, training and
systems development, virtually all of which are expensed through the profit
and loss account. The development of our new service, logistics and
administration centre in Hatfield is also on track with occupation
commencing in September. All of these investments will help to secure our
long-term growth.
We have also continued to expand our market share in France and Germany at
a rapid rate. Turnover for Computacenter France, at FF1,061 million, was
ahead 54.3 per cent compared to the same period last year and operating
profit grew 8.5 per cent to FF12.4 million. Turnover for Computacenter
Germany grew by 146.7 per cent to DM94.4 million. Operating losses in
Germany increased slightly to DM2.2 million in line with plan. In June
1999 the Group made a small acquisition in Belgium, providing a foothold to
expand our customer base in this region. We remain satisfied with progress
in the Group's overseas operations.
With respect to the Year 2000 issue, as noted, there has been some evidence
that the growth rate in the corporate market has slowed. Market indications
are that this will continue for the remainder of this year before
recovering in 2000. However, we have seen no evidence of a slowdown in the
demand for our services and the outlook is for continued strong growth in
this area.
Computacenter's success has been built on providing a comprehensive and
competitive range of high quality distributed IT support services. As
always the IT industry is a cauldron of change. Our task is to adapt, and
help our customers adapt, to these changes. For example, in the first half
of this year over 40 per cent of all customer orders were placed via On-
Trac our electronic commerce system. Our business, which is characterised
by stable, long-term customer relationships, is underpinned by our strategy
of investing to deliver the quality support services that our customers
demand.
In the rapidly changing and demanding environment in which we compete, it
is a tribute to our staff that we have once more achieved record results.
I thank them all once again and look forward to reporting on our results,
and declaring a full dividend, at the end of this financial year.
Philip Hulme, Chairman
REVIEW OF OPERATIONS
During the first half of the year the Group enjoyed a very satisfactory
rate of growth in overall revenues. However, the growth achieved in our
service operations was outstanding. This was the result of extending our
service provision with existing accounts and also winning a number of
significant contracts with new customers.
Extensions to existing contracts included Shell Service International and
Credit Suisse First Boston (CSFB). New accounts won towards the end of
1998, which came on stream and contributed to revenues in the first half of
this year, included Halifax plc. New account wins in the first six months
of this year included The Houses of Parliament, Royal & Sun Alliance and
SmithKline Beecham Research & Development.
Our highest profile win in the first half of 1999 was British Telecom. BT
is a long-established Computacenter customer and we are delighted to renew
our relationship with a new three-year contract with the option to extend
for a further two years. The range of services provided now includes
maintenance of all BT's distributed IT systems, equipment supply chain re-
engineering and the full implementation of electronic commerce into BT's
business units.
Growth in UK product sales during the first half was somewhat slower than
in previous years. However, more importantly, PC system unit sales grew
by 26 per cent in the UK compared with the same period last year. This
helped feed customer demand for product-related services, enabling us to
continue to develop these offerings at a rapid rate.
Computacenter's spread of business across a number of core industry sectors
reduced the impact of slower growth in some markets. We saw strong growth
in the government and telecommunication sectors. In contrast, revenues from
the financial services industry, particularly in the City, weakened;
although we believe we are now starting to see signs of recovery.
The first half of 1999 saw the first successes of our new e-commerce
division, The iGroup. Computacenter has invested heavily in this area
throughout the last year, establishing a group of over 50 specialists with
Internet and Intranet design, development and consulting skills. We are
now starting to establish e-commerce products and services, which we will
leverage across our customer base in the future.
Customer demand for our On-Trac electronic commerce system has also
increased. On-Trac enables our customers to procure services and products
from the Group directly from their desktops. The system, which was
developed by our partner, Computasoft, exclusively to our specification,
has established itself as an invaluable aid to our business and a
significant source of competitive advantage. We continue to work with
Computasoft to find ways of marketing the product to a wider range of
customers, for example by including the ability to procure products and
services from companies other than Computacenter.
In France our business continues to grow rapidly due to significant gains
in market-share. Headcount has grown by 52 per cent to 657 over the last
year and we have now successfully moved our headquarters and operations
centre to a new facility, establishing a solid platform for future growth.
With the implementation of best practices that have already proved
successful in the UK, we are starting to see significant growth of our
French maintenance, systems engineering and project management capability.
Two years after the acquisition of our German subsidiary, growth in Germany
remains in line with our expectations. As with France we have invested
strongly. Staff numbers grew by 113 per cent to 312 in the past year and we
moved into a new operations centre during the first half of 1999. We also
opened new sales offices in Hannover, Stuttgart and Nuremberg. As in the
UK, achieving such growth in France and Germany involved significant levels
of investment, the vast majority of which was expensed through the profit
and loss account.
