Preliminary Results - Part 2
Preliminary Results - Part 2
March 11, 2008 at 12:00 AM EDT
RNS Number:7912P
Computacenter
Part 2 : For preceding part double-click [nRNSK7912P]
At 1 January
2007 9,571 2,247 74,542 (2,503) (2,455) 183,700 265,102 27 265,129
Exchange
differences
on
retranslation
of foreign
operations - - - - 3,962 - 3,962 - 3,962
------- ------- -------- ------ ------- ------- ------ ------ --------
Net income
recognised
directly in
equity - - - - 3,962 - 3,962 - 3,962
Profit for
the year - - - - - 28,888 28,888 10 28,898
------- ------- -------- ------ ------- ------- ------ ------ --------
Total
recognised
income and
expenses for
the year - - - - 3,962 28,888 32,850 10 32,860
Cost of
share-based
payment - - - - - 2,659 2,659 - 2,659
Exercise of
options 18 643 - 49 - - 710 - 710
Purchase of
own shares - - - (11,332) - - (11,332) - (11,332)
Cancellation
of own shares (85) - 85 2,406 - (2,406) - - -
Equity
dividends - - - - - (11,806) (11,806) - (11,806)
Acquisition
of minority
interests - - - - - - - (24) (24)
------- ------- -------- ------ ------- ------- ------ ------ --------
(67) 643 85 (8,877) 3,962 17,335 13,081 (14) 13,067
------- ------- -------- ------ ------- ------- ------ ------ --------
At 31
December
2007 9,504 2,890 74,627 (11,380) 1,507 201,035 278,183 13 278,196
======= ======= ======== ====== ======= ======= ====== ====== ========
Consolidated cash flow statement
For the year ended 31 December 2007
2007 2006
Notes £'000 £'000
Operating activities
Operating profit 43,101 28,541
Adjustments to reconcile Group operating
profit to net cash inflows from operating
activities
Depreciation 27,130 14,585
Amortisation 3,547 1,907
Share-based payment 2,659 1,411
Impairment of property, plant and equipment - 2,492
Loss on disposal of property, plant and 190 353
equipment
Impairment of intangible assets 86 114
Loss on disposal of intangible assets - 9
Dividend received from associate - 202
(Increase)/decrease in inventories (8,724) 4,560
Increase in trade and other receivables (1,470) (35,498)
(Decrease)/increase in trade and other (19,976) 6,895
payables
Currency and other adjustments (218) 5
-------- --------
Cash generated from operations 46,325 25,576
Income taxes paid (13,853) (11,994)
-------- --------
Net cash flow from operating activities 32,472 13,582
-------- --------
Investing activities
Interest received 3,885 6,600
Acquisition of subsidiaries, net of cash (32,600) -
acquired
Sale of property, plant and equipment 336 24
Purchases of property, plant and equipment (8,620) (7,504)
Purchases of intangible assets (5,619) (2,499)
Acquisition of minority interests (30) -
Sale of interest in associate - 364
-------- --------
Net cash flow from investing activities (42,648) (3,015)
-------- --------
Financing activities
Interest paid (5,333) (2,152)
Dividends paid to equity shareholders of the (11,806) (13,326)
parent
Proceeds from share issues 661 2,383
Purchase of own shares (11,332) -
Repayment of capital element of finance (12,195) (2,629)
leases
Repayment of loans (11,103) (5,527)
New borrowings 19,832 12,447
Return of capital - (74,442)
Expenses on return of capital - (365)
Decrease in factor financing (8,743) (1,377)
-------- --------
Net cash flow from financing activities (40,019) (84,988)
-------- --------
Decrease in cash and cash equivalents (50,195) (74,421)
Effect of exchange rates on cash and cash (1,521) 492
equivalents
Cash and cash equivalents at the beginning of 7 58,982 132,911
the year -------- --------
Cash and cash equivalents at the year end 7 7,266 58,982
======== ========
Analysis of changes in net funds
At 1 Cash flows Non-cash Exchange At 31
January in year flow differences December
2007 2007
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 58,982 (50,195) - (1,521) 7,266
Factor financing (29,549) 8,743 - (2,647) (23,453)
-------- --------- -------- -------- --------
Net funds/(debt) prior to 29,433 (41,452) - (4,168) (16,187)
customer-specific financing
Finance leases (11,403) 12,195 (47,768) (666) (47,642)
Other loans (7,246) (8,729) - - (15,975)
-------- --------- -------- -------- --------
Net funds/(debt) 10,784 (37,986) (47,768) (4,834) (79,804)
======== ========= ======== ======== ========
Notes to the consolidated financial statements
For the year ended 31 December 2007
1 Authorisation of financial statements and statement of compliance with IFRS
The consolidated financial statements of Computacenter plc for the year ended 31
December 2007 were authorised for issue in accordance with a resolution of the
Directors on 10 March 2008. The balance sheet was signed on behalf of the Board
by MJ Norris and FA Conophy. Computacenter plc is a limited company incorporated
and domiciled in England whose shares are publicly traded.
