Half Yearly Report
Interim results for the six months ended
'Computacenter continues to implement its Services-based strategy'
Financial Highlights
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H1 2014 |
H1 2013 |
Change (%) |
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Financial Key Performance Indicators ** |
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Group revenue (£ million) |
1,458.3 |
1,426.3 |
2.2 |
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Adjusted* profit before tax (£ million) |
28.0 |
26.2 |
6.8 |
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Adjusted* diluted earnings per share (pence) |
14.5 |
12.5 |
16.0 |
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Dividend (pence per share) |
5.9 |
5.2 |
13.5 |
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Statutory Performance ** |
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Statutory profit/(loss) before tax (£ million) |
18.0 |
(4.3) |
N/A |
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Exceptional Items (£ million) |
9.1 |
29.3 |
(68.9) |
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Statutory basic earnings/(loss) per share (pence) |
7.4 |
(5.7) |
N/A
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Statutory diluted earnings/(loss) per share (pence) |
7.4 |
(5.7) |
N/A |
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Cash Position |
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Underlying Net Funds*** (£ million) |
54.0 |
22.2 |
143.8 |
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Net funds (£ million) |
54.0 |
65.8 |
(17.9) |
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Revenue Performance by Sector ** |
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Group Services revenue (£ million) |
488.5 |
472.7 |
3.3 |
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Group Supply Chain revenue (£ million) |
969.8 |
953.7 |
1.7 |
Reconciliation between the Group's Adjusted* and Statutory Performance in H1 2014
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Adjusted* profit before tax (£ million) |
28.0 |
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Exceptional Item: Estimated costs of restructuring in French business (£ million) |
(9.1) (please refer to note 6 to the accounts for further detail) |
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Amortisation of acquired intangibles (£ million) |
(0.9) |
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Statutory profit before tax (£ million) |
18.0 |
Operational Highlights:
· Group Services revenue increased by 3.3% across the Group on an as reported basis
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· Early signs of progress in Services in
· Trading performance for the three onerous contracts continues in line with expectations
· Revenue growth across the business in
· Charge of
* Adjusted profit before tax and adjusted diluted earnings per share is stated prior to exceptional items and amortisation of acquired intangibles. Adjusted operating profit is also stated after charging interest on customer specific financing.
** Figures provided are on an as reported basis.
*** The H1 2013 'Underlying Net Funds' Position is presented having been adjusted for the remittance of
'We end the first half of 2014 with the Group having made solid progress against its strategic objectives and financial key performance indicators. The delivery of 16% growth in adjusted* diluted earnings per share, Computacenter's primary measure of financial success, was especially pleasing.
Trading remains in line with the Board's expectations, and the significant incremental organic investment that we continue to make in our business, in addition to the market opportunities that are presenting themselves, gives us confidence for the rest of the year and beyond.'
Enquiries:
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Mike Norris, Chief Executive |
01707 631601 |
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Tony Conophy, Finance Director |
01707 631515 |
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Tulchan Communications: |
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James Macey White |
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Christian Cowley |
0207 353 4200 |
Chairman's Statement
The first half of 2014 marked a period of strength in our
Our UK Managed Services revenues have grown significantly, and we have won new contracts which bode well for continued growth. We believe that we continue to increase our market share in Services as we pursue our strategic objectives. We are pleased with our product revenue growth in the
In
We continue to manage our resources prudently. Our cash position has improved by
We are on track to meet the Board's expectations for 2014, and we continue to invest to grow the business in future years. We will need relentless focus on execution. This is at the heart of the way the Company leadership operates and it must be. Competition is tough and our customers demand a lot from us - nothing can or should be taken for granted. I thank all of our employees whose continued passion and loyalty is marked. Above all, I thank our customers for their business and their confidence in us.
Strategic Progress
Computacenter has continued to focus on its four key Group strategic objectives and has made good progress against these during the first half of 2014.
1. To lead with and grow our Services business
What we have achieved so far in 2014
· Relevant Group Strategic Key Performance Indicator: Our Group total Services contract base finished the period at
· Continued implementation of our Services-led strategy, with a 5.3% growth in total Services revenue in constant currency versus the same period last year.
· This was underpinned by a very strong performance by the
· Following the implementation of our Group Operating Model, the German Services business is beginning to show signs of progress reflected by the win of its largest Managed Services contract since
· A number of important steps have been taken to refocus the French business, but completing its transition to become Services-led is a medium-term objective. We have commenced the on-boarding of a large French customer for Managed Services in
Next Steps
· We seek to continue the significant Services revenue and profitability growth seen in the
· In
· Within our French business, we will take continued action to facilitate, and where appropriate, accelerate its transition to become Services-led.
2. To improve our Services productivity and enhance our competitiveness
What we have achieved so far in 2014
· Relevant Group Strategic key performance indicator: Revenue generated per Services head has grown from
· We split Services productivity and competitiveness into two distinct areas. Firstly, the productivity of customer-facing staff, measured by way of gross margin. Secondly, we measure the utilisation rate of our industrialised Services engines, such as for our Service Desks, Remote Management capability and Project Management capability.
· Gross margin levels remain strong in the
· Our French business lost a small number of important Services contracts in 2013, which have not been replaced. Therefore, whilst customer gross margins in the business remain reasonable, it has struggled with extremely low levels of utilisation of our central Services engines, which have in turn materially and negatively impacted overall Services margins. This has made it difficult for the French business to compete in its current structure.
Next steps
· Over the second half over the year, we expect the
· Our German Services margin still has scope for improvement, within customer-facing gross margins and the utilisation of our central Services engines. We expect to see some improvement in German business Service margin percentage during the second half of the year against the comparative period in 2013.
· Our issues in
3. To retain and maximise the relationship with our customers over the long-term
What we have achieved so far in 2014
· Relevant Group Strategic key performance indicator: The number of customer accounts which generate gross margin contribution of over
· The Group remains totally focused on providing its Service offerings to large and medium-sized enterprises and corporate entities which are headquartered in
· We have made particularly significant progress on this objective in the
Next steps
· The strength of pipeline in the
· We will continue to increase the volume of our customers' users that we serve globally through the development of our international Services business and the use of our established partner network. Additionally, in accordance with our Group business model, we will ensure that our sales processes are refined further to make our customers aware of the value that the full range of our Services offerings can deliver for them.
4. To innovate our Services offerings to build future growth opportunities
What we have achieved so far in 2014
· Relevant Group Strategic key performance indicator: Following further analysis of our strategic objectives, the key performance indicator for this objective has been changed from 'The share of our overall Services revenue against the Group's total revenue' to 'The Group's total Services revenue'. The Group's total Services revenue has increased by 5.3% in constant currency to
· During the period, we have embarked on one of the most comprehensive investment phases of our Services-led organic growth strategy, which has principally taken place in three areas. Firstly, we are developing our Services tools, systems and processes for our Next Generation Service Desk (NGSD) offering, the innovation which we believe will materially enhance the user experience for our customers' users and deliver significant competitive advantage for our business. Secondly, we are growing our international footprint, transferring a number of our key clients to our new service desk location in
Next steps
· The success we have experienced in transitioning the provision of Services for a number of our key clients to our newly-established Hungarian operation means that we will search for further capacity to be utilised in
· We expect to pilot our NGSD and Mobility Solutions internally during the third quarter of 2014, before doing the same with two external customers before the end of the year.
