Half Yearly Report
Interim Results for Six Months ended
Financial Highlights:
· Group revenue of
· Group adjusted* profit before tax of
· Adjusted* diluted earnings per share (Diluted EPS) of 12.5p (H1 2012 restated: 12.7p)
· Net funds excluding customer specific financing (CSF) of
· Interim dividend of 5.2p (H1 2012: 5.0p)
Statutory Highlights:
· Total exceptional items of
o Trading losses on three previously announced onerous contracts in
o One-off provision of
o A non-cash impairment of goodwill and acquired intangibles in
o Accordingly, 2012 results are re-stated to reclassify trading losses on the three onerous contracts in
· After exceptional items, H1 2013 Group statutory loss before tax of
· Statutory diluted loss per share of 5.7p (H1 2012: diluted earnings per share of 10.0p)
· Net funds including CSF of
Operational Highlights:
· Continued good progress towards objective of increasing the proportion of Group revenue generated from Services
· Group Services revenue increased by 3.0% in constant currency across the Group
· Excellent momentum in the
· Pleasing underlying performance in
· Trading performance of the three onerous contracts in
· Successful implementation of Group Operating Model in
· French business continues to face challenging market conditions. Short-term adverse impact from its migration to the Group ERP system. Confident of improved French business performance in the long term
· Successful Group ERP migration in the
· Financial flexibility of the Group increased through a
* Adjusted profit before tax and diluted EPS is stated prior to exceptional items and amortisation of acquired intangibles. Adjusted operating profit is also stated after charging interest on CSF. Exceptional items for 2012 have been restated to take account of the reclassification of trading losses and provisions in respect of three onerous German contracts.
"Trading remains in line with the Board's expectations for the year, with the exception of the provisions we have made in respect of our three onerous contracts in
We believe that the performance of the Group during the first half of 2013, excluding the three onerous contracts in
Enquiries:
James Macey White 0207 353 4200
Chairman's Statement
The first half of 2013 has seen continued excellent progress in the
You will see from the detail which follows that we have calculated the quantum of provisions for unprofitable German contracts, and taken a non-cash impairment of goodwill and acquired intangibles in
I am very pleased to welcome Frau Regine Stachelhaus to our Board. She brings a wealth of relevant experience with her as a recent Management Board member at EON and as a former Hewlett Packard Managing Director in Germany.
We are confident that we have invested wisely in the future prospects of the Group and will continue our focus on Services contract wins, margin growth and cash generation.
Operating statement
Group
Turnover and Adjusted Profitability
During the first six months of 2013, the Group's total profitability was ahead of the same period in 2012, with adjusted* profit before tax increasing by 1.9% to
Total revenues were flat on a reported basis at
Our continuing ability to on-board Services contracts successfully in the
Group Supply Chain revenues reduced by 4.0% in constant currency, largely due to a disappointing performance by our French Supply Chain business. However, we are pleased that our
Whilst the Group's adjusted* profit before tax increased, the increased losses in
Statutory Performance and Exceptional Items
The Group incurred
As previously announced, the rapid growth of our Services business in
Further customer negotiation and extensive financial analysis is now at a sufficiently advanced stage to estimate the full financial consequences of these contracts. The Group is therefore required to make an exceptional one-off provision of
Additionally, in order to provide a clearer picture of the past performance of the business, the Group has restated its 2012 accounts where necessary to reclassify trading losses and provisions incurred on these contracts as exceptional items. The impact of the reclassification is summarised in the table below:
|
|
Restated |
Restated |
|
|
Germany Segment |
H1 2012 |
FY 2012 |
|
|
Restatement of adjusted* operating profit |
£m |
£m |
|
|
|
|
|
|
|
As restated in 2013 accounts |
7.2 |
19.7 |
|
|
|
|
|
|
|
Onerous Contracts - trading losses |
(1.7) |
(5.9) |
|
|
Onerous Contracts - provisions for future losses |
- |
(2.1) |
|
|
|
|
|
|
|
As reported in 2012 accounts |
5.4 |
11.6 |
|
Following the implementation of our Group Operating Model in
Our French business continues to be adversely affected by the state of the French macro-economy, which we noted was of some concern in our full year report for 2012, and which remains challenging. Whilst we are nonetheless disappointed with our performance in
However, the disappointing financial performance of our French business in 2013 has resulted in a requirement for a non-cash impairment to non-current assets in the French cash-generating unit, relating to goodwill and acquired intangibles, of
The table below summarises the adjusted* profitability and exceptional items for the Group as a whole:
|
|
Restated |
Restated |
|
|
|
|
|
H1 2012 |
FY 2012 |
|
|
H1 2013 |
|
From adjusted to statutory (2012 restated) |
£m |
£m |
|
|
£m |
|
|
|
|
|
|
|
|
Adjusted operating profit |
25.0 |
78.0 |
|
|
25.7 |
|
Adjusted net interest |
0.8 |
1.3 |
|
|
0.5 |
|
Adjusted profit before tax |
25.8 |
79.3 |
|
|
26.2 |
|
Onerous German Contracts |
|
|
|
|
|
|
- trading losses |
(1.7) |
(5.9) |
|
|
(5.1) |
|
- provisions for future losses |
- |
(2.1) |
|
|
(10.7) |
|
|
(1.7) |
(8.0) |
|
|
(15.8) |
|
Non-cash impairment - France |
- |
- |
|
|
(12.2) |
|
Redundancy costs |
- |
(1.5) |
|
|
(1.3) |
|
Costs in relation to relocation of premises |
(1.9) |
(2.4) |
|
|
- |
|
Total exceptional items |
(3.6) |
(11.9) |
|
|
(29.3) |
|
Amortisation of acquired intangibles |
(1.3) |
(2.6) |
|
|
(1.3) |
|
Statutory profit before tax |
20.8 |
64.8 |
|
|
(4.3) |
|
|
|
|
|
|
|
|
Diluted earnings per share measures |
|
|
|
|
|
|
Adjusted diluted EPS - as restated in 2013 |
12.7 p |
40.8 p |
|
|
12.5 p |
|
Adjusted diluted EPS - as reported in 2012 |
11.7 p |
36.1 p |
|
|
n/a |
|
Statutory diluted EPS |
10.0 p |
32.4 p |
|
|
(5.7)p |
Cash and Return of Value
Cash flow generation remained strong throughout the period and net funds, excluding customer specific financing (CSF) but including the outflow associated with the Return of Value to shareholders outlined below, reduced to
Continuing Computacenter's tradition of returning cash to shareholders through our dividend policy and stand-alone corporate actions, we announced on
As part of the Return of Value, an associated share capital reorganisation took place on
The Return of Value will reduce our interest income by approximately
We are pleased to announce the payment of an interim dividend of 5.2p per share (H1 2012: 5.0p). This is in line with our policy that the interim dividend will be approximately one-third of the previous year's full dividend. The interim dividend will be paid on
Outlook
Trading remains in line with the Board's expectations for the year, with the exception of the provisions we have made in respect of our three onerous contracts in
Our
We believe that the performance of the Group during the first half of 2013, excluding our three onerous contracts in
In the first half of 2013, our
In a market where IT spend continues to remain broadly flat, this performance has been driven by the UK Services business, which achieved revenue growth of 5.9% during the reporting period. We are especially pleased with this performance as it has been measured against a very tough comparator for the first half of 2012, which benefitted from a substantial volume of Services take-on billing. The Services revenue growth seen in the first half of 2013 further builds on a strong growth of 15.3% in 2012 as a whole.
