Press Release

 

 

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 £1.37 billion (H1 2010: £1.29 billion) an increase of 5.9%

·     Group adjusted¹ profit before tax of £26.6 million (H1 2010: £21.3 million) an increase of 24.9%

·     Adjusted¹ diluted earnings per share (EPS) of 12.9p (H1 2010: 10.4p) an increase of 24.0%

·     After capital expenditure of £20.4 million, free cash flow of £4.9 million

·     Net funds excluding customer-specific financing (CSF) of £104.3 million (H1 2010: £95.6 million)

·     Interim dividend of 4.5p (H1 2010: 3.5p)  an increase of 28.6%

 

Statutory Highlights:

 

·     Group profit before tax of £26.2 million (H1 2010: £21.0 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 £80.9 million (H1 2010: £57.1 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 £570.1 million (H1 2010: £539.0 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 £3.3 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."

¹Adjusted 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 £100 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 adjusted¹ profit before tax by 24.9% to £26.6 million (H1 2010: £21.3 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 £1.37 billion (H1 2010: £1.29 billion) and without acquisitions, the overall reported revenues were up by 3.1% to £1.33 billion.

 

Adjusted¹ 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 £26.2 million (H1 2010: £21.0 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 £570.1 million (H1 2010: £539.0 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 £104.3 million at the period end (H1 2010: net funds of £95.6 million). This increase was achieved despite the investment of £22.8 million in two acquisitions, as well as an investment in ICS Solutions Ltd and £10.7 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 £80.9 million (H1 2010: £57.1 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 £20.4 million was incurred during the period, including the RDC property purchase. The level of CSF has reduced from £38.5 million, at the end of the first half of 2010, to the current level of £23.5 million. As previously reported, our cash position was enhanced by £30.8 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 £35 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 £3.3 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 £547.3 million (H1 2010: £651.9 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.       

 

Adjusted¹ operating profit in the UK declined by 7.9%, to £16.7 million (H1 2010: £18.1 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 C³ (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 adjusted¹ 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 £8.4 million (H1 2010: £3.4 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 €294.0 million (H1 2010: €277.0 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 für 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 adjusted¹ operating loss at Computacenter France, excluding Top Info, reduced to €0.4 million (H1 2010: Loss €1.4 million). Together with the single quarter's contribution by Top Info, the French business, for the first time in many years, is reporting an adjusted¹ operating profit at the half year stage, of €0.2 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 €34.7 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 €214.5 million (H1 2010: €153.9 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, Crédit Agricole Franche-Comté. 

 

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 adjusted¹ operating profit of £359,000 (H1 2010: £280,000). 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

 

¹Adjusted 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	£'000		£'000				£'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 period	7	12.7p			10.3p				32.6p

                                                                                   

 

 

 

 

Consolidated statement of comprehensive income
For the six months ended 30 June 2011
	Unaudited		Unaudited		Audited
	H1 2011		H1 2010		Year 2010
	£'000		£'000		£'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	£'000		£'000		£'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