· We will continue to refine our governance processes to ensure that these keep pace with the development of our operational and technical capability, and that the Group acts at all times in accordance with the risk appetite as set by its Board of Directors.
Group Operating Update
Turnover and Adjusted* Profitability
The first half of 2014 was a period of solid progress for the Group, in which it continued to pursue its strategy of delivering organic revenue and profitability growth through targeted investment in its Services business.
During the period, total Group revenues increased by 2.2% on an as reported basis to
Whilst this performance was principally driven by another very strong performance from our UK Services business, we are now beginning to see early signs of progress from our Services business in
Group Supply Chain revenues were up by 1.7% on an as reported basis to
We were undoubtedly disappointed by our Supply Chain performance in
Group profitability was mixed within our operating units, with significant adjusted* profit before tax growth in the
Statutory Performance and Exceptional Items
During the period, the Group took an exceptional item of
As we previously announced on
Our three onerous contracts in
Cash Position
Cash flow generation continued to remain strong throughout the period and Underlying Net Funds*** increased by
As noted in the 2013 Annual Report and Accounts, working capital in
We have taken the decision not to report the cash position exclusive of Customer Specific Financing ("CSF") in the interest of reducing the complexity of our financial reporting, as we expect CSF to remain broadly stable for future periods.
Dividend
We are pleased to announce an interim dividend of
Outlook
In line with the Board's expectations, the company is heading for another year of record adjusted* pre-tax profits in 2014. Additionally, the company continues to make significant incremental organic investments through our income statement to sustain profit growth into the future.
The performance, particularly of the
The investments we continue to make in our business and the market opportunities that are presenting themselves gives us confidence for the rest of the year and beyond.
Computacenter in the
The
The ongoing delivery of new Managed Services wins in the
Our Supply Chain business also continues to be assisted by the ongoing macro-economic recovery in the
Therefore, our strategic focus has been to develop our capability and capacity to enable our customers' users principally through our Services business. Through this aspiration, we aim to deliver value that is predictable and sustainable through the continued growth of our Managed Services business. Additionally, we look to deliver high-quality, innovative Professional Services solutions that deliver a comparatively higher rate of return on capital. In light of this focus, we are pleased to report that, despite significant Services growth in 2013, the UK's Services business still grew by 8.2% to
The high utilisation of our Services staff has been especially prevalent within our Professional Services business during the first half of the year, as anticipated. This continued to be dominated by projects focused on the modernisation of our customers' user workspace. We see nothing at present to indicate that this demand for our Professional Services offerings will abate in the short-term, as we continue to see large numbers of our customers modernise their user environments through Windows 7/8 and Office 2010 upgrades.
In the medium-term, we believe that our customers will continue to enable their users' productivity and effectiveness. As such, in order to sustain our rate of Professional Services growth, we are very focused on further accelerating our Professional Services through related Datacenter and Networking upgrade and transformation activity. We also believe that significant Professional Services demand will be based around 'mobility', and given the significant investment that the Group is making to develop its capability in this area, we are optimistic that the
Our UK Managed Services business has made good progress during the first half of the year, which has seen a number of successful renewals, with one particularly significant renewal of a major customer contract. The Group's investment in its IT Services geographic footprint is also yielding positive outcomes as evidenced by the renewal of a
The
The UK Services business has also signed a contract with Network Rail to deliver workplace support, which will help improve its end user experience and employee productivity. Under the five-year contract, Computacenter will deliver a major workplace transformation programme incorporating the deployment of new desktop hardware including thin client devices and Microsoft Windows 7. The contract covers more than 27,000 end user devices such as desktops, laptops and thin clients at 1,777 sites across the
We remain optimistic that the growth of our Managed Services business will remain strong in the medium term, as the business continues to invest in developing our portfolio of Services offerings to enable our customers' users. Our Managed Services pipeline for the second half of the year is strong, and we are confident that we will be able to take advantage of these opportunities. However, as we try to sustain our revenue growth, our established governance processes will remain absolutely central to our ability to maintain appropriate Services margins, particularly as some new contracts may involve technology transformation and as our global service reach extends further afield. We continue to invest in and update these processes to ensure that they keep pace with the development of our Services offerings.
Following a year of consolidation at our IT redeployment and recycling subsidiary, RDC, the business was able to make good progress with its new ERP system implementation now firmly behind it. It is now reaping the benefit of having a stable IT system in place, the roll-out of greater levels of automation within its sales and reporting processes and re-location to new, larger processes in
We are very encouraged by the performance of the
Computacenter in
Total revenue reduced by 9.6% in constant currency to €640.8 million (H1 2013: €709.0 million), primarily as a result of a significant revenue reduction in our Supply Chain business. Adjusted* operating profit for the German segment, which excludes the three onerous contracts, reduced by 16.3% in constant currency to €9.5 million (H1 2013: €11.4 million).
Supply Chain revenue reduced by 15.4% in constant currency to €397.8 million (H1 2013: €470.0 million). Whilst we are particularly disappointed with this performance, it should be noted that just over 40 percent of this reduction relates to a single low margin software licence of circa €30 million sold in the second quarter of 2013 and not repeated this year. The Supply Chain business was also materially impacted by the loss of one significant customer contract during the second quarter of 2013 and a weaker performance by our datacenter business. However, whilst volumes have been significantly reduced, it is important to note that margins with our Supply Chain business have remained stable.
More significantly in terms of the Group's overall Services-led strategy, we are beginning to see some positive progress with our Managed Services business in
We are particularly encouraged by the recent win of an IT help-desk deal for a large German automobile manufacturer which represents, in revenue terms, the largest Managed Services contract that the German business has won since the issues arising from the three onerous contracts entered into at the end of 2011. Our business has agreed to provide support for the Company's 150,000 users. Computacenter has won a four-year workplace outsourcing deal with the German insurance company, Talanx. Under the new contract, we will provide centralised support services for 12,000 Talanx employees from our shared operations centres in Erfurt and Kerpen and shared datacenter in
We are confident that with the implementation of our Group Operating Model and the restructuring and realignment of our sales force having taken place, we have a solid foundation on which to aggressively pursue Managed Services opportunities in
As our industrialised bidding and contracting processes continue to take effect, we are seeing an ongoing gradual increase in our Services margins on existing business. We believe that there is scope for a further increase of margins during the second half of the year, as these processes are further refined and utilised more efficiently and our German workforce becomes increasingly familiar with them. Additional Services contract wins that materially utilise the central Services engines in the second half of the year would assist in improving Services margins further.
We have been pleased with the performance of our Professional Services business, which continues to benefit from significant demand for workplace offerings, especially ongoing Windows migrations. Our strong consulting capability is also assisting our growth in this area and we anticipate that the strength of this performance will continue for the remainder of 2014.