Our ability to deliver long-term value and delight our customers is undoubtedly enhancing our reputation. Following our number-one ranking for customer reference-ability and satisfaction in the
Our
When a leading
Our new wins have also included a large insurer, which has awarded Computacenter a
As we have previously made clear, we remain extremely aware of the vital role that our governance processes and procedures have played in the successful on-boarding of contracts and maintenance of Services margins. They have continued to ensure the efficient and effective take-on of new contracts in 2013, and we will continue to invest in, develop and update these processes in accordance with what we believe to be our best practice, as they clearly deliver value for our customers and shareholders alike.
We anticipate that the significant demand for our Professional Services offerings seen in the first half of the year will continue, given that the Professional Services forward order book is at a record level. We further believe that this will be sustained in the short to medium term, as customers continue to modernise their end-user workplace environments with Windows 7 and Microsoft 2010 upgrades. In respect of our longer term Professional Services outlook, we believe that demand will continue and be based around Windows Server, mobility, datacenter and networking infrastructure upgrades.
The demand for Professional Services, and in particular our Windows 7 transformations, has continued to underpin our Supply Chain business for which overall revenue growth was very marginally up against the first half of 2012, at
The
With the exception of our three previously announced onerous contracts in
Total revenue fell by 1.3% in constant currency which, considering the changes in this business, is encouraging. These changes have been implemented to ensure that future Services growth is contracted appropriately, well implemented and governed in accordance with Group procedures. These factors will play a significant role in ensuring that Services margins acceptable to the Group, and in accordance with projected bid forecasts, are consistently delivered. Given that we have prioritised this implementation over short-term growth of the Services business, we are pleased that total Services revenue only fell modestly during the period by 0.4% in constant currency. We believe that there are significant Service growth opportunities in the German market which are evidenced by the increased bid pipeline activity.
The recent implementation of Group processes within the German business has significantly increased our confidence that new Services wins will be contracted correctly and implemented successfully, both from a customer services and financial perspective. Services margins, excluding the three onerous contracts, have been stable over the reporting period compared to the first half of 2012. We are also encouraged by the fact that our new processes appear to be taking effect, with Services margins starting to improve during the second quarter of 2013. Whilst there is still significant work to do in order to ensure that our German business continues to successfully adjust to new bidding, negotiation and on-boarding processes and changes in personnel, we believe that the majority of incremental effort required to implement appropriate procedures has now been made.
We have already seen evidence of the benefits that our new Group Operating Model will bring to our business. During the first half of 2013, we have completed one new material transition and transformation process, under the Group model, completing it on time, within budget and in accordance with agreed contracted service levels.
We are now bidding for new Managed Services contracts, which are being designed and negotiated in accordance with our Group processes. The prospect pipeline looks strong and we are now focused on driving Contractual Services growth in 2014.
We have been pleased with the performance of our Supply Chain business, particularly given the very strong comparator in Q1 2012. Margins have increased slightly, principally due to margin recovery in our networking business. Overall, Supply Chain revenue reduced by 1.8% in constant currency in the period compared to H1 2012, with gross margin increasing slightly. Supply Chain revenue in Q2 increased by circa 15% compared to Q2 last year. However, it is too early to assess whether this represents the early signs of an ongoing IT product spend recovery in
Total SG&A is down 3.2% in constant currency compared to H1 2012. This includes the early impact of a significant realignment of the sales force and other management changes, and due to their nature the one-off costs of implementing this will be included within the Group financials as exceptional costs. We expect this trend to continue as further restructuring will take place in the second half of 2013, as the business continues to adjust its cost base.
Turning specifically to the three loss-making contracts, performance on these has stabilised since the Group's Interim Management Statement dated
During the first six months of 2013, total revenue declined by 11.5% in constant currency, to €244.1 million. Overall, the adjusted* operating loss increased from €0.9 million for the first half of 2012 to €5.4 million in the first half of 2013.
The majority of the revenue decline was attributable to the Supply Chain business, with revenues in constant currency declining by 13.4%. The revenue decline was due to a combination of challenging market conditions in
We are more disappointed by our Services performance where revenue reduced by 1.6% and gross margin reduced by over 20% compared to the first half of 2012. The demand for our Professional Services offerings has declined by 16%, as decisions on significant projects work were delayed, due to the uncertainty in the French economy. Our maintenance business has also struggled to maintain margins, as a significant number of high-margin maintenance contracts have expired.
Additionally, we have faced some temporary implementation issues in respect of the migration of our Group ERP system into the French business, which has been a materially more significant business change programme than the migration in either
We are encouraged by a significant large Services contract where we are in the final contract negotiation stage. Given the material size of this contract, the bid has been made in accordance with Group governance processes and the contract will be implemented in line with those procedures, if negotiations are successfully concluded.
Computacenter has been selected by a leading European electricity company to manage its office ICT infrastructure, including its telephony network, under a three-year contract. As well as providing support and maintenance services, we will assist with future infrastructure transformation projects. This service covers up to 40,000 users. Additionally, the regional council of Midi-Pyrénées has partnered with Computacenter for the provision of 15,000 laptop bundles for high school students across 60 locations. As a result, students will be supplied with a laptop and cover, wireless mouse and USB key. The deal includes preparation, warranty, insurance and user support for one year.
Whilst the underlying trend of SG&A in our French business was broadly flat compared to the first half of 2012, it is worth noting that the first half of 2013 included approximately €0.5 million of operational cost related to the ERP deployment, mainly due to extra resource required to manage the additional workload created by the project.
As mentioned in our Group overview, as a result of the disappointing financial performance of the French business as a whole over the first half of the year and our medium term expectations in
Total revenue for the reporting period was reduced by 15% to €27.0 million in constant currency. As we indicated would be the case within our 2012 Annual Report, the very strong rates of growth seen throughout the course of 2011 and 2012 have not been sustainable and have provided a very tough comparator against which the results for the first half of this year have been measured. Overall adjusted* operating profit reduced by 42.1% to €0.7 million in constant currency.
The reduction in revenue was predominantly caused by a drop in demand for our Supply Chain offerings as a result of a very significant one-off Supply Chain deal with one customer in the first half of 2012. As a result, total Supply Chain revenue dropped by 33% in constant currency. This has additionally been impacted by the difficult market conditions in
Total Services revenue has grown significantly over the period. Inclusive of the acquisition of Informatic Services IS in
Despite a reduction in total revenue and profitability during the period, we feel confident of the
Note: The Group has calculated constant currency comparative information by re-translating 2012 results into the Group's functional currency (GBP) at the exchange rates prevailing in the H1 2013 reporting period.
Risk
The principal risks to our business, and our overall approach to risk mitigation, remain largely as set out on pages 24 to 25 of our 2012 Report and Accounts.
These were as follows:
|
Strategic objectives |
Principal risks |
|
Accelerating the growth of our Contractual Services business |
Our offerings may transpire to be uncompetitive within the market or an unforeseen or sudden technology shift occurs where the market develops appetite for different equipment and solutions to those offered. Conversely, we could be motivated into investing significantly into an offering which transpires to amount to no more than hype. |
|
Our growth aspirations are impacted by the economic climate and with a certain level of uncertainty about a full return to economic stability in the short term; there is the potential for reduced capital expenditure from customers. |
|
|
Reducing cost through increased efficiency and industrialisation of our service operations |
Failure to utilise established and repeatable processes, specifically designed for increased efficiency, can result in poor service delivery and threatened reputation. Margin erosion and significant cost increases need to be incurred to recover stability. The comprehensively reported contract take-on challenges in Germany during 2012 was an unfortunate manifestation of this threat. |
|
Driving culture change from being a fragmented country specific focussed organisation to becoming a single Group, could prove challenging and time consuming to embed. |
|
|
Maximising the return on working capital and freeing working capital where not optimally used |
Following significant progress over the years in reducing working capital through the disposal of the distribution business, as well as other working capital optimisation initiatives, a material increase in working capital demand could harm further progress in this regard. |
|
Growing our profit margin through increased services and high-end supply chain sales |
Resource demands could arise when transitioning multiple new service business opportunities at or around the same time. Conversely, resource surplus could result where a contract reaches end of term and is not renewed. |
|
Our vendor partners compete in the high-end sales environment and approach our customers directly. A challenged economy does tend to impact supply chain activity adversely. |
|
|
Ensuring the successful implementation of the Group-wide ERP system |
With a project of this scale there is the potential that during early transition operational issues could occur which impact on customer service levels and ultimately, overall financial performance of the Company. |
The final risk outlined in the table above, concerning the implementation of our Group wide ERP system is now materially behind us having gone live in our three main countries.