In the second quarter of 1999 we made our first two acquisitions as a
public company. A small acquisition has established a new subsidiary in
Belgium. Again, as in France and Germany, we expect Computacenter Belgium
to benefit from our best practices and strong international customer base.
The second of our two acquisitions is a UK-based IT disposal services
company, RDC, which will continue to operate under its own name. The
acquisition was made to meet the demand from our customers for a cost-
effective and environmentally friendly disposal service for redundant
distributed technology. We can now provide a superior level of service at
every stage of the product life-cycle.
Trading in the second half has started satisfactorily, although the Group
has budgeted for some slowdown in the final few weeks of the year. We
believe there is significant pent-up demand within our customer base, which
will be released next year. The Group will continue to invest to ensure we
are well positioned to take advantage of this and future demand.
Mike Norris, Chief Executive
AUDITORS' INDEPENDENT REVIEW REPORT TO COMPUTACENTER PLC
Introduction
We have been instructed by the Company to review the financial information
set out and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein,
is the responsibility of, and has been approved by, the directors. The
Listing Rules of the London Stock Exchange require that the accounting
policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists
principally of making enquires of management and applying analytical
procedures to the financial information and underlying financial data and
based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope
than an audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 June 1999.
Ernst & Young
18 August 1999
Computacenter plc
Summarised Profit And Loss Account
For the six months ended 30 June 1999
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Turnover 904,816 775,746 1,586,238
Operating costs (864,104) (742,451) (1,519,942)
--------- --------- ---------
Operating profit 40,712 33,295 66,296
Loss from interests in
associated undertakings
- - (12)
Other income 3,481 1,495 4,945
Interest payable and (3,461) (3,458) (6,626)
similar charges
--------- --------- ---------
Profit on ordinary
activities before
taxation 40,732 31,332 64,603
Taxation (13,210) (10,402) (21,232)
--------- --------- ---------
Profit on ordinary
activities after taxation
27,522 20,930 43,371
Minority interests -
equity (5) (15) (77)
--------- --------- ---------
Profit attributable to
members of the parent
company 27,517 20,915 43,294
Dividends - ordinary
dividends on equity
shares (90) - (4,302)
Retained profit for the
period 27,427 20,915 38,992
====== ====== ======
Earnings per share
- Basic 16.2p 13.1p 27.0p
- Diluted 14.6p 11.4p 23.5p
Dividends per ordinary
share - - 2.5p
Computacenter plc
Statement of Total Recognised Gains and Losses
For the six months ended 30 June 1999
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Profit attributable to
members of parent Company
for the period 27,517 20,915 43,294
Exchange differences on
retranslation of net
assets of associated and
subsidiary undertakings
(1,300) (44) 287
--------- --------- ---------
Total recognised gains
for the period 26,217 20,871 43,581
====== ====== ======
Computacenter plc
Summarised Balance Sheet
At 30 June 1999
Unaudited Unaudited Audited
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Fixed assets
Goodwill 1,612 - -
Tangible assets 79,325 37,522 59,768
Investments 4,170 2,805 1,467
--------- --------- ---------
85,107 40,327 61,235
Current assets
Stocks 116,045 122,868 109,853
Debtors: gross 258,081 257,126 237,855
Less non-returnable
proceeds (64) (36,032) (1,293)
--------- --------- ---------
258,017 221,094 236,562
Cash at bank and in hand
75,984 64,136 63,601
--------- --------- ---------
450,046 408,098 410,016
CREDITORS: amounts
falling due within one
year (343,387) (293,783) (307,382)
--------- --------- ---------
Net current assets 106,659 114,315 102,634
--------- --------- ---------
Total assets less current
liabilities 191,766 154,642 163,869
CREDITORS: amounts
falling due after more
than one year (42,830) (52,816) (42,013)
Provisions for
liabilities and charges
(1,035) - (1,035)
--------- --------- ---------
Total assets less
liabilities 147,901 101,826 120,821
====== ====== ======
Capital and reserves
Called up share capital
8,876 8,601 8,678
Share premium account 51,106 49,410 49,850
Profit and loss account
87,777 43,736 62,144
--------- --------- ---------
Shareholders' funds -
equity 147,759 101,747 120,672
Minority interests -
equity 142 79 149
--------- --------- ---------
147,901 101,826 120,821
====== ====== ======
Approved by the board on 18 August 1999
Computacenter plc
Summarised Statement Of Cash Flows
For the six months ended 30 June 1999
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Cash inflow from
operating activities 42,041 16,172 63,734