During the period, the business carried out a project for our long-standing customer, a chemical production company, to migrate its existing unified communications and collaborations solution to a virtualised platform. During the project, Computacenter migrated 30,000 users in 20 countries over five consecutive weekends. With the new consistent and consolidated unified communications and collaboration environment, the customer has reduced its operating costs and created the basis for the use of an up-to-date and future-oriented solution.
Our three onerous contracts in
Computacenter in
During the first six months of 2014, total revenue increased by 15.1% in constant currency, to €281.0 million (H1 2013: €244.1 million). The majority of this increase was attributable to the Supply Chain business, which increased by 17.4% over the period to €234.9 million (H1 2013: €200.2 million). However, margins across the business remain challenging, with the adjusted* operating loss increasing in constant currency from €5.4 million at the end of H1 2013, to €6.9 million at the end of the period.
We are encouraged by this Supply Chain revenue performance, which we believe is testament to the delivery of an improved customer experience. It also illustrates that our systems issues, which caused operational problems in the business in 2013, affecting its ability to manage the delivery of product and parts through its logistics operation, are now behind us and have not resulted in the loss of any of our material Supply Chain customers.
However, we are also aware that this growth has been flattered by a very weak comparator from
Computacenter in
This process is still in its very early stages, and although we can report that Services revenue was up by 4.8% in constant currency to €46.1 million (H1 2013: €43.9 million), this was due to the ongoing take-on of one very large Managed Services contract during the period. Without this new contract, Services revenue was down by 5.8% in constant currency against that achieved in the first half of 2013, which has materially impacted Services margins. We remain focused on developing a business that is consistently able to design, sell and deliver high-quality IT Services and Solutions that enable the users of our target customers throughout the Group. A number of actions have taken place to facilitate, and where possible, accelerate this process during the period.
Firstly, we are aligning our structure so that it better serves our large customers in the private and public sector, to ensure that we are best placed to offer the full portfolio of Computacenter Product and Services offerings. We have reviewed our customer base in detail to ensure that the customers we do serve fit the size and profile that enable us to deliver IT value for them, and appropriate financial returns for the Group.
We are also investing to support our customers in the area of Managed Services. As part of this, we are developing our IT Services desk French language capability through the establishment of an additional location in Montpellier,
As detailed above, gross margins remain challenging across the business, particularly within Services. The loss of a small number of important Services deals during 2013 has impacted Services margin, principally due to the resulting poor utilisation of staff, especially within our Professional Services and Maintenance businesses.
We remain uncompetitive and in order to improve the long-term profitability of our French business, we are taking steps to address our cost base. We have previously announced that, as a result of the action we are taking to increase the ability of the business to compete, we have taken an exceptional restructuring charge of
The French business has also seen a change of Management during the period in order to drive the significant change action that is taking place there. Ms
Whilst the significant and wide-ranging action that we are taking in
Computacenter in
The Group's Belgian business performed strongly over the first half of the year, achieving significant levels of growth in both revenue and profitability across the business. Total revenue for the reporting period increased by 14.8% in constant currency to €31.0 million (H1 2013: €27.0 million), whilst adjusted* operating profit also increased by approximately 63.1% in constant currency to €1.2 million.
Total Supply Chain revenue, in constant currency, increased by 15.5% to €19.3 million (H1 2013: €16.7 million). Whilst this performance was slightly flattered by a drop in demand for our Supply Chain offerings during the first half of 2013, and therefore a weaker comparative performance, it was a pleasing achievement which has been driven principally by the ongoing improvement of economic market conditions in
Overall, Services revenue has also increased significantly over the period by almost 13.7% in constant currency to €11.7 million (H1 2013: €10.3 million). This has been assisted by a number of successful Managed Services contract renewals, and on a number of these, we have seen the customer increase the scope of Services that it receives from us. We believe this is testament to the high levels of Services execution which we are delivering to our existing customers.
Our Services performance has also been assisted by the contribution of Informatic Services IS ("IS"), the business we acquired in
We remain confident that the business will continue to make good progress during the second half of the year. However, given the comparatively strong performance by the business in H2 2013, we expect that rates of growth will reduce from those seen so far during 2014. A continued economic recovery in
Risk
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Our Risk Management Approach and the principal risks to our business remain as set out on pages 12 to 15 of our 2013 Report and Accounts.
Our principal risks continue to be concentrated in the availability and resilience of systems, our people, our cost base, technology change, and in the design, take on, and running of large services contracts, and are shown on the following table.
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Principal risks |
Potential impacts |
Primary mitigations |
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A |
Failure(s) leading to unacceptably long outages or regular short outages of our customer-facing systems. |
• Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage |
• All centrally-hosted systems are built and operated on High Availability infrastructure. • Enhanced Group IS support models, with key Operations and Applications staff on call 24x7 to respond quickly in the event of failures or issues. |
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B |
Not recruiting and retaining the right calibre of staff across any of our customer facing functions. |
• Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage |
• We perform regular remuneration benchmarking to ensure we remain competitive. • We invest in management development programmes. • There is an annual staff survey to understand employee views. • We have implemented a series of staff retention initiatives. |
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C |
We fail to implement appropriate designs and pricing structures for Managed Services or outcome based project management contracts. |
• Reduced margin • Loss-making contracts • Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage |
• The Group Operating Model is in place in the UK, Germany and France. This incorporates mandatory gateway governance products and processes, as well as the Group signing policy. • There is Board oversight of significant bids. |
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D |
Inadequate succession planning and not eough management depth within key senior management areas of the business. |
• Lack of leadership |
• Board consideration of succession plans. • Management development programmes to develop talent.
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E |
Letting our direct costs run out of control and not taking advantage of productivity and cost reduction opportunities. |
• Reduced margin |
• We employ a range of metrics on a monthly and quarterly basis to ensure that we properly manage our direct costs and monitor productivity. • We have a programme of activities to deliver cost reduction opportunities, through the reduction of manual effort. |
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F |
Technology change dramatically reduces customer need and demand for our Service offerings. |
• Reduced margin • Excess operational staff • Contracts not renewed |
• We mitigate this through a range of measures including win/loss reviews, senior management forums and strategy reviews where we consider our offerings alongside where the market is going. |
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G |
Failure to deliver and manage effectively our international business strategies. By association the risk around take-on and management of our international partners. |
• Reduced margin • Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage |
• Annual senior management review of our International business and team. • In relation to our partner network we have upgraded our contracts and have increased the level of monitoring activity.
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H |
Failure to develop a Group culture. |
• Loss of synergies • Loss of brand identity |
• Deployment of Group Operating Model resulting in consistent ways of working. • Initiatives to reduce in-country barriers. |
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I |
Letting our inventory and/or receivables get out of control. |
• Financial impact through obsolete stock and/or bad debts |
• We mitigate these risks through a range of measures including: monthly and quarterly metrics, credit scoring and credit limits for customers, and utilisation of direct delivery where possible. |
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J |
A security hacking or virus problem at a customer that is due to Computacenter's negligence, mismanagement or employee rogue behaviour leading to a breach and/or loss of data. |
• Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage |
• We have well-communicated Group policies for information security and virus prevention. • There is specific induction and training for staff working on customer sites/systems, as well as specific policies and procedures for anyone working behind a customer firewall.