The Group Risk Committee (GRC) is comprised of senior managers from across the Group, and is responsible for consolidating, monitoring and reviewing risk on an ongoing basis.
Following our Group restructuring work, which has been carried out both prior to and during the period, we have refined our Risk Management roles, responsibilities and processes accordingly to:
· focus the GRC on the principal risks to our business;
· provide robust and detailed challenge on the mitigations and safeguards in place for those principal risks; and
· ensure effective coordination between the top-down, renamed Group Risk Log (GRL), which is regenerated quarterly, and the bottom-up Business Risk Assessment (BRA), which is regenerated annually.
Monitoring of the GRL risks, along with material BRA risks, is carried out on a quarterly basis within each Group Risk Committee meeting, and through subsequent discussion at Board meetings, where there isa rolling review of a number of the GRL risks during each quarter, in order to ensure that the safeguards and mitigations in place are sufficient.
In addition to the above, a risk will on occasion be reviewed in greater depth by the Audit Committee. By way of example, the risk of Cyber attack/threats was considered by the Audit Committee during its May meeting, where it received and considered presentations from our internal and customer facing in-house security professionals. Whilst our approach to prevention was demonstrated to be wide-ranging and to-date effective, we recognise that our rapid response to any breach, should it occur, is also key given the broadness of the threat landscape and numerous sources/routes of potential cyber attack.
To some degree owing to the issues we have encountered in our German business around our three onerous Services contracts, we have reinforced governance around all new business deals, not only in
In
One of the current fifteen risks on our GRL concerns prevailing macro-economic conditions, and the adverse effect that these may have on our customer IT expenditure, particularly within hardware or software. Mitigation of this risk is mainly around provision of IS cost-cutting service options, which prove to be in greater demand in challenging times. This mitigation is serving us well in both the
Moving forward into the second half of 2013, a significant benefit of both our new Group-wide ERP system and our Group-wide Operating model is that managing risk across all of the countries in which we do business, and achieving similar levels of governance and diligence becomes easier to effect, oversee and achieve.
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
|
Consolidated income statement |
|
|
|
|
|
|
|
||
|
For the six months ended 30 June 2013 |
|
|
|
|
|
|
|
||
|
|
|
|
|
Restated* |
|
Restated* |
|
||
|
|
|
Unaudited |
|
unaudited |
|
unaudited |
|
||
|
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
||
|
|
Note |
£'000 |
|
£'000 |
|
£'000 |
|
||
|
Revenue |
5 |
1,426,346 |
|
1,422,264 |
|
2,914,214 |
|
||
|
Cost of sales |
|
(1,241,158) |
|
(1,239,953) |
|
(2,531,926) |
|
||
|
Gross profit |
|
185,188 |
|
182,311 |
|
382,288 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Administrative expenses |
|
(159,003) |
|
(156,776) |
|
(303,172) |
|
||
|
Operating profit: |
|
|
|
|
|
|
|
||
|
Before amortisation of intangibles and exceptional items |
|
26,185 |
|
25,535 |
|
79,116 |
|
||
|
Amortisation of acquired intangibles |
|
(1,296) |
|
(1,316) |
|
(2,608) |
|
||
|
Onerous contracts |
|
|
|
|
|
|
|
||
|
- trading losses |
|
(5,107) |
|
(1,743) |
|
(5,921) |
|
||
|
- provision for future losses |
|
(10,673) |
|
- |
|
(2,108) |
|
||
|
Onerous contracts |
|
(15,780) |
|
(1,743) |
|
(8,029) |
|
||
|
Non-cash impairment |
|
(12,195) |
|
- |
|
|
|
||
|
Other exceptional items |
|
(1,324) |
|
(1,882) |
|
(3,874) |
|
||
|
Exceptional items |
7 |
(29,299) |
|
(3,625) |
|
(11,903) |
|
||
|
Operating (loss)/profit |
|
(4,410) |
|
20,594 |
|
64,605 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Finance revenue |
|
1,001 |
|
1,023 |
|
1,971 |
|
||
|
Finance costs |
|
(941) |
|
(801) |
|
(1,778) |
|
||
|
Profit before tax: |
|
|
|
|
|
|
|
||
|
Before amortisation of intangibles and exceptional items |
5 |
26,245 |
|
25,757 |
|
79,309 |
|
||
|
Amortisation of acquired intangibles |
|
(1,296) |
|
(1,316) |
|
(2,608) |
|
||
|
Onerous contracts |
|
|
|
|
|
|
|
||
|
- trading losses |
|
(5,107) |
|
(1,743) |
|
(5,921) |
|
||
|
- provision for future losses |
|
(10,673) |
|
- |
|
(2,108) |
|
||
|
Onerous contracts |
|
(15,780) |
|
(1,743) |
|
(8,029) |
|
||
|
Non-cash impairment |
|
(12,195) |
|
- |
|
- |
|
||
|
Other exceptional items |
|
(1,324) |
|
(1,882) |
|
(3,874) |
|
||
|
Exceptional items |
7 |
(29,299) |
|
(3,625) |
|
(11,903) |
|
||
|
(Loss)/profit before tax |
5 |
(4,350) |
|
20,816 |
|
64,798 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Income tax expense: |
|
|
|
|
|
|
|
||
|
Before amortisation of intangibles and exceptional items |
|
(7,304) |
|
(6,149) |
|
(17,461) |
|
||
|
Tax on amortisation of intangibles |
|
122 |
|
272 |
|
538 |
|
||
|
Tax on onerous contracts |
|
|
|
|
|
|
|
||
|
- tax on trading losses |
|
613 |
|
191 |
|
651 |
|
||
|
- tax on provision for future losses |
|
1,281 |
|
- |
|
232 |
|
||
|
Total tax on onerous contracts |
|
1,894 |
|
191 |
|
883 |
|
||
|
Tax on non-cash impairment |
|
1,014 |
|
- |
|
- |
|
||
|
Tax on other exceptional items |
|
146 |
|
322 |
|
362 |
|
||
|
Total tax on exceptional items |
7 |
3,054 |
|
513 |
|
1,245 |
|
||
|
Income tax expense |
8 |
(4,128) |
|
(5,364) |
|
(15,678) |
|
||
|
(Loss)/profit for the period |
|
(8,478) |
|
15,452 |
|
49,120 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Attributable to: |
|
|
|
|
|
|
|
||
|
Equity holders of the parent |
|
(8,478) |
|
15,452 |
|
49,121 |
|
||
|
Non-controlling interest |
|
- |
|
- |
|
(1) |
|
||
|
(Loss)/profit for the period |
|
(8,478) |
|
15,452 |
|
49,120 |
|
||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
Earnings per share |
|
|
|
|
|
|
|||
|
- basic for (loss)/profit for the period |
9 |
(5.7)p |
|
10.3p |
|
32.9p |
|||
|
- diluted for (loss)/profit for the period |
9 |
(5.7)p |
|
10.0p |
|
32.4p |
|||
*Certain amounts here do not correspond to the interim condensed consolidated and annual consolidated financial statements as at
|
Consolidated statement of comprehensive income |
|
|
|
|
|
|
For the six months ended 30 June 2013 |
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
(Loss)/profit for the period |
(8,478) |
|