The Group's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted by the European
Union as they apply to the financial statements of the Group for the year ended
31 December 2007 and applied in accordance with the Companies Act 1985.
2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements are presented in sterling and all values
are rounded to the nearest thousand (£'000) except when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial statements of
Computacenter plc and its subsidiaries as at 31 December each year. The
financial statements of subsidiaries are prepared for the same reporting year as
the parent company, using existing GAAP in each country of operation.
Adjustments are made to translate any differences that may exist between the
respective local GAAPs and IFRS.
All intra-group balances, transactions, income and expenses and profit and
losses resulting from intra-group transactions that are recognised in assets,
have been eliminated in full.
Subsidiaries are consolidated from the date on which the Group obtains control
and cease to be consolidated from the date on which the Group no longer retains
control.
Minority interests represent the portion of profit or loss and net assets in
subsidiaries that is not held by the Group and is presented separately within
equity in the consolidated balance sheet, separately from parent shareholders'
equity.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous
financial year except as described below:
The Group has adopted the following new and amended IFRS and IFRIC
interpretations during the year. Adoption of these standards did not have any
effect on the financial performance or position of the Group. They did however
give rise to additional disclosures:
IFRS 7 Financial Instruments: Disclosures
This standard requires disclosures that enable users of the financial statements
to evaluate the significance of the Group's financial instruments and the nature
and extent of risks arising from those financial instruments. The new
disclosures are included throughout the financial statements. Whilst there has
been no effect on the financial position or results, comparative information has
been revised where needed.
IAS 1 Presentation of Financial Statements
The amendment requires the Group to make new disclosures to enable users of the
financial statements to evaluate the Group's objectives, policies and processes
for managing capital. These new disclosures are shown in note 24.
IFRIC 11 IFRS 2 Group and Treasury Share Transactions
The Group has elected to early adopt IFRIC Interpretation 11 as of January 2007,
insofar as it applies to consolidated financial statements. This interpretation
requires arrangements whereby an employee is granted rights to an entity's
equity instruments to be accounted for as an equity-settled scheme.
3 Segmental analysis
The Group's primary reporting format is geographical segments and its secondary
format is business segments. The Group's geographical segments are 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.
Each geographical business contains the following three business segments: -
- the Product segment supplies computer hardware and software to large and
medium corporate and government customers and to other distributors. It
includes the resale of third party services for which the group retains no
risks or rewards post sale; and
- the Professional Services segment provides technical and project
management skills to enable customers in the corporate and government
sectors to implement and integrate new technologies into their
infrastructures; and
- the Support and Managed Services segment provides an outsourcing service
for specific areas of infrastructure management to customers in the
corporate and government sectors.
The sale of goods is reported in the Product segment. The rendering of services
is reported in the Professional Services and Support and Managed Services
segments.
Transfer prices between geographical segments are set on an arm's length basis
in a manner similar to transactions with third parties. The impact of
inter-segment sales on operating profit by segment is not significant.