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K |
Not fully understanding employment terms and conditions and the obligations on Computacenter resulting from transferring staff into the Company |
• Reduced margin |
• Our Group Legal team review all bids that involve staff transfer. • We build the effects of transferring staff into our cost and pricing models, and seek to build commercial terms into new contracts to minimise the impact. |
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L |
Failure to deliver against contract during transformation and committed Service productivity improvements and Service levels in contract life leading to penalty clauses or financial underachievement and a lack of Service or technical innovation. |
• Customer dissatisfaction • Financial penalties • Contract cancellations • Reputational damage • Reduced margin |
• The Group Operating Model is in place in the UK, Germany and France. This incorporates mandatory gateway governance products and processes, as well as the Group signing policy and Service management best practice. • We have an increasingly mature root cause analysis and lessons learnt process for complex transformations. • We perform regular commercial and contract 'deep dives' to manage Service productivity improvements. |
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M |
Not investing appropriately or over investing in the wrong automation, self-service and remote tools when compared to our competition. |
• Reduced margin • Win less new business • Contracts not renewed |
• This is linked to Risk F - we mitigate this through a range of measures including win/loss reviews, senior management forums and strategy reviews where we consider our offerings alongside our competitors and where the market is going. |
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
On behalf of the Board
Independent review report to
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
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (
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
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the
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 (
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
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Consolidated income statement |
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For the six months ended 30 June 2014 |
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Unaudited |
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Unaudited |
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Audited |
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H1 2014 |
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H1 2013 |
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Year 2013 |
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Note |
£'000 |
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£'000 |
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£'000 |
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Revenue |
4 |
1,458,284 |
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1,426,346 |
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3,072,075 |
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Cost of sales |
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(1,268,013) |
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(1,241,158) |
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(2,668,814) |
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Gross profit |
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190,271 |
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185,188 |
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403,261 |
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Administrative expenses |
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(161,830) |
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(159,003) |
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(321,096) |
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Operating profit: |
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Before amortisation of intangibles and exceptional items |
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28,441 |
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26,185 |
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82,165 |
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Amortisation of acquired intangibles |
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(884) |
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(1,296) |
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(2,375) |
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Onerous contracts |
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- |
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(15,780) |
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(15,739) |
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Non-cash impairment |
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- |
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(12,195) |
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(12,195) |
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Other exceptional items |
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(9,100) |
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(1,324) |
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(830) |
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Total exceptional items |
6 |
(9,100) |
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(29,299) |
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(28,764) |
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Operating profit/(loss) |
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18,457 |
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(4,410) |
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51,026 |
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Finance revenue |
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771 |
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1,001 |
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1,351 |
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Finance costs |
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(1,194) |
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(941) |
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(1,852) |
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Profit before tax: |
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Before amortisation of intangibles and exceptional items |
4 |
28,018 |
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26,245 |
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81,664 |
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Amortisation of acquired intangibles |