15,452 |
|
49,120 |
|
|
|
|
|
|
|
|
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
(Loss)/gain arising on cash flow hedge |
(639) |
|
233 |
|
494 |
|
Income tax effect |
149 |
|
(58) |
|
(120) |
|
|
(490) |
|
175 |
|
374 |
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
10,308 |
|
(5,542) |
|
(5,311) |
|
|
9,818 |
|
(5,367) |
|
(4,937) |
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
1,340 |
|
10,085 |
|
44,183 |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
Equity holders of the parent |
1,341 |
|
10,085 |
|
44,182 |
|
Non-controlling interest |
(1) |
|
- |
|
1 |
|
|
1,340 |
|
10,085 |
|
44,183 |
|
Consolidated balance sheet |
|
|
|
|
|
|
|
As at 30 June 2013 |
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
Note |
£'000 |
|
£'000 |
|
£'000 |
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
95,344 |
|
101,365 |
|
100,696 |
|
Intangible assets |
12 |
94,393 |
|
101,758 |
|
104,612 |
|
Investment in associates |
|
620 |
|
495 |
|
575 |
|
Deferred income tax asset |
|
17,139 |
|
17,040 |
|
14,385 |
|
|
|
207,496 |
|
220,658 |
|
220,268 |
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
69,549 |
|
87,992 |
|
67,782 |
|
Trade and other receivables |
|
521,307 |
|
496,852 |
|
573,661 |
|
Prepayments |
|
54,892 |
|
49,602 |
|
46,250 |
|
Accrued income |
|
68,161 |
|
80,740 |
|
58,029 |
|
Forward currency contracts |
|
83 |
|
|
|
30 |
|
Financial asset |
11 |
31,412 |
|
|
|
- |
|
Current asset investment |
16 |
10,000 |
|
10,000 |
|
10,000 |
|
Cash and short-term deposits |
|
76,336 |
|
91,747 |
|
138,149 |
|
|
|
831,740 |
|
816,933 |
|
893,901 |
|
Total assets |
|
1,039,236 |
|
1,037,591 |
|
1,114,169 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
476,412 |
|
507,204 |
|
527,539 |
|
Deferred income |
|
107,860 |
|
99,481 |
|
128,540 |
|
Return of Value |
11 |
74,965 |
|
- |
|
- |
|
Financial liabilities |
|
11,650 |
|
7,356 |
|
9,117 |
|
Forward currency contracts |
|
548 |
|
226 |
|
584 |
|
Income tax payable |
|
4,144 |
|
6,097 |
|
3,778 |
|
Provisions |
13 |
8,203 |
|
2,551 |
|
4,373 |
|
|
|
683,782 |
|
622,915 |
|
673,931 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
8,974 |
|
10,631 |
|
10,406 |
|
Provisions |
13 |
12,384 |
|
7,404 |
|
6,455 |
|
Other non-current liabilities |
|
- |
|
31 |
|
- |
|
Deferred income tax liabilities |
|
1,012 |
|
684 |
|
1,034 |
|
|
|
22,370 |
|
18,750 |
|
17,895 |
|
Total liabilities |
|
706,152 |
|
641,665 |
|
691,826 |
|
Net assets |
|
333,084 |
|
395,926 |
|
422,343 |
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
Issued capital |
|
9,250 |
|
9,233 |
|
9,234 |
|
Share premium |
|
3,654 |
|
3,717 |
|
3,769 |
|
Capital redemption reserve |
|
74,957 |
|
74,957 |
|
74,957 |
|
Own shares held |
|
(12,942) |
|
(12,211) |
|
(13,848) |
|
Foreign currency translation reserve |
|
12,633 |
|
2,096 |
|
2,325 |
|
Retained earnings |
|
245,520 |
|
318,122 |
|
345,893 |
|
Shareholders' equity |
|
333,072 |
|
395,914 |
|
422,330 |
|
Non-controlling interest |
|
12 |
|
12 |
|
13 |
|
Total equity |
|
333,084 |
|
395,926 |
|
422,343 |
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 |
Non-controlling interests |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
At 1 January 2012 |
9,233 |
3,717 |
74,957 |
(10,962) |
7,638 |
319,152 |
403,735 |
12 |
403,747 |
|
Profit for the period |
- |
- |
- |
- |
- |
15,452 |
15,452 |
- |
15,452 |
|
Other comprehensive income |
- |
- |
|
- |
(5,542) |
175 |
(5,367) |
- |
(5,367) |
|
Total comprehensive income |
- |
|
|
- |
(5,542) |
15,627 |
10,085 |
- |
10,085 |
|
Cost of share-based payments |
- |
|
|
- |
- |
648 |
648 |
- |
648 |
|
Tax on share- based payment transactions |
- |
|
|
- |
- |
338 |
338 |
- |
338 |
|
Exercise of options |
- |
|
|
1,918 |
- |
(1,918) |
|
- |
- |
|
Purchase of own shares |
- |
|
|
(3,167) |
- |
- |
(3,167) |
- |
(3,167) |
|
Equity dividends |
- |
|
|
- |
- |
(15,725) |
(15,725) |
- |
(15,725) |
|
At 30 June 2012 |
9,233 |
3,717 |
74,957 |
(12,211) |
2,096 |
318,122 |
395,914 |
12 |
395,926 |
|
Profit for the period |
- |
- |
- |
- |
- |
33,669 |
33,669 |
(1) |
33,668 |
|
Other comprehensive income |
- |
- |
- |
- |
229 |
199 |
428 |
2 |
430 |
|
Total comprehensive income |
- |
|
|
- |
229 |
33,868 |
34,097 |
1 |
34,098 |
|
Cost of share-based payments |
- |
|
|
- |
- |
1,528 |
1,528 |
- |
1,528 |
|
Tax on share- based payment transactions |
- |
|
|
- |
- |
(122) |
(122) |
- |
(122) |
|
Exercise of options |
1 |
52 |
|
15 |
- |
(15) |
53 |
- |
53 |
|
Purchase of own shares |
- |
- |
- |
(1,652) |
- |
- |
(1,652) |
- |
(1,652) |
|
Equity dividends |
- |
- |
- |
- |
- |
(7,488) |
(7,488) |
- |
(7,488) |
|
At 31 December 2012 |
9,234 |
3,769 |
74,957 |
(13,848) |
2,325 |
345,893 |
422,330 |
13 |
422,343 |
|
Loss 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 payments |
- |
- |
- |
- |
- |
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 |
- |
- |
- |
- |
- |
(74,965) |
(74,965) |
- |
(74,965) |
|
Expenses on share redemption |
- |
- |
- |
- |
- |
(34) |
(34) |
- |
(34) |
|
Equity dividends |
- |
- |
- |
- |
- |
(15,759) |
(15,759) |
- |
(15,759) |
|
At 30 June 2013 |
9,250 |
3,654 |
74,957 |
(12,942) |
12,633 |
245,520 |
333,072 |
12 |
333,084 |
|
Consolidated cash flow statement |
|
|
|
|
|
|
|
For the six months ended 30 June 2013 |
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
Note |
£'000 |
|
£'000 |
|
£'000 |
|
Operating activities |
|
|
|
|
|
|
|
(Loss)/profit before tax |
|
(4,350) |
|
20,816 |
|
64,798 |
|
Net finance income |
|
(60) |
|
(223) |
|
(193) |
|
Depreciation |
|
11,705 |
|
11,620 |
|
24,337 |
|
Amortisation |
12 |
4,269 |
|
3,971 |
|
9,573 |
|
Impairment of intangible assets |
|
12,195 |
|
- |
|
- |
|
Share-based payments |
|
527 |
|
648 |
|
2,176 |
|
(Profit)/loss on disposal of property, plant and equipment |
|
(442) |
|
(266) |
|
363 |
|
Loss on disposal of intangibles |
|
103 |
|
- |
|
184 |
|
Decrease in inventories |
|
1,047 |
|
7,510 |
|
27,477 |
|
Decrease/(increase) in trade and other receivables |
|
59,274 |
|
(1,509) |
|
(49,061) |
|
(Decrease)/increase in trade and other payables |
|
(74,992) |
|
(29,523) |
|
18,863 |
|
Increase in provisions |
|
(10,745) |
|
- |
|
(2,108) |
|
Other adjustments |
|
267 |
|
4 |
|
74 |
|
Cash (used in)/generated from operations |
|
(1,202) |
|
13,048 |
|
96,483 |
|
Income taxes paid |
|
(8,582) |
|
(4,126) |
|
(13,111) |
|
Net cash flow from operating activities |
|
(9,784) |
|
8,922 |
|
83,372 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Interest received |
|
956 |
|
755 |
|
1,926 |
|