Geographical segments
The following tables present revenue, expenditure and certain asset information
regarding the Group's geographical segments for the years ended 31 December 2007
and 2006:
UK Germany France Benelux Total
£'000 £'000 £'000 £'000 £'000
Year ended 31 December
2007
Revenue
Sales to external
customers 1,357,305 708,581 285,698 27,557 2,379,141
Inter-segment sales 13,094 19,529 1,373 4,014 38,010
------- ------- ------- ------- --------
Segment revenue 1,370,399 728,110 287,071 31,571 2,417,151
======= ======= ======= ======= ========
Result
Gross profit 197,185 94,202 31,501 2,920 325,808
Distribution costs (10,572) (3,700) (3,855) (217) (18,344)
Administrative expenses (152,175) (79,428) (29,400) (2,747) (263,750)
------- ------- ------- ------- --------
Operating result before
amortisation of acquired
intangibles 34,438 11,074 (1,754) (44) 43,714
Amortisation of acquired
intangibles (481) (132) - - (613)
------- ------- ------- ------- --------
Segment operating result 33,957 10,942 (1,754) (44) 43,101
------- ------- ------- ------- --------
Net finance income/
(expense) 2,536 (1,842) (1,613) (123) (1,042)
------- ------- ------- ------- --------
Profit before tax 36,493 9,100 (3,367) (167) 42,059
Income tax expense (13,161)
--------
Profit for the year 28,898
========
Assets and liabilities
Total segment assets 578,522 186,480 56,379 3,720 825,101
======= ======= ======= ======= ========
Total segment liabilities 293,033 152,534 95,763 5,575 546,905
======= ======= ======= ======= ========
Other segment information
Capital expenditure:
Property, plant and
equipment 42,914 12,759 648 67 56,388
Intangible fixed assets 3,195 2,239 185 - 5,619
======= ======= ======= ======= ========
Depreciation 22,319 4,705 - 106 27,130
Amortisation 2,985 451 111 - 3,547
======= ======= ======= ======= ========
Share-based payment 2,197 326 136 - 2,659
------- ------- ------- ------- --------
UK Germany France Benelux Total
£'000 £'000 £'000 £'000 £'000
Year ended 31 December
2006
Revenue
Sales to external
customers 1,281,498 654,671 307,264 26,470 2,269,903
Inter-segment sales 8,601 11,734 764 3,336 24,435
------- ------- ------- ------- --------
Segment revenue 1,290,099 666,405 308,028 29,806 2,294,338
======= ======= ======= ======= ========
Result
Gross profit 181,900 83,405 27,711 2,450 295,466
Distribution costs (11,765) (3,646) (3,521) (143) (19,075)
Administrative expenses (132,665) (76,925) (30,685) (2,498) (242,773)
------- ------- ------- ------- --------
Operating result before
amortisation of acquired
intangibles and
exceptional items 37,470 2,834 (6,495) (191) 33,618
Amortisation of acquired - (46) - - (46)
intangibles ------- ------- ------- ------- --------
Operating result before
exceptional items 37,470 2,788 (6,495) (191) 33,572
Exceptional items - - (5,031) - (5,031)
------- ------- ------- ------- --------
Segment operating result 37,470 2,788 (11,526) (191) 28,541
======= ======= ======= ======= ========
Net finance income/
(expense) 6,834 (882) (1,475) (89) 4,388
------- ------- ------- ------- --------
Profit before tax 44,304 1,906 (13,001) (280) 32,929
Income tax expense (13,994)
--------
Profit for the year 18,935
========
Assets and liabilities
Total segment assets 506,177 166,611 76,342 2,188 751,318
------- ------- ------- ------- --------
Total segment liabilities 223,296 145,382 112,679 4,832 486,189
------- ------- ------- ------- --------
Other segment information
Capital expenditure:
Property, plant and
equipment 10,387 9,557 852 89 20,885
Intangible fixed assets 1,922 495 82 - 2,499
------- ------- ------- ------- --------
Depreciation 11,262 2,283 936 104 14,585
Amortisation 1,551 293 63 - 1,907
------- ------- ------- ------- --------
Share-based payment 1,173 202 28 8 1,411
------- ------- ------- ------- --------
Business segments
The following tables present revenue information regarding the Group's business
segments for the years ended 31 December 2007 and 2006.