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(884) |
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(1,296) |
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(2,375) |
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Onerous contracts |
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- |
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(15,780) |
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(15,739) |
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Non-cash impairment |
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- |
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(12,195) |
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(12,195) |
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Other exceptional items |
|
(9,100) |
|
(1,324) |
|
(830) |
|
Total exceptional items |
6 |
(9,100) |
|
(29,299) |
|
(28,764) |
|
Profit/(loss) before tax |
4 |
18,034 |
|
(4,350) |
|
50,525 |
|
|
|
|
|
|
|
|
|
Income tax expense: |
|
|
|
|
|
|
|
Before amortisation of intangibles and exceptional items |
|
(8,036) |
|
(7,304) |
|
(19,325) |
|
Tax on amortisation of intangibles |
|
117 |
|
122 |
|
244 |
|
Tax on onerous contracts |
|
- |
|
1,894 |
|
1,889 |
|
Tax on non-cash impairment |
|
- |
|
1,014 |
|
1,014 |
|
Tax on other exceptional items |
|
- |
|
146 |
|
(700) |
|
Tax on exceptional items |
|
- |
|
3,054 |
|
2,203 |
|
Exceptional tax items |
6 |
- |
|
- |
|
(489) |
|
Income tax expense |
7 |
(7,919) |
|
(4,128) |
|
(17,367) |
|
Profit/(loss) for the period |
|
10,115 |
|
(8,478) |
|
33,158 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the parent |
|
10,115 |
|
(8,478) |
|
33,160 |
|
Non-controlling interest |
|
- |
|
- |
|
(2) |
|
Profit/(loss) for the period |
|
10,115 |
|
(8,478) |
|
33,158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
- basic for profit /(loss) for the period |
8 |
7.4p |
|
(5.7)p |
|
23.2p |
|
- diluted for profit /(loss)for the period |
8 |
7.4p |
|
(5.7)p |
|
23.0p |
|
Consolidated statement of comprehensive income |
|
|
|
|
|
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
Profit/(loss) for the period |
10,115 |
|
(8,478) |
|
33,158 |
|
|
|
|
|
|
|
|
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
Loss arising on cash flow hedge |
(376) |
|
(639) |
|
(1,403) |
|
Income tax effect |
81 |
|
149 |
|
326 |
|
|
(295) |
|
(490) |
|
(1,077) |
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
(5,811) |
|
10,308 |
|
4,326 |
|
|
(6,106) |
|
9,818 |
|
3,249 |
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
4,009 |
|
1,340 |
|
36,407 |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
Equity holders of the parent |
4,009 |
|
1,341 |
|
36,407 |
|
Non-controlling interest |
- |
|
(1) |
|
- |
|
|
4,009 |
|
1,340 |
|
36,407 |
|
Consolidated balance sheet |
|
|
|
|
|
|
|
As at 30 June 2014 |
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
Note |
£'000 |
|
£'000 |
|
£'000 |
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
82,891 |
|
95,344 |
|
89,044 |
|
Intangible assets |
|
95,710 |
|
94,393 |
|
98,870 |
|
Investment in associates |
|
43 |
|
620 |
|
45 |
|
Deferred income tax asset |
|
14,977 |
|
17,139 |
|
15,172 |
|
|
|
193,621 |
|
207,496 |
|
203,131 |
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
71,840 |
|
69,549 |
|
58,618 |
|
Trade and other receivables |
|
532,520 |
|
521,307 |
|
667,722 |
|
Prepayments |
|
56,745 |
|
54,892 |
|
61,579 |
|
Accrued income |
|
69,180 |
|
68,161 |
|
53,140 |
|
Forward currency contracts |
|
164 |
|
83 |
|
- |
|
Financial asset |
|
- |
|
31,412 |
|
- |
|
Current asset investment |
13 |
- |
|
10,000 |
|
- |
|
Cash and short-term deposits |
|
70,982 |
|
76,336 |
|
91,098 |
|
|
|
801,431 |
|
831,740 |
|
932,157 |
|
Total assets |
|
995,052 |
|
1,039,236 |
|
1,135,288 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
482,414 |
|
474,528 |
|
604,945 |
|
Deferred income |
|
109,060 |
|
107,860 |
|
115,986 |
|
Return of value |
|
- |
|
74,965 |
|
- |
|
Financial liabilities |
|
11,614 |
|
11,650 |
|
8,147 |
|
Forward currency contracts |
|
700 |
|
548 |
|
2,360 |
|
Income tax payable |
|
9,118 |
|
4,144 |
|
10,239 |
|
Provisions |
11 |
10,442 |
|
8,203 |
|
6,005 |
|
|
|
623,348 |
|
681,898 |
|
747,682 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
5,350 |
|
8,974 |
|
11,540 |
|
Provisions |
11 |
11,491 |
|
12,384 |
|
10,449 |
|
Deferred income tax liabilities |
|
829 |
|
1,012 |
|
947 |
|
|
|
17,670 |
|
22,370 |
|
22,936 |
|
Total liabilities |
|
641,018 |
|
704,268 |
|
770,618 |
|
Net assets |
|
354,034 |
|
334,968 |
|
364,670 |
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
Issued capital |
|
9,276 |
|
9,250 |
|
9,271 |
|
Share premium |
|
4,597 |
|
3,654 |
|
4,362 |
|
Capital redemption reserve |
|
74,963 |
|
74,957 |
|
74,963 |
|
Own shares held |
|
(11,655) |
|
(12,942) |
|
(11,976) |
|
Foreign currency translation reserve |
|
838 |
|
12,633 |
|
6,649 |
|
Retained earnings |
|
276,002 |
|
247,404 |
|
281,388 |
|
Shareholders' equity |
|
354,021 |
|
334,956 |
|
364,657 |
|
Non-controlling interest |
|
13 |
|
12 |
|
13 |
|
Total equity |
|
354,034 |
|
334,968 |
|
364,670 |
Approved by the Board on
MJ Norris, Chief Executive FA Conophy, Finance Director
Consolidated statement of changes in equity
|
|
Attributable to equity holders of the parent |
|
|
||||||
|
|
Issued capital |
Share premium |
Capital redemption reserve |
Own shares held |
Foreign currency translation reserve |
Retained earnings |
Total |
Minority interest |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
At 1 January 2013 |
9,234 |
3,769 |
74,957 |
(13,848) |
2,325 |
345,893 |
422,330 |
13 |
422,343 |
|
Profit for the period |
- |
- |
- |
- |
- |
(8,478) |
(8,478) |
- |
(8,478) |
|
Other comprehensive income |
- |
- |
- |
- |
10,308 |
(490) |
9,818 |
(1) |
9,817 |
|
Total comprehensive income |
- |
- |
- |
- |
10,308 |
(8,968) |
1,340 |
(1) |
1,339 |
|
Cost of share-based payment |
- |
- |
- |
- |
- |
527 |
527 |
- |
527 |
|
Tax on share-based payment transactions |
- |
- |
- |
- |
- |
(268) |
(268) |
- |
(268) |
|
Exercise of options |
1 |
57 |
- |
906 |
- |
(906) |
58 |
- |
58 |
|
Bonus issue |
15 |
(15) |
- |
- |
- |
- |
- |
- |
- |
|
Expenses on bonus issue |
- |
(157) |
- |
- |
- |
- |
(157) |
- |
(157) |
|
Return of value |
- |
- |
- |
- |
- |
(73,115) |
(73,115) |
- |
(73,115) |
|
Equity dividends |
- |
- |
- |
- |
- |
(15,759) |
(15,759) |
- |
(15,759) |
|
At 30 June 2013 |
9,250 |
3,654 |
74,957 |
(12,942) |
12,633 |
247,404 |
334,956 |
12 |
334,968 |
|
Profit for the period |
- |
- |
- |
- |
- |
41,638 |
41,638 |
(2) |
41,636 |
|
Other comprehensive income |
- |
- |
- |
- |
(5,984) |
(587) |
(6,571) |
3 |
(6,568) |
|
Total comprehensive income |
- |
- |
- |
- |
(5,984) |
41,051 |
35,067 |
1 |
35,068 |
|
Cost of share-based payment |