Acquisition of subsidiaries, net of cash acquired |
|
- |
|
- |
|
(1,754) |
|
Acquisition of associate |
|
- |
|
- |
|
(100) |
|
Sale of property, plant and equipment |
|
51 |
|
291 |
|
1,074 |
|
Purchases of property, plant and equipment |
|
(4,245) |
|
(15,561) |
|
(22,906) |
|
Purchases of intangible assets |
|
(3,095) |
|
(3,576) |
|
(8,981) |
|
Net cash flow from investing activities |
|
(6,333) |
|
(18,091) |
|
(30,741) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Interest paid |
|
(830) |
|
(1,039) |
|
(1,929) |
|
Dividends paid to equity shareholders of the parent |
|
(15,759) |
|
(15,725) |
|
(23,213) |
|
Proceeds from issue of shares |
|
58 |
|
- |
|
53 |
|
Purchase of own shares |
|
- |
|
(3,167) |
|
(4,819) |
|
Increase in other financial assets |
11 |
(31,412) |
|
- |
|
- |
|
Repayment of capital element of finance leases |
|
(4,090) |
|
(5,534) |
|
(9,201) |
|
Repayment of loans |
|
(651) |
|
(1,750) |
|
(2,353) |
|
New borrowings |
|
- |
|
726 |
|
1,577 |
|
Net cash flow from financing activities |
|
(52,684) |
|
(26,489) |
|
(39,885) |
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
|
(68,801) |
|
(35,658) |
|
12,746 |
|
Effect of exchange rates on cash and cash equivalents |
|
3,579 |
|
484 |
|
(2,059) |
|
Cash and cash equivalents at the beginning of the period |
|
137,471 |
|
126,784 |
|
126,784 |
|
Cash and cash equivalents at the end of the period |
|
72,249 |
|
91,610 |
|
137,471 |
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 despite an operating cash outflow in the period and, after committing to 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
· IAS1 - Presentation of Items of Other Comprehensive Income - Amendments to IAS 1
· IAS1 - Clarification of the requirement for comparative information (Amendment)
· IAS 34 - Interim financial reporting and segment reporting for total assets and liabilities (Amendment)
· IFRS 13 - Fair Value Measurement
· IFRS 7 - Financial instruments: Disclosures - Offsetting financial assets and financial liabilities
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
4 Restatement of 2012 results
The rapid growth of our Services business in
Actions taken in response to these issues, including a full review of our governance procedures, have had a positive effect, helping to stabilise the business and turnaround a number of operational issues. However the Group has determined that three of these contracts, following further customer negotiation and extensive financial analysis, will be loss-making over the course of their remaining life.
The Group is therefore required to make an exceptional one-off provision of
In order to give investors a clearer picture of the past performance of the business, the Group has reclassified trading losses and provisions previously incurred on these three onerous contracts in 2012 as exceptional items, and has accordingly restated its 2012 results for the German segment and the Group as a whole results, as follows :
H1 2012
|
|
As reported in 2012 |
|
Restated in 2013 |
|||||
|
|
Onerous German Contracts |
|
|
|
|
|
||
|
Total Group in £'000 |
Trading losses |
Provision for future losses |
Total |
Rest of Group |
Group |
|
Reclass-ification |
Group |
|
Turnover |
4,831 |
- |
4,831 |
1,417,433 |
1,422,264 |
|
- |
1,422,264 |
|
Cost of Sales |
(6,574) |
- |
(6,574) |
(1,235,674) |
(1,242,248) |
|
1,743 |
(1,240,505) |
|
Adjusted Gross Profit |
(1,743) |
- |
(1,743) |
181,759 |
180,016 |
|
1,743 |
181,759 |
|
Administrative expenses |
- |
- |
- |
(156,776) |
(156,776) |
|
- |
(156,776) |
|
Adjusted Operating Profit |
(1,743) |
- |
(1,743) |
24,983 |
23,240 |
|
1,743 |
24,983 |
|
Adjusted net interest |
- |
- |
- |
774 |
774 |
|
- |
774 |
|
Adjusted Profit before tax |
(1,743) |
- |
(1,743) |
25,757 |
24,014 |
|
1,743 |
25,757 |
|
Exceptional Items |
- |
- |
- |
(1,882) |
(1,882) |
|
(1,743) |
(3,625) |
|
Intangibles amortisation |
- |
- |
- |
(1,316) |
(1,316) |
|
- |
(1,316) |
|
Statutory Profit before tax |
(1,743) |
- |
(1,743) |
22,559 |
20,816 |
|
- |
20,816 |
Adjusted gross profit and adjusted operating profit for the group that is shown in the segment information note, includes interest on CSF of
|
|
As reported in 2012 |
|
Restated in 2013 |
|||||
|
|
Onerous German Contracts |
|
|
|
|
|
||
|
Germany segment in £'000 |
Trading losses |
Provision for future losses |
Total |
Rest of Germany Segment |
Germany Segment |
|
Reclass-ification |
Germany Segment |
|
Turnover |
4,831 |
|
4,831 |
586,201 |
591,032 |
|
- |
591,032 |
|
Cost of Sales |
(6,574) |
|
(6,574) |
(515,529) |
(522,103) |
|
1,743 |
(520,360) |
|
Adjusted Gross Profit |
(1,743) |
|
(1,743) |
70,672 |
68,929 |
|
1,743 |
70,672 |
|
Administrative expenses |
- |
|
- |
(63,516) |
(63,516) |
|
- |
(63,516) |
|
Adjusted Operating Profit |
(1,743) |
|
(1,743) |
7,156 |
5,413 |
|
1,743 |
7,156 |
|
Adjusted net interest |
- |
|
- |
220 |
220 |
|
- |
220 |
|
Adjusted Profit before tax |
(1,743) |
|
(1,743) |
7,376 |
5,633 |
|
1,743 |
7,376 |
|
Exceptional Items |
|
|
|
|
|
|
(1,743) |
(1,743) |
|
Intangibles amortisation |
|
|
|
(604) |
(604) |
|
|
(604) |
|
Statutory Profit before tax |
(1,743) |
|
(1,743) |
6,772 |
5,029 |
|
|
5,029 |
Full year 2012
|
|
As reported in 2012 |
|
Restated in 2013 |
|||||||
|
|
Onerous German Contracts |
|
|
|
|
|
||||
|
Total Group in £'000 |
Trading losses |
Provision for future losses |
Total |
Rest of Group |
Group |
|
Reclass-ification |
Group |
||
|
Turnover |
15,427 |
- |
15,427 |
2,898,787 |
2,914,214 |
|
|
2,914,214 |
||
|
Cost of Sales |
(21,348) |
(2,108) |
(23,456) |
(2,517,571) |
(2,541,027) |
|
8,029 |
(2,532,998) |
||
|
Adjusted Gross Profit |
(5,921) |
(2,108) |
(8,029) |
381,216 |
373,187 |
|
8,029 |
381,216 |
||
|
Administrative expenses |
|
|
|
(303,172) |
(303,172) |
|
|
(303,172) |
||
|
Adjusted Operating Profit |
(5,921) |
(2,108) |
(8,029) |
78,044 |
70,015 |
|
8,029 |
78,044 |
||
|
Adjusted net interest |
|
|
|
1,265 |
1,265 |
|
- |
1,265 |
||
|
Adjusted Profit before tax |
(5,921) |
(2,108) |
(8,029) |
79,309 |
71,280 |
|
8,029 |
79,309 |
||
|
Exceptional Items |
|
|
|
(3,874) |
(3,874) |
|
(8,029) |
(11,903) |
||
|
Intangibles amortisation |
|
|
|
(2,608) |
(2,608) |
|
|
(2,608) |
||
|
Statutory Profit before tax |
(5,921) |
(2,108) |
(8,029) |
72,827 |
64,798 |
|
|
64,798 |
||
|
|
|
|
|
|||||||
|
Adjusted gross profit and adjusted operating profit for the group that is shown in the segment information note includes interest on CSF of £1,072,000 that is reported in finance costs on the consolidated income statement.