Product Professional Support Total
Services and
Managed
Services
Year ended 31 £'000 £'000 £'000 £'000
December 2007
Revenue
Sales to external
customers 1,774,164 158,488 446,489 2,379,141
Inter-segment sales 7,563 9,559 20,888 38,010
------- --------- --------- -------
Segment revenue 1,781,727 168,047 467,377 2,417,151
======= ========= ========= =======
Product Professional Support Total
Services and
Managed
Services
Year ended 31 £'000 £'000 £'000 £'000
December 2006
Revenue
Sales to external
customers 1,735,210 128,895 405,798 2,269,903
Inter-segment sales 3,865 2,723 17,847 24,435
------- --------- --------- -------
Segment revenue 1,739,075 131,618 423,645 2,294,338
======= ========= ========= =======
Business segments provide the Group with common business performance reporting
across geographic segments that are structured and organised differently. Due to
invoice bundling and shared service and business support structures, revenue and
gross profit involves allocation judgements. Each geographic segment principally
consists of a single entity with shared assets, liabilities and capital
expenditure. Investment decisions are made either at the level of or within a
geographic segment, but are not made at a business segment level. It is,
therefore, not possible to split out assets, liabilities and capital expenditure
information by business segments.
4 Income tax
a) Tax on profit on ordinary activities
2007 2006
£'000 £'000
Tax charged in the income statement
Current income tax
UK corporation tax 13,420 14,421
Foreign tax 113 212
Adjustments in respect of prior periods (385) 76
Consortium relief - 59
-------- --------
Total current income tax 13,148 14,768
======== ========
Deferred tax
Origination and reversal of temporary
differences (1,372) (499)
Losses utilised 3,417 -
Effect of changes in tax rate on deferred
tax (49) -
Effect of changes in tax rate on German
deferred tax asset 635 -
Changes in recoverable amounts of deferred
tax assets (2,747) (275)
Adjustments in respect of prior periods 129
-------- --------
Total deferred tax 13 (774)
-------- --------
Tax charge in the income statement 13,161 13,994
======== ========
b) Reconciliation of the total tax charge
2007 2006
£'000 £'000
Accounting profit before tax 42,059 32,929
-------- --------
At the UK standard rate of corporation tax
of 30% (2006: 30%) 12,618 9,879
Expenses not deductible for tax purposes 643 724
Relief on share option gains (78) (218)
Non-deductible element of share-based
payment charge 506 423
Adjustments in respect of current income tax
of previous periods (256) (214)
Higher tax on overseas earnings 859 49
Effect of changes in tax rate on deferred
tax (49) -
Accounting depreciation in excess of tax
depreciation - 21
Other differences (149) (616)
Changes in recoverable amounts of deferred
tax assets (2,747)
Effect of change in rate of overseas
deferred tax asset 635
Consortium relief - 59
Profit of overseas undertakings not taxable
due to brought forward loss offset - (154)
Losses of overseas undertakings not
available for relief 1,179 4,041
-------- --------
At effective income tax rate of 31.3% (2006:
42.6%) 13,161 13,994
======== ========
Corporation tax is calculated at 30% of the estimated assessable profit for the
year. Based on future legislation of the Government in the United Kingdom the
corporation tax will be calculated at 28% of assessable profit from 1 April
2008. This has resulted in an increase to the closing deferred tax balances in
the UK of £49,000.
From 1 January 2008 the Corporate Tax rate in Germany reduced to 30% from 40%.
This has resulted in a £635,000 reduction in the deferred tax asset recognised
in respect of losses carried forward.
c) Tax losses
Deferred tax assets of £6.5 million (2006: £5.5 million) have been recognised in
respect of losses carried forward. In addition, at 31 December 2007, there were
unused tax losses across the Group of £169.6 million (2006 : £153.1 million) for
which no deferred tax asset has been recognised. Of these losses, £116.5 million
(2006 : £107.6 million) arise in Germany, albeit a significant proportion have
been generated in statutory entities that no longer have significant levels of
trade. The remaining unrecognised tax losses relate to other loss-making
overseas subsidiaries.
5 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 amortisation of acquired intangibles and exceptional
items.
2007 2006
£'000 £'000
Profit attributable to equity holders of the
parent 28,888 18,927
Amortisation of acquired intangibles 613 46
Tax on amortisation of acquired intangibles (184) (14)
Exceptional items attributable to equity holders - 5,031
of the parent
-------- --------
Before amortisation of acquired intangibles and
exceptional items 29,317 23,990
======== ========
2007 2006
000's 000's
Basic weighted average number of shares (excluding 156,117 172,312
own shares held)
Effect of dilution:
Share options 2,202 1,232
-------- --------
Diluted weighted average number of shares 158,319 173,544
======== ========
2007 2006
pence pence
Basic earnings per share 18.5 11.0
Diluted earnings per share 18.2 10.9
Adjusted basic earnings per share 18.8 13.9
Adjusted diluted earnings per share 18.5 13.8
Subsequent to the reporting date the Company has repurchased a further 3,537,600
of its own shares for cancellation.