- |
- |
- |
- |
- |
543 |
543 |
- |
543 |
|
Tax on share-based payment transactions |
- |
- |
- |
- |
- |
394 |
394 |
- |
394 |
|
Exercise of options |
27 |
1,137 |
- |
966 |
- |
(966) |
1,164 |
- |
1,164 |
|
Expenses on bonus issue |
- |
(429) |
- |
- |
- |
- |
(429) |
- |
(429) |
|
Redemption of shares |
(6) |
- |
6 |
- |
- |
- |
- |
- |
- |
|
Equity dividends |
- |
- |
- |
- |
- |
(7,038) |
(7,038) |
- |
(7,038) |
|
At 31 December 2013 |
9,271 |
4,362 |
74,963 |
(11,976) |
6,649 |
281,388 |
364,657 |
13 |
364,670 |
|
Profit for the period |
- |
- |
- |
- |
- |
10,115 |
10,115 |
- |
10,115 |
|
Other comprehensive income |
- |
- |
- |
- |
(5,811) |
(295) |
(6,106) |
- |
(6,106) |
|
Total comprehensive income |
- |
- |
- |
- |
(5,811) |
9,820 |
4,009 |
- |
4,009 |
|
Cost of share-based payment |
- |
- |
- |
- |
- |
1,724 |
1,724 |
- |
1,724 |
|
Tax on share-based payment transactions |
- |
- |
- |
- |
- |
27 |
27 |
- |
27 |
|
Exercise of options |
5 |
235 |
- |
321 |
- |
(321) |
240 |
- |
240 |
|
Equity dividends |
- |
- |
- |
- |
- |
(16,636) |
(16,636) |
- |
(16,636) |
|
At 30 June 2014 |
9,276 |
4,597 |
74,963 |
(11,655) |
838 |
276,002 |
354,021 |
13 |
354,034 |
|
Consolidated cash flow statement |
|
|
|
|
|
|
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
Note |
£'000 |
|
£'000 |
|
£'000 |
|
Operating activities |
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
18,034 |
|
(4,350) |
|
50,525 |
|
Net finance expense/(income) |
|
423 |
|
(60) |
|
501 |
|
Depreciation |
|
10,263 |
|
11,705 |
|
22,735 |
|
Amortisation |
|
6,056 |
|
4,269 |
|
9,676 |
|
Impairment of intangible assets |
|
- |
|
12,195 |
|
12,195 |
|
Share-based payments |
|
1,724 |
|
527 |
|
1,070 |
|
Loss/(profit) on disposal of property, plant and equipment |
|
106 |
|
(442) |
|
(215) |
|
Loss on disposal of intangibles |
|
133 |
|
103 |
|
642 |
|
(Increase)/decrease in inventories |
|
(15,167) |
|
1,047 |
|
10,596 |
|
Decrease/(increase) in trade and other receivables |
|
107,200 |
|
59,274 |
|
(94,982) |
|
(Decrease)/increase in trade and other payables |
|
(108,140) |
|
(96,482) |
|
52,997 |
|
(Decrease)/increase in customer contract provisions |
|
(2,375) |
|
10,745 |
|
7,443 |
|
Other adjustments |
|
623 |
|
267 |
|
(456) |
|
Cash generated from/(used in) operations |
|
18,880 |
|
(1,202) |
|
72,727 |
|
Income taxes paid |
|
(8,592) |
|
(8,582) |
|
(9,624) |
|
Net cash flow from operating activities |
|
10,288 |
|
(9,784) |
|
63,103 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Interest received |
|
1,197 |
|
956 |
|
1,741 |
|
Decrease in current asset investment |
|
- |
|
- |
|
10,000 |
|
Acquisition of subsidiaries, net of cash acquired |
10 |
(465) |
|
- |
|
- |
|
Sale of property, plant and equipment |
|
31 |
|
51 |
|
921 |
|
Purchases of property, plant and equipment |
|
(5,216) |
|
(4,245) |
|
(9,609) |
|
Purchases of intangible assets |
|
(3,638) |
|
(3,095) |
|
(15,544) |
|
Net cash flow from investing activities |
|
(8,091) |
|
(6,333) |
|
(12,491) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Interest paid |
|
(1,783) |
|
(830) |
|
(2,663) |
|
Dividends paid to equity shareholders of the parent |
|
(16,636) |
|
(15,759) |
|
(22,797) |
|
Return of Value |
|
- |
|
- |
|
(73,115) |
|
Expenses on Return of Value |
|
- |
|
- |
|
(586) |
|
Proceeds from issue of shares |
|
240 |
|
58 |
|
1,222 |
|
Increase in other financial assets |
|
- |
|
(31,412) |
|
- |
|
Repayment of capital element of finance leases |
|
(3,410) |
|
(4,090) |
|
(8,066) |
|
Repayment of loans |
|
(2,378) |
|
(651) |
|
(2,766) |
|
New borrowings |
|
2,363 |
|
- |
|
9,267 |
|
Net cash flow from financing activities |
|
(21,604) |
|
(52,684) |
|
(99,504) |
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
(19,407) |
|
(68,801) |
|
(48,892) |
|
Effect of exchange rates on cash and cash equivalents |
|
(1,363) |
|
3,579 |
|
1,755 |
|
Cash and cash equivalents at the beginning of the period |
|
90,334 |
|
137,471 |
|
137,471 |
|
Cash and cash equivalents at the end of the period |
|
69,564 |
|
72,249 |
|
90,334 |
Notes to the accounts
1 Corporate information
The interim condensed consolidated financial statements of the Group for the six months ended
2 Basis of preparation
The interim condensed consolidated financial statements for the six months ended
The Group has maintained its positive cash position in the period. In order to ensure that the Group can maintain its strong liquidity position it has a
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
· IAS 32 amendments - Offsetting financial assets and financial liabilities
· IAS 39 amendments - Novation of derivatives and continuation of hedge accounting
· IAS 36 amendments - Recoverable Amount Disclosures for Non-Financial Assets
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 reportable operating segments shown below.
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 are the amortisation of acquired intangibles and exceptional items, as management do not consider these items when reviewing the underlying performance of a segment.
Segmental performance for the periods to H1 2014, H1 2013 and Full Year 2013 were as follows:
|
Six months ended 30 June 2014 (unaudited) |
|
|
|
|
||
|
|
|
UK |
Germany |
France |
Belgium |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Supply Chain revenue |
|
434,042 |
326,830 |
193,037 |
15,862 |
969,771 |
|
Services revenue |
|
|
|
|
|
|
|
Professional Services |
|
59,768 |
55,446 |
10,316 |
1,473 |
127,003 |
|
Contractual Services |
|
181,570 |
144,246 |
27,525 |
8,169 |
361,510 |
|
Total Services revenue |
|
241,338 |
199,692 |
37,841 |
9,642 |
488,513 |
|
Total revenue |
|
675,380 |
526,522 |
230,878 |
25,504 |
1,458,284 |
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
Adjusted gross profit |
|
102,291 |
69,648 |
14,734 |
3,256 |
189,929 |
|
Administrative expenses |
|
(77,342) |
(61,807) |
(20,406) |
(2,275) |
(161,830) |
|
Adjusted operating profit/(loss) |
|
24,949 |
7,841 |
(5,672) |
981 |
28,099 |
|
Adjusted net interest |
|
387 |
326 |
(738) |
(56) |
(81) |
|
Adjusted profit/(loss) before tax |
|
25,336 |
8,167 |
(6,410) |
925 |
28,018 |
|
Exceptional costs |
|
- |
- |
(9,100) |
- |
(9,100) |
|
Amortisation of acquired intangibles |
|
(240) |
(600) |
- |
(44) |
(884) |
|
Statutory profit/(loss) before tax |
|
25,096 |
7,567 |
(15,510) |
881 |
18,034 |
|
|
|
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
|
|
Share-based payments |
|
1,373 |
178 |
173 |
- |
1,724 |
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2013 (unaudited) |
|
|
||||
|
|
|
UK |
Germany |
France |
Belgium |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Supply Chain revenue |
|
369,054 |
400,016 |
170,356 |
14,227 |
953,653 |
|
Services revenue |
|
|
|
|
|
|
|
Professional Services |
|
52,798 |
47,736 |
10,690 |
1,230 |