|
||||||||||
|
|
As reported in 2012 |
|
Restated in 2013 |
|||||||
|
|
Onerous German Contracts |
|
|
|
|
|
||||
|
Germany segment in £'000 |
Trading losses |
Provision for future losses |
Total |
Rest of Germany Segment |
Germany Segment |
|
Reclass-ification |
Germany Segment |
||
|
Turnover |
15,427 |
- |
15,427 |
1,178,369 |
1,193,796 |
|
- |
1,193,796 |
||
|
Cost of Sales |
(21,348) |
(2,108) |
(23,456) |
(1,033,348) |
(1,056,804) |
|
8,029 |
(1,048,775) |
||
|
Adjusted Gross Profit |
(5,921) |
(2,108) |
(8,029) |
145,021 |
136,992 |
|
8,029 |
145,021 |
||
|
Administrative expenses |
|
|
|
(125,356) |
(125,356) |
|
- |
(125,356) |
||
|
Adjusted Operating Profit |
(5,921) |
(2,108) |
(8,029) |
19,665 |
11,636 |
|
8,029 |
19,665 |
||
|
Adjusted net interest |
|
|
|
228 |
228 |
|
- |
228 |
||
|
Adjusted Profit before tax |
(5,921) |
(2,108) |
(8,029) |
19,893 |
11,863 |
|
8,029 |
19,893 |
||
|
Exceptional Items |
|
|
|
(1,484) |
(1,484) |
|
(8,029) |
(9,513) |
||
|
Intangibles amortisation |
|
|
|
(1,194) |
(1,194) |
|
- |
(1,194) |
||
|
Statutory Profit before tax |
(5,921) |
(2,108) |
(8,029) |
17,215 |
9,186 |
|
- |
9,186 |
||
5 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 below reportable operating segments.
Management monitors the operating results of its geographical segments separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on adjusted operating profit or loss which is measured differently from operating profit or loss in the consolidated financial statements. Adjusted operating profit or loss takes account of the interest paid on customer-specific financing ('CSF') which management consider to be a cost of sale. Excluded from adjusted operating profit is the amortisation of acquired intangibles and exceptional items as management do not consider these items when reviewing the underlying performance of a segment.
Restatement of prior year comparative information
Included within exceptional items in the German segment results in 2012 are losses and provisions incurred in relation to three onerous contracts that were previously classified within operating profit. Further details of the restatement have been provided within note 4.
Segmental performance for the periods to H1 2013, H1 2012 and Full Year 2012 were as follows:
|
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 trading losses |
|
- |
(5,107) |
- |
- |
(5,107) |
|
- onerous contracts provision for future losses |
|
- |
(10,673) |
- |
- |
(10,673) |
|
- 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 |
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2012 (unaudited and restated) |
|
|
||||
|
|
|
UK |
Germany |
France |
Belgium |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Supply Chain revenue |
|
367,638 |
393,622 |
190,091 |
20,568 |
971,919 |
|
Services revenue |
|
|
|
|
|
|
|
Professional Services |
|
47,501 |
46,327 |
12,299 |
1,401 |
107,528 |
|
Contractual Services |
|
163,103 |
151,083 |
24,425 |
4,206 |
342,817 |
|
Total Services revenue |
|
210,604 |
197,410 |
36,724 |
5,607 |
450,345 |
|
Total revenue |
|
578,242 |
591,032 |
226,815 |
26,175 |
1,422,264 |
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
Adjusted gross profit |
|
87,264 |
70,672 |
20,918 |
2,905 |
181,759 |
|
Administrative expenses |
|
(69,698) |
(63,516) |
(21,697) |
(1,865) |
(156,776) |
|
Adjusted operating profit/(loss) |
|
17,566 |
7,156 |
(779) |
1,040 |
24,983 |
|
Adjusted net interest |
|
702 |
220 |
(103) |
(45) |
774 |
|
Adjusted profit/(loss) before tax |
|
18,268 |
7,376 |
(882) |
995 |
25,757 |
|
Exceptional items: |
|
|
|
|
|
|
|
- onerous contracts trading losses |
|
- |
(1,743) |
- |
- |
(1,743) |
|
- exceptional costs |
|
(364) |
- |
(1,518) |
- |
(1,882) |
|
|
|
(364) |
(1,743) |
(1,518) |
- |
(3,625) |
|
Amortisation of acquired intangibles |
|
(240) |
(604) |
(472) |
- |
(1,316) |
|
Statutory profit/(loss) before tax |
|
17,664 |
5,029 |
(2,872) |
995 |
20,816 |
|
|
|
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
|
|
Share-based payments |
|
551 |
70 |
27 |
- |
648 |
|
Year ended 31 December 2012 (unaudited and restated) |
|
|
|
|
||
|
|
|
UK |
Germany |
France |
Belgium |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Supply Chain revenue |
|
764,215 |
801,447 |
405,432 |
34,490 |
2,005,584 |
|
Services revenue |
|
|
|
|
|
|
|
Professional Services |
|
104,308 |
89,602 |
23,897 |
2,447 |
220,254 |
|
Contractual Services |
|
327,124 |
302,747 |
49,977 |
8,528 |
688,376 |
|
Total Services revenue |
|
431,432 |
392,349 |
73,874 |
10,975 |
908,630 |
|
Total revenue |
|
1,195,647 |
1,193,796 |
479,306 |
45,465 |
2,914,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
Adjusted gross profit |
|
183,915 |
145,020 |
47,297 |
4,984 |
381,216 |
|
Administrative expenses |
|
(131,686) |
(125,356) |
(43,033) |
(3,097) |
(303,172) |
|
Adjusted operating profit |
|
52,229 |
19,664 |
4,264 |
1,887 |
78,044 |
|
Adjusted net interest |
|
1,439 |
228 |
(327) |
(75) |
1,265 |
|
Adjusted profit before tax |
|
53,668 |
19,892 |
3,937 |
1,812 |
79,309 |
|
Exceptional items: |
|
|
|
|
|
|
|
- onerous contracts trading losses |
|
- |
(5,921) |
- |
- |
(5,921) |
|
- onerous contracts provision for future losses |
|
- |
(2,108) |
- |
- |
(2,108) |
|
- exceptional costs |
|
(364) |
(1,484) |
(2,026) |
- |
(3,874) |
|
|
|
(364) |
(9,513) |
(2,026) |
- |
(11,903) |
|
Amortisation of acquired intangibles |
|
(481) |
(1,194) |
(933) |
- |
(2,608) |
|
Statutory profit before tax |
|
52,823 |
9,185 |
978 |
1,812 |
64,798 |
|
|
|
|
|
|
|
|
|
Other segment information |
|
|
|
|
|
|
|
Share-based payments |
|
1,613 |
522 |
41 |
- |
2,176 |
6 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.