6 Dividends paid and proposed
2007 2006
£'000 £'000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2006: 5.0p (2005: 5.2p) 7,872 9,405
Interim for 2007: 2.5p (2006: 2.5p) 3,934 3,921
-------- --------
11,806 13,326
======== ========
Proposed for approval at AGM (not recognised as
a liability as at 31 December)
Equity dividends on ordinary shares:
Final dividend for 2007: 5.5p (2006: 5.0p) 7,997 7,856
======== ========
7 Cash and short-term deposits
2007 2006
£'000 £'000
Cash at bank and in hand 19,211 17,882
Short-term deposits 10,000 60,000
-------- --------
29,211 77,882
======== ========
Cash at bank and in hand earns interest at floating rates based on daily bank
deposit rates. Short-term deposits are made for varying periods of between one
day and three months depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates. The fair value of
cash and cash equivalents is £29,211,000 (2006: £77,882,000).
At 31 December 2007, the Group had available £148.1 million (2006:£ 132.9
million) of uncommitted overdraft and factoring facilities.
For the purposes of the consolidated cash flow statement, cash and cash
equivalents comprise the following at 31 December:
2007 2006
£'000 £'000
Cash at bank and in hand 19,211 17,882
Short-term deposits 10,000 60,000
Bank overdrafts (21,945) (18,900)
-------- --------
7,266 58,982
======== ========
8 Customer-specific leases and loans
a) Other loans
The other loans are unsecured borrowings to finance equipment sold to customers
on specific contracts.
The table below summarises the maturity profile of these loans:
2007 2006
£'000 £'000
Not later than one year 11,571 4,443
After one year but not more than five years 4,404 2,803
-------- --------
15,975 7,246
======== ========
b) Finance lease commitments
The finance leases are only secured on the assets that they finance. These
assets are used to satisfy specific customer contracts.
The present value of the net minimum lease payments are as follows:
2007 2006
£'000 £'000
Within one year 17,394 2,844
After one year but not more than 30,248 8,559
five years -------- --------
47,642 11,403
======== ========
c) Operating lease commitments where the Group is lessor
During the year the Group entered into commercial leases with customers on
certain items of machinery. These leases have remaining terms of between one and
five years.
Future amounts receivable by the Group under the non-cancellable operating
leases as at 31 December are as follows:
2007 2006
£'000 £'000
Not later than one year 26,064 8,541
After one year but not more than 27,752 12,723
five years ------- --------
53,816 21,264
======= ========
The amounts receivable are directly related to the finance lease obligations
detailed in note 8b.
9 Post balance sheet event
On 10 January 2008 the Company entered into an agreement with its stockbrokers,
Credit Suisse, to purchase during the Close Period, its own Ordinary Shares to a
maximum of four million shares with a maximum value of £8,000,000. A further
3,537,600 shares had been repurchased for cancellation between the reporting
date and 10 March 2008 for a value of £6,054,000.
10 Publication of non-statutory accounts
The financial information in the preliminary statement of results does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985 (the "Act"). The financial information for the year ended 31
December 2007 has been extracted from the statutory accounts on which an
unqualified audit opinion has been issued. Statutory accounts for the year
ended 31 December 2007 will be delivered to the Registrar of Companies following
the Company's Annual General Meeting.
The financial statements, and this preliminary statement, of the Group for the
year ended 31 December 2007 were authorised for issue by the Board of Directors
on 10 March 2008 and the balance sheet was signed on behalf of the Board by MJ
Norris and FA Conophy.
The statutory accounts have been delivered to the Registrar of Companies in
respect of the year ended 31 December 2006 and the Auditors of the Company made
a report thereon under Section 235 of the Act. That report was an unqualified
report and did not contain a statement under Section 237(2) or (3) of the Act.
This information is provided by RNS
The company news service from the London Stock Exchange
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