112,454 |
|
Contractual Services |
|
170,297 |
155,676 |
26,711 |
7,555 |
360,239 |
|
Total Services revenue |
|
223,095 |
203,412 |
37,401 |
8,785 |
472,693 |
|
Total revenue |
|
592,149 |
603,428 |
207,757 |
23,012 |
1,426,346 |
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
Adjusted gross profit |
|
90,528 |
73,308 |
18,198 |
2,714 |
184,748 |
|
Administrative expenses |
|
(70,475) |
(63,605) |
(22,832) |
(2,091) |
(159,003) |
|
Adjusted operating profit/(loss) |
|
20,053 |
9,703 |
(4,634) |
623 |
25,745 |
|
Adjusted net interest |
|
625 |
144 |
(207) |
(62) |
500 |
|
Adjusted profit/(loss) before tax |
|
20,678 |
9,847 |
(4,841) |
561 |
26,245 |
|
Exceptional items: |
|
|
|
|
|
|
|
- onerous contracts |
|
- |
(15,780) |
- |
- |
(15,780) |
|
- impairment of intangibles |
|
- |
- |
(12,195) |
- |
(12,195) |
|
- exceptional costs |
|
- |
(1,324) |
- |
- |
(1,324) |
|
|
|
- |
(17,104) |
(12,195) |
- |
(29,299) |
|
Amortisation of acquired intangibles |
|
(396) |
(613) |
(242) |
(45) |
(1,296) |
|
Statutory profit/(loss) before tax |
|
20,282 |
(7,870) |
(17,278) |
516 |
(4,350) |
|
|
|
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
|
|
Share-based payments |
|
378 |
64 |
85 |
- |
527 |
|
Year ended 31 December 2013 (audited) |
|
|
|
|
||
|
|
|
UK |
Germany |
France |
Belgium |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Supply Chain revenue |
|
828,097 |
859,404 |
389,517 |
29,195 |
2,106,213 |
|
Services revenue |
|
|
|
|
|
|
|
Professional Services |
|
113,102 |
104,446 |
20,794 |
3,716 |
242,058 |
|
Contractual Services |
|
344,930 |
307,592 |
56,008 |
15,274 |
723,804 |
|
Total Services revenue |
|
458,032 |
412,038 |
76,802 |
18,990 |
965,862 |
|
Total revenue |
|
1,286,129 |
1,271,442 |
466,319 |
48,185 |
3,072,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
Adjusted gross profit |
|
200,097 |
158,051 |
38,320 |
6,006 |
402,474 |
|
Administrative expenses |
|
(143,926) |
(127,403) |
(45,603) |
(4,164) |
(321,096) |
|
Adjusted operating profit/(loss) |
|
56,171 |
30,648 |
(7,283) |
1,842 |
81,378 |
|
Adjusted net interest |
|
791 |
173 |
(561) |
(117) |
286 |
|
Adjusted profit/(loss) before tax |
|
56,962 |
30,821 |
(7,844) |
1,725 |
81,664 |
|
Exceptional items: |
|
|
|
|
|
|
|
- onerous contracts |
|
- |
(15,739) |
- |
- |
(15,739) |
|
- impairment of intangibles |
|
- |
- |
(12,195) |
- |
(12,195) |
|
- exceptional costs |
|
3,466 |
(3,105) |
(1,191) |
- |
(830) |
|
|
|
3,466 |
(18,844) |
(13,386) |
- |
(28,764) |
|
Amortisation of acquired intangibles |
|
(792) |
(1,225) |
(242) |
(116) |
(2,375) |
|
Statutory profit/(loss) before tax |
|
59,636 |
10,752 |
(21,472) |
1,609 |
50,525 |
|
|
|
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
|
|
Share-based payments |
|
838 |
(2) |
234 |
- |
1,070 |
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 Exceptional items
|
|
Unaudited |
Unaudited |
Audited |
|
|
H1 2014 |
H1 2013 |
Year 2013 |
|
|
£'000 |
£'000 |
£'000 |
|
Operating profit |
|
|
|
|
Onerous contracts |
- |
(15,780) |
(15,739) |
|
Impairment of acquired intangible assets |
- |
(12,195) |
(12,195) |
|
Redundancy and other restructuring costs |
(9,100) |
(1,324) |
(4,291) |
|
Impairment of investment in associate |
- |
- |
(539) |
|
Services contracts re-evaluation |
- |
- |
4,000 |
|
|
(9,100) |
(29,299) |
(28,764) |
|
Income tax |
|
|
|
|
Tax on onerous contracts included in operating profit |
- |
1,894 |
1,889 |
|
Tax on impairment of acquired intangible assets |
- |
1,014 |
1,014 |
|
Tax on exceptional items included in operating profit |
- |
146 |
(700) |
|
Total tax on exceptional items |
- |
3,054 |
2,203 |
|
Exceptional tax items |
|
|
|
|
-Deferred tax asset in respect of France |
- |
- |
(2,184) |
|
-Tax credit in relation to prior year R&D claim |
- |
- |
1,695 |
|
|
- |
3,054 |
1,714 |
|
|
|
|
|
|
Exceptional items after taxation |
(9,100) |
(26,245) |
(27,050) |
2014
Computacenter France has incurred an exceptional charge of
The substantial restructuring exercise currently underway aims to reduce the cost base, improve the competitiveness and therefore improve the profitability of the Group's French business.
In line with our accounting policy, management has elected under IAS1 to report this provision under the heading of "Exceptional Items" due to the materiality, infrequency and nature of the restructuring plan. This election provides the best guidance to users of our external reporting as to the underlying profitability trends within the Group and to present the results of the Group in a way that is fair, balanced and understandable. Excluding the costs related to the restructuring plan is consistent with treatments of similar costs in prior periods and presents the Adjusted Profit Before tax in a way that enables users to better assess the quality of the Groups underlying profitability.
Further details of the treatment of the restructuring costs are disclosed in note 11.
2013
In
Included within the German segment results in 2012 and 2013 were losses incurred in relation to these onerous contracts. In order to provide a clearer understanding of the performance of the remainder of the business, losses previously recognised within the German operating result for these contracts were reclassified within exceptional items. In 2012 trading losses of
The deterioration in the performance of Computacenter France led to an assessment of their non-current assets. It was concluded that the forecasted cash flows for the French cash generating unit did not fully support the value of non-current assets in the business. This resulted in an impairment of
During 2013 Computacenter Germany continued its programme, from late 2012, to reduce its net operating expenses. As a result, redundancy costs of
Similarly, Computacenter France began a programme to also reduce its SG&A and restructure its business and senior management in line with the Group Operating Model. Redundancy related expenses of
Due to the continued adverse performance of our equity accounted associate,
As part of our normal processes, we carried out a detailed evaluation of other long-term Services contracts across the Group. As a result of this on-going evaluation, management calculated that a positive change in certain estimates resulted in a one-off gain of
During the year a deferred tax asset relating to losses carried forward in
Tax relief from prior period Research and Development project spend on the Group ERP platforms resulted in a prior year adjustment credited in the statutory tax charge for the year. Due to the timing, materiality and one-off nature of this relief, it was decided to classify it as an exceptional tax item.
7 Income tax
The Group calculates the period income tax expense using the tax rate that would be applicable to the total expected total annual earnings.