7 Exceptional items
|
|
|
Restated |
Restated |
|
|
Unaudited |
Unaudited |
Unaudited |
|
|
H1 2013 |
H1 2012 |
Year 2012 |
|
|
£'000 |
£'000 |
£'000 |
|
Operating profit |
|
|
|
|
Onerous contracts -trading losses |
(5,107) |
(1,743) |
(5,921) |
|
Onerous contracts - provision for future losses |
(10,673) |
- |
(2,108) |
|
Impairment of acquired intangible assets |
(12,195) |
- |
- |
|
Redundancy costs |
(1,324) |
- |
(1,484) |
|
Costs in relation to relocation of premises |
- |
(1,882) |
(2,390) |
|
|
(29,299) |
(3,625) |
(11,903) |
|
Income tax |
|
|
|
|
Tax on onerous contracts included in operating profit |
1,894 |
191 |
883 |
|
Tax on impairment of acquired intangible assets |
1,014 |
- |
- |
|
Tax on exceptional items included in operating profit |
146 |
322 |
362 |
|
|
3,054 |
513 |
1,245 |
|
|
|
|
|
|
Exceptional items after taxation |
(26,245) |
(3,112) |
(10,658) |
2013
In
Included within the German segment results in 2012 and H1 2013 are 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 have now been reclassified within exceptional items. In H1 2012 trading losses of
The deterioration in the performance of Computacenter France has led to an assessment of their non-current assets. It has been concluded that the forecasted cash flows for the French cash generating unit do not fully support the value of non-current assets in the business. This has resulted in an impairment of
In the first half of 2013 Computacenter Germany continued its programme, from late 2012, to reduce its net operating expenses. As a result, redundancy costs of
2012
Included within H1 2012 and the year ended
During the year, Computacenter France consolidated its operations in a new Office and began the move to a new Warehouse. In
· operating lease rental expense charged on new properties during the fit out period and prior to occupation,
· redundancy expenses paid as a result of the relocation, and
· rental expense related to legacy properties once they had been vacated.
In the second half of 2012, Computacenter Germany undertook a programme to reduce its net operating expenses by approximately
The income statement tax impact of the above items have been shown as exceptional tax items.
8 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 (loss)/profit for the period comprises: |
|
|
|
|
|
|
|
|
|
Restated |
|
Restated |
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
UK corporation tax |
|
|
|
|
|
|
- operating result |
5,329 |
|
4,945 |
|
14,914 |
|
- exceptional items |
- |
|
(94) |
|
(94) |
|
Total UK corporation tax |
5,329 |
|
4,851 |
|
14,820 |
|
Foreign tax |
|
|
|
|
|
|
- operating result |
2,196 |
|
1,726 |
|
3,988 |
|
- exceptional items |
(613) |
|
(191) |
|
(651) |
|
Total foreign tax |
1,583 |
|
1,535 |
|
3,337 |
|
Adjustments in respect of prior periods |
- |
|
(124) |
|
(2,952) |
|
Deferred tax |
|
|
|
|
|
|
- operating result |
(489) |
|
(898) |
|
705 |
|
- exceptional items |
(2,295) |
|
- |
|
(232) |
|
Total deferred tax |
(2,784) |
|
(898) |
|
473 |
|
|
4,128 |
|
5,364 |
|
15,678 |
The main rate of corporation tax will be reduced to 21% from
9 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.
|
|
|
|
Restated |
|
Restated |
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
(Loss)/profit attributable to equity holders of the parent |
(8,478) |
|
15,452 |
|
49,121 |
|
Amortisation of acquired intangibles attributable to equity holders of the parent |
1,296 |
|
1,316 |
|
2,608 |
|
Tax on amortisation of acquired intangibles |
(122) |
|
(272) |
|
(538) |
|
Exceptional items within operating profit |
29,299 |
|
3,625 |
|
11,903 |
|
Tax on exceptional items included in operating profit |
(3,054) |
|
(513) |
|
(1,245) |
|
Adjusted profit after tax |
18,941 |
|
19,608 |
|
61,849 |
|
|
|
|
|
|
|
|
|
No '000 |
|
No '000 |
|
No '000 |
|
Basic weighted average number of shares (excluding own shares held) |
149,512 |
|
149,415 |
|
149,387 |
|
Effect of dilution: |
|
|
|
|
|
|
Share options |
1,416 |
|
4,702 |
|
2,179 |
|
Diluted weighted average number of shares |
150,928 |
|
154,117 |
|
151,566 |
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
pence |
|
pence |
|
pence |
|
Basic earnings per share |
(5.7) |
|
10.3 |
|
32.9 |
|
Diluted earnings per share |
(5.7) |
|
10.0 |
|
32.4 |
|
Adjusted basic earnings per share |
12.7 |
|
13.1 |
|
41.4 |
|
Adjusted diluted earnings per share |
12.5 |
|
12.7 |
|
40.8 |
10 Dividends paid and proposed
A final dividend for 2012 of 10.5p per ordinary share was paid on
11 Return of Value and Post Balance Sheet Event
Return of Value
On
The holders of the B shares could elect to either sell the shares or receive a one-off dividend income. Both options to be remitted to shareholders on 5th July. For those who elected to sell the shares, the Company was required to pay an amount of £31.4 million into an escrow account on
Other Financial Asset
As a result of the above the Company had £31.4 million included within financial assets at 30 June, which represents the amount held in escrow. As this amount was no longer available to the Company to finance its day-to-day operations it was not appropriate to include this within cash and cash equivalents at the reporting date.