Returns on investments
and servicing of finance
127 (1,963) (2,084)
Taxation
Corporation tax
refunded/(paid) 1,536 - (17,486)
Capital expenditure and
financial investment
(26,295) (12,416) (40,179)
Acquisitions and
disposals (1,974) - (71)
Equity dividends paid (4,392) - -
--------- --------- ---------
Cash inflow before
financing 11,043 1,793 3,914
Financing
Issue of shares 1,454 49,598 50,115
Decrease in debt (114) (1,104) (4,257)
--------- --------- ---------
Increase in cash in the
period 12,383 50,287 49,772
====== ====== ======
Reconciliation of net
cash flow to movement in
net debt
Increase in cash 12,383 50,287 49,772
Cash decrease from
repayment of loans - 1,098 4,033
Repayment of capital
elements of finance lease
rentals 114 114 224
--------- --------- ---------
Changes in net debt
arising from cash flows
12,497 51,499 54,029
Loans acquired on
acquisition of subsidiary
undertaking (542) - -
Other non cash movements
(107) (108) (214)
--------- --------- ---------
Movement in net
funds/(debt) 11,848 51,391 53,815
Net funds/(debt) at 1 Jan
21,126 (32,689) (32,689)
--------- --------- ---------
Net funds at 30 Jun/31
Dec 32,974 18,702 21,126
====== ====== ======
Computacenter plc
Notes to the Unaudited Interim Report
At 30 June 1999
1 Basis of Preparation of Interim Financial Information
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year
ended 31 December 1998. 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 Turnover and Segmental Analysis
Turnover represents the amounts derived from the provision of goods and
services which fall within the Group's ordinary activities, stated net of
VAT. The Group operates in one principal activity, that of the design,
supply, project management and long-term support of information technology
systems.
An analysis of turnover by destination and origin and operating profit is
given below:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Turnover by destination
UK 757,451 688,237 1,365,906
France & Belgium 110,117 70,614 168,130
Germany 33,536 13,917 39,020
Rest of the World 3,712 2,978 13,182
--------- --------- ---------
Total 904,816 775,746 1,586,238
====== ====== ======
Turnover by origin
UK 762,981 693,863 1,383,357
France & Belgium 109,399 68,998 165,773
Germany 32,436 12,885 37,108
--------- --------- ---------
Total 904,816 775,746 1,586,238
====== ====== ======
Operating profit
UK 40,197 32,723 64,929
France & Belgium 1,262 1,146 2,747
Germany (747) (574) (1,380)
--------- --------- ---------
Total Group excluding
associated undertakings
40,712 33,295 66,296
====== ====== ======
All turnover and operating profit relates to continuing operations.
Computacenter plc
Notes to the Unaudited Interim Report
At 30 June 1999
3 Operating Costs
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Increase in stocks of
finished goods (6,192) (14,623) (1,608)
Goods for resale and
consumables 706,312 635,561 1,254,418
Staff costs 97,554 69,906 153,619
Other operating charges
66,430 51,607 113,513
--------- --------- ---------
864,104 742,451 1,519,942
====== ====== ======
4 Other Income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Bank Interest received 3,481 1,495 4,328
Exchange gain - - 617
--------- --------- ---------
3,481 1,495 4,945
====== ====== ======
5 Interest Payable and Similar Charges
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Bank loans and overdraft
18 114 236
Other loans 3,431 3,332 6,368
Finance charges payable
under finance leases and
hire purchase contracts
12 12 22
--------- --------- ---------
3,461 3,458 6,626
====== ====== ======
Computacenter plc
Notes to the Unaudited Interim Report
At 30 June 1999
6 Tax on Profit on Ordinary Activities
The charge for the period is based on the estimated effective tax rate for
the year ending 31 December 1999 and comprises the following:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
UK corporation tax at 31
per cent
Current 13,210 10,402 20,197
Deferred tax - - 1,035
--------- --------- ---------
Total 13,210 10,402 21,232
====== ====== ======
7 Reconciliation of Operating Profit to Operating Cash Flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 1999 30 Jun 1998 31 Dec 1998
#'000 #'000 #'000
Operating profit 40,712 33,295 66,296
Depreciation 6,001 4,846 10,691
Loss on disposal of fixed
assets - 637 407
Increase in debtors (21,052) (55,374) (70,842)
Increase in stocks (6,160) (14,623) (1,608)
Increase in creditors 23,852 47,420 57,976
Currency and other
adjustments (1,312) (29) 814
---------- ---------- ----------
Net cash inflow from
operating activities 42,041 16,172 63,734
====== ====== ======
8 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies
Act 1985. The financial information for the full preceding year is based
on the statutory accounts for the financial year ended 31 December 1998.
Those accounts, upon which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies.
END
IR GBURPRBGBGBR
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