|
The charge based on the profit/(loss) for the period comprises: |
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
UK corporation tax |
|
|
|
|
|
|
- operating result |
6,653 |
|
5,329 |
|
14,395 |
|
- exceptional items |
- |
|
- |
|
(891) |
|
Total UK corporation tax |
6,653 |
|
5,329 |
|
13,504 |
|
Foreign tax |
|
|
|
|
|
|
- operating result |
2,159 |
|
2,196 |
|
5,031 |
|
- exceptional items |
- |
|
(613) |
|
(1,994) |
|
Total foreign tax |
2,159 |
|
1,583 |
|
3,037 |
|
Adjustments in respect of prior periods |
(103) |
|
- |
|
(509) |
|
Deferred tax |
|
|
|
|
|
|
- operating result |
(790) |
|
(489) |
|
139 |
|
- adjustments in respect of prior periods |
- |
|
- |
|
25 |
|
Exceptional items |
- |
|
(2,295) |
|
1,171 |
|
Total deferred tax |
(790) |
|
(2,784) |
|
1,335 |
|
|
7,919 |
|
4,128 |
|
17,367 |
The main rate of corporation tax will be reduced to 20% from
8 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 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
Profit/(loss) attributable to equity holders of the parent |
10,115 |
|
(8,478) |
|
33,160 |
|
Amortisation of acquired intangibles attributable to equity holders of the parent |
884 |
|
1,296 |
|
2,375 |
|
Tax on amortisation of acquired intangibles |
(117) |
|
(122) |
|
(244) |
|
Exceptional items within operating profit |
9,100 |
|
29,299 |
|
28,764 |
|
Tax on exceptional items included in operating profit |
- |
|
(3,054) |
|
(2,203) |
|
Exceptional tax items |
- |
|
- |
|
489 |
|
Adjusted profit after tax |
19,982 |
|
18,941 |
|
62,341 |
|
|
|
|
|
|
|
|
|
No.'000 |
|
No '000 |
|
No '000 |
|
Basic weighted average number of shares (excluding own shares held) |
135,961 |
|
149,512 |
|
142,665 |
|
Effect of dilution: |
|
|
|
|
|
|
Share options |
1,423 |
|
1,416 |
|
1,428 |
|
Diluted weighted average number of shares |
137,384 |
|
150,928 |
|
144,093 |
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
|
|
pence |
|
pence |
|
pence |
|
Basic earnings per share |
7.4 |
|
(5.7) |
|
23.2 |
|
Diluted earnings per share |
7.4 |
|
(5.7) |
|
23.0 |
|
Adjusted basic earnings per share |
14.7 |
|
12.7 |
|
43.7 |
|
Adjusted diluted earnings per share |
14.5 |
|
12.5 |
|
43.3 |
9 Dividends paid and proposed
A final dividend for 2013 of 12.3p per ordinary share was paid on
10 Business combinations
Update on acquisitions made in 2012
On
11 Provisions
|
|
|
Customer contract provisions |
|
Restruc-turing provisions |
|
Property provisions |
|
Total provisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
At 1 January 2013 |
|
2,108 |
|
- |
|
8,720 |
|
10,828 |
|
Arising during the period |
|
10,672 |
|
- |
|
- |
|
10,672 |
|
Utilised |
|
- |
|
- |
|
(1,015) |
|
(1,015) |
|
Amounts unused reversed |
|
- |
|
- |
|
(281) |
|
(281) |
|
Exchange adjustment |
|
193 |
|
- |
|
190 |
|
383 |
|
At 30 June 2013 |
|
12,973 |
|
- |
|
7,614 |
|
20,587 |
|
Arising during the period |
|
- |
|
- |
|
130 |
|
130 |
|
Utilised |
|
(3,107) |
|
- |
|
(181) |
|
(3,288) |
|
Amounts unused reversed |
|
- |
|
- |
|
(451) |
|
(451) |
|
Exchange adjustment |
|
(315) |
|
- |
|
(209) |
|
(524) |
|
At 31 December 2013 |
|
9,551 |
|
- |
|
6,903 |
|
16,454 |
|
Arising during the period |
|
- |
|
9,000 |
|
65 |
|
9,065 |
|
Utilised |
|
(2,375) |
|
- |
|
(588) |
|
(2,963) |
|
Exchange adjustment |
|
(299) |
|
(231) |
|
(93) |
|
(623) |
|
At 30 June 2014 |
|
6,877 |
|
8,769 |
|
6,287 |
|
21,933 |
|
Current June 2014 |
3,791 |
|
3,044 |
|
3,607 |
|
10,442 |
|
Non-current June 2014 |
3,086 |
|
5,725 |
|
2,680 |
|
11,491 |
|
|
|
|
|
|
|
|
|
|
Current June 2013 |
6,282 |
|
- |
|
1,921 |
|
8,203 |
|
Non-current June 2013 |
6,691 |
|
- |
|
5,693 |
|
12,384 |
|
|
|
|
|
|
|
|
|
|
Current December 2013 |
4,268 |
|
- |
|
1,737 |
|
6,005 |
|
Non-current December 2013 |
5,283 |
|
- |
|
5,166 |
|
10,449 |
Customer contract provisions are based on the Directors' best estimate of the amount of future losses to completion on certain contractual services contracts in
Management have a detailed formal plan for the French restructuring that is sufficiently well advanced and which has been comprehensively communicated to the affected parties and appropriate authorities such that a constructive obligation on the Group has been created. At
Initial operational changes have been implemented which, along with the communication noted above, have raised a valid expectation within all affected parties that the Group will carry out the notified action, as programmed, in the second half of the year. Management have used the detailed plan itself to reliably estimate the total cost of the obligation, and the outflow of resources from the Group which will result, given the information currently available.
Only those costs directly related to the restructuring, and specifically the termination costs and benefits accruing to the affected employees, have been provided for.
Further details of the treatment of the restructuring costs are disclosed in note 6.
Assumptions used to calculate the property provisions are based on the market value of the rental charges plus any contractual dilapidation expenses on empty properties and the Directors' best estimates of the likely time before the relevant leases can be reassigned or sublet, which ranges between one and nine years. The provision in relation to the
12 Fair value measurements recognised in the consolidated balance sheet
Financial instruments which are recognised at fair value subsequent to initial recognition are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The three levels are defined as follows:
1. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
2. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3. Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
At
At
The realised gains from forward currency contracts in the period to
The foreign currency forward contracts are measured based on observable spot exchange rates, the yield
curves of the respective currencies as well as the currency basis spreads between the respective currencies. All
contracts are fully cash collateralised, thereby eliminating both counterparty and the Group's own credit risk.
The carrying value of the Group's short-term receivables and payables is a reasonable approximation of their fair values. The fair value of all other financial instruments carried within the Group's financial statements is not materially different from their carrying amount.
| 13 Analysis of net funds |
|
||||||||||
|
|
Unaudited |
|
Unaudited |
|
Audited |
||||||
|
|
H1 2014 |
|
H1 2013 |
|
Year 2013 |
||||||
|
|
£'000 |
|
£'000 |
|
£'000 |
||||||
|
Cash and short term deposits |
70,982 |
|
76,336 |
|
91,098 |
||||||
|
Bank overdraft |
(1,418) |
|
(4,087) |
|
(764) |
||||||
|
Cash and cash equivalents |
69,564 |
|
72,249 |
|
90,334 |
||||||
|
Current asset investment |
- |
|
10,000 |
|
- |
||||||
|
Bank loans |
(146) |
|
(107) |
|
(63) |
||||||
|
Net funds excluding CSF |
69,418 |
|
82,142 |
|
90,271 |
||||||
|
Finance leases |
(8,134) |
|
(16,329) |
|
(11,577) |
||||||
|
Other loans |
(7,266) |
|
(53) |
|
(7,280) |
||||||
|
Total CSF |
(15,400) |
|
(16,382) |
|
(18,857) |
||||||
|
Net funds |
54,018 |
|
65,760 |
|
71,414 |
||||||
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
Appendix
Revenue growth summary by segment for H1 2014 vs H1 2013
|
|
|
|
|
|
|
|
|
|
Change vs H1 2013 |
|
|
H1 Change |
H1 Change Constant Currency |
|
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Supply Chain Revenue |
|
|
|
|
|
|
|
UK |
|
|
17.6% |
17.6% |
|
|
|
Germany |
|
|
(18.3%) |
(15.4%) |
|
|
|
France |
|
|
13.3% |
17.4% |
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
1.7% |
3.9% |
|
|
|
|
|
|
|
|
|
|
|
Services Revenue |
|
|
|
|
|
|
|
UK |
|
|
8.2% |
8.2% |
|
|
|
Germany |
|
|
(1.8%) |
1.7% |
|
|
|
France |
|
|
1.2% |
4.8% |
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
3.3% |
5.3% |
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
|
|
|
|
|
|
UK |
|
|
14.1% |
14.1% |
|
|
|
Germany |
|
|
(12.7%) |
(9.6%) |
|
|
|
France |
|
|
11.1% |
15.1% |
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
2.2% |
4.3% |
|
|
|
|
|
|
|
|
|
This information is provided by RNS