Return of Value Payable
As the Return of Value was declared and authorised as at the balance sheet date, the payment to shareholders in early July has been accrued as at
Liquidity
In the period the Company has entered into a new £40 million committed facility which was not utilised at the balance sheet date. This is a three year facility which expires in
12 Intangible assets
|
|
Goodwill |
Software |
Acquired intangible assets |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
At 1 January 2012 |
56,227 |
64,218 |
18,253 |
138,698 |
|
Additions |
- |
3,576 |
- |
3,576 |
|
Foreign currency adjustment |
(857) |
(621) |
(150) |
(1,628) |
|
At 30 June 2012 |
55,370 |
67,173 |
18,103 |
140,646 |
|
Additions |
1,080 |
5,405 |
850 |
7,335 |
|
Acquired via subsidiary |
- |
3 |
- |
3 |
|
Disposals |
- |
(364) |
(333) |
(697) |
|
Foreign currency adjustment |
325 |
287 |
(176) |
436 |
|
At 31 December 2012 |
56,775 |
72,504 |
18,444 |
147,723 |
|
Additions |
- |
4,406 |
- |
4,406 |
|
Disposals |
- |
(3,499) |
- |
(3,499) |
|
Foreign currency adjustment |
1,399 |
424 |
201 |
2,024 |
|
At 30 June 2013 |
58,174 |
73,835 |
18,645 |
150,654 |
|
|
|
|
|
|
|
Amortisation and impairment |
|
|
|
|
|
At 1 January 2012 |
- |
28,124 |
6,332 |
34,456 |
|
Charged during the year |
- |
2,655 |
1,316 |
3,971 |
|
Foreign currency adjustment |
- |
337 |
124 |
461 |
|
At 30 June 2012 |
- |
31,116 |
7,772 |
38,888 |
|
Charged during the year |
- |
4,310 |
1,292 |
5,602 |
|
Disposals |
- |
(180) |
(333) |
(513) |
|
Foreign currency adjustment |
- |
(663) |
(203) |
(866) |
|
At 31 December 2012 |
- |
34,583 |
8,528 |
43,111 |
|
Charged during the year |
- |
2,973 |
1,296 |
4,269 |
|
Impairment |
9,271 |
- |
2,924 |
12,195 |
|
Disposals |
- |
(3,396) |
- |
(3,396) |
|
Foreign currency adjustment |
59 |
681 |
(658) |
82 |
|
At 30 June 2013 |
9,330 |
34,841 |
12,090 |
56,261 |
|
Net book value |
|
|
|
|
|
At 30 June 2013 |
48,844 |
38,994 |
6,555 |
94,393 |
|
At 30 June 2012 |
55,370 |
36,057 |
10,331 |
101,758 |
|
At 31 December 2012 |
56,775 |
37,921 |
9,916 |
104,612 |
Management have considered that the deterioration in the performance of Computacenter France in the first half of 2013 provides sufficient evidence to test the non-financial assets in the business for impairment as at
13 Provisions
|
|
|
Customer contract provisions |
|
Property provisions |
|
Total provisions |
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
At 1 January 2012 |
|
|
|
11,748 |
|
11,748 |
|
Arising during the period |
|
|
|
413 |
|
413 |
|
Utilised |
|
|
|
(1,032) |
|
(1,032) |
|
Amounts unused reversed |
|
|
|
(1,021) |
|
(1,021) |
|
Exchange adjustment |
|
|
|
(153) |
|
(153) |
|
At 30 June 2012 |
|
|
|
9,955 |
|
9,955 |
|
Arising during the period |
|
2,108 |
|
(240) |
|
1,868 |
|
Utilised |
|
|
|
(682) |
|
(682) |
|
Amounts unused reversed |
|
|
|
(342) |
|
(342) |
|
Exchange adjustment |
|
|
|
29 |
|
29 |
|
At 31 December 2012 |
|
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 |
|
Current June 2013 |
6,282 |
|
1,921 |
|
8,203 |
|
Non-current June 2013 |
6,691 |
|
5,693 |
|
12,384 |
|
|
|
|
|
|
|
|
Current June 2012 |
|
|
2,551 |
|
2,551 |
|
Non-current June 2012 |
|
|
7,404 |
|
7,404 |
|
|
|
|
|
|
|
|
Current December 2012 |
2,108 |
|
2,265 |
|
4,373 |
|
Non-current December 2012 |
|
|
6,455 |
|
6,455 |
Customer contract provisions are based on the Directors' best estimate of the amount of future losses to completion on certain contractual services contracts in
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 six years. The provision in relation to the
14 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
15 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain how management view the cash performance of the business. There are two primary differences to this presentation compared to the statutory cash flow statement, as follows:
1) Factor financing and current asset investment, where cash is placed on deposit but is not available on demand, is not included within the statutory definition of cash and cash equivalents, but operationally is managed within the total net funds/borrowings of the businesses; and
2) Items relating to customer-specific financing ("CSF") are adjusted for as follows:
a. Interest paid on CSF is reclassified from interest paid to adjusted operating profit; and
b. Where customer-specific assets are financed by finance leases and the liabilities are matched by future amounts receivable under customer operating lease rentals, the depreciation of leased assets and the repayment of the capital element of finance leases are offset within net working capital; and
c. Where assets are financed by loans and the liabilities are matched by amounts receivable under customer operating lease rentals, the movement on loans within financing activities is also offset within working capital.
3) Net funds excluding CSF is stated inclusive of current asset investments. Current asset investments consists of a deposit held for a term of greater than 3 months from the date of deposit which is available to the Group with 30 days notice. The fair value of the current asset investment as at
Adjusted management cash flow statement
For the six months ended
|
|
|
|
Restated |
|
Restated |
|
|
Unaudited |
|
unaudited |
|
unaudited |
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
Adjusted profit before tax |
26,245 |
|
25,757 |
|
79,309 |
|
Adjusted net interest |
(500) |
|
(774) |
|
(1,265) |
|
Depreciation and amortisation |
12,822 |
|
10,443 |
|
24,384 |
|
Share-based payments |
527 |
|
648 |
|
2,176 |
|
Trading losses on onerous contracts |
(5,107) |
|
(1,743) |
|
(5,921) |
|
Working capital movements |
(41,117) |
|
(27,675) |
|
(13,819) |
|
Other adjustments |
735 |
|
(722) |
|
377 |
|
Adjusted operating cash (outflow)/inflow |
(6,395) |
|
5,934 |
|
85,241 |
|
Net interest received |
502 |
|
269 |
|
1,118 |
|
Income taxes paid |
(8,582) |
|
(4,126) |
|
(13,111) |
|
Capital expenditure and investments |
(7,289) |
|
(18,846) |
|
(30,813) |
|
Acquisitions |
- |
|
- |
|
(1,854) |
|
Equity dividends paid |
(15,759) |
|
(15,725) |
|
(23,213) |
|
Cash (outflow)/inflow before financing |
(37,523) |
|
(32,494) |
|
17,368 |
|
Proceeds from issue of shares |
58 |
|
- |
|
53 |
|
Return of value |
(31,412) |
|
- |
|
- |
|
Purchase of own shares |
- |
|
(3,167) |
|
(4,819) |
|
(Decrease)/increase in net funds excluding CSF in the period |
(68,877) |
|
(35,661) |
|
12,602 |
|
|
|
|
|
|
|
|
(Decrease)/increase in net funds excluding CSF |
(68,877) |
|
(35,661) |
|
12,602 |
|
Effect of exchange rates on cash and cash equivalents |
3,692 |
|
487 |
|
(2,059) |
|
Net funds excluding CSF at beginning of period |
147,327 |
|
136,784 |
|
136,784 |
|
Net funds excluding CSF at end of period |
82,142 |
|
101,610 |
|
147,327 |
16 Analysis of net funds
|
|
|||||||||||
|
|
Unaudited |
|
Unaudited |
|
Audited |
||||||
|
|
H1 2013 |
|
H1 2012 |
|
Year 2012 |
||||||
|
|
£'000 |
|
£'000 |
|
£'000 |
||||||
|
Cash and short term deposits |
76,336 |
|
91,747 |
|
138,149 |
||||||
|
Bank overdraft |
(4,087) |
|
(137) |
|
(678) |
||||||
|
Cash and cash equivalents |
72,249 |
|
91,610 |
|
137,471 |
||||||
|
Current asset investment |
10,000 |
|
10,000 |
|
10,000 |
||||||
|
Bank loans |
(107) |
|
- |
|
(144) |
||||||
|
Net funds excluding CSF |
82,142 |
|
101,610 |
|
147,327 |
||||||
|
Finance leases |
(16,329) |
|
(17,294) |
|
(17,999) |
||||||
|
Other loans |
(53) |
|
(556) |
|
(702) |
||||||
|
Total CSF |
(16,382) |
|
(17,850) |
|
(18,701) |
||||||
|
Net funds |
65,760 |
|
83,760 |
|
128,626 |
||||||
Net funds excluding CSF of
17 Publication of non-statutory accounts
The financial information contained in the interim statement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The auditors have issued an unqualified opinion on the Group's statutory financial statements under International Accounting Standards for the year ended
This information is provided by RNS