Interim Results Announcement
Interim Results Announcement
Computacenter plc, the European IT infrastructure services provider, today announces interim results for the six months ended 30 June 2006.
Financial Highlights:
- Group revenues of £1.11 billion (2005: £1.15 billion)
- Profit before tax of £14.5 million (2005: £8.2 million)
- Earnings per share of 4.3p (2005: 1.2p)
- Interim dividend of 2.5p per share (2005: 2.5p)
- Strong balance sheet with net funds of £90.6 million at period end
- Return of £74.4 million to shareholders completed in July 2006
Operational Highlights:
Encouraging performance of UK Technology Solutions, our consulting and systems integration business, with a number of significant projects undertaken
- Recently established Computacenter Direct, our telesales mid-market provider, continued to grow aggressively
- Good progress in embedding our shared services delivery model into our customer propositions
- Newly formed software business unit delivered strong growth in revenues
- German business returned to profit and successfully secured several new Managed Services contracts
- Improved French performance, although product margin pressures intensified
Ron Sandler, Chairman of Computacenter plc, commented:
“The improvement in Computacenter’s profitability is encouraging. I have reported in the past on the market challenges faced in recent years by Computacenter, and on the significant efforts underway to improve our competitiveness and focus our resources on higher margin activities. Whilst the various transformation programmes are essentially long-term in nature and it is far too early to comment definitively on their success, we are increasingly confident that we are on the right track as today’s results demonstrate.
“Looking ahead, we anticipate that the improvements we are seeing in the Group’s market positioning and performance will continue as the year progresses. The outlook for the full year remains in line with expectations.”
For further information, please contact:
Computacenter plc.
Mike Norris, Chief Executive - 01707 631 601
Tessa Freeman, Investor Relations - 01707 631 514
www.computacenter.com
Tulchan Communications - 020 7353 4200
Stephen Malthouse
www.tulchangroup.com
High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk
Chairman’s Statement
Computacenter made steady progress in the first half of 2006. Although Group revenues were largely unchanged at £1.11 billion (2005: £1.15 billion), profit before tax increased by 76.7% to £14.5 million (2005: £8.2 million) due to a more favourable business mix. The balance sheet remained strong, although a requirement for greater working capital across the Group, largely as a result of revenue growth in France and the lengthening of terms of payment with some key customers in the UK, meant that net funds fell by £9.8 million to £90.6 million at the period end.
The intention of the Board to return surplus cash to shareholders, subject to the resolution of various tax matters, was announced in March. I am pleased to report that the tax uncertainties were satisfactorily resolved during the period and on 4 July 2006, £74.4 million was returned to shareholders by way of a B share issue. As a part of this process, a 5 for 6 share consolidation was undertaken.
I am pleased to announce the payment of an interim dividend of 2.5p per share (2005: 2.5p) to be paid on 20 October 2006 to shareholders on the register as at 22 September 2006. This reflects the available cash resources in the business and is consistent with our policy of seeking to keep the interim dividend at a level equal to one-third of the preceding year’s total dividend.
The improvement in the Group’s profitability is encouraging. I have reported in the past on the market challenges faced in recent years by Computacenter, and on the significant efforts underway in each of our three principal European businesses to improve our competitiveness. Whilst the various transformation programmes are essentially long-term in nature and it is far too early to comment definitively on their success, we are increasingly confident that we are on the right track.
In recent years our growth in sales of enterprise products (including servers), software and services has outstripped our performance in the area of desktops, notebooks and peripherals. This trend continued in the first half of 2006 to such an extent that PC and peripheral business revenues now account for only 33 % of the Group total. This figure varies widely by country; it is just 13% in Germany and 35 % in the UK; whilst in France, this business still accounts for 60% of revenues.
In the UK, Computacenter’s operating profit increased by 10.3 % to £16.4 million (2005: £14.9 million), with both the Services and Product Divisions contributing to this improvement. Within the Services Division, the performance of Technology Solutions, our consulting and systems integration unit, was particularly encouraging with a number of significant projects undertaken in such areas as server virtualisation, datacentre relocation and security solutions. Considerable efforts have been made in recent years to increase the breadth and sophistication of Computacenter’s technology integration capabilities, and it is pleasing to see these increasingly recognised by customers.
Within our contractual services business units, Support Services and Managed Services, good progress was made in further embedding a shared services delivery model. Through centralisation of core resources, such as the help desk, and rigorous adherence to key processes and routines, the consistency, reliability and cost effectiveness of our services delivery are being improved.
The increase in profitability of the Product Division in the UK is due to improved gross margins and reduction in the cost base. Gross margin improvement has arisen primarily from better execution, more effective sales incentives and a more favourable customer mix. Cost reduction has been the result of a number of projects carried out during the second half of 2005. Software revenues also grew strongly as a result of the creation last year of a specialist business unit to focus on this segment of the market.
Computacenter Direct, our telesales mid-market provider, continued on its aggressive growth path, achieving in excess of 60% organic revenue growth compared to H1 2005.
Our German business returned a small operating profit of £0.5 million (2005: operating loss of £1.5 million) on revenues that were largely unchanged at £297.7 million. Much of this is due to improving the performance within a number of specific service contracts. More significantly, the German business secured several new Managed Services contracts during the period, the revenues from which will start to flow during the second half of the year. As in the UK, there was a discernible shift in the German business away from desktop products and services towards higher-margin datacentre and networking technologies.
Revenues from Computacenter France grew strongly to £141.7 million (2005: £126.2 million), although in part this simply reflects the temporary withdrawal from the market of a key customer in the first half of 2005 pending the renegotiation of the supply contract. However, product margins were under pressure in the French market as vendors increasingly sought to sell direct, with the result that our operating loss only reduced to £5.4 million (2005: £7.9 million).
Turning to matters of governance, there have been two Board changes in recent months. I am pleased to welcome Dr Ian Lewis to the Board as a non-executive Director. Ian has had a distinguished career as an IT director, initially in financial services and latterly in academia, and I very much look forward to his involvement with the Group. As previously announced, pressures on his time have led Nick Cosh to resign from the Board. Nick has made a significant contribution to the Group over the last four years and we are sorry to see him leave. An executive search firm has been appointed to assist in recruiting a suitable candidate to replace Nick on the Board and its sub-committees, including his role as Chair of the Audit Committee. I am delighted that Cliff Preddy has agreed to take on the role of Senior Independent Non-Executive Director.
Computacenter has made considerable efforts in recent years, particularly in the UK, to transform itself in response to some fundamental changes in the way our markets operate. Whilst this process is far from complete, a great deal of progress has been made. Changes of this nature are never easy and new demands are continually being made on our employees, whose dedication and commitment have been exemplary and to whom I am pleased to record my thanks.
Looking ahead, we anticipate that the improvements we are seeing in the Group’s market positioning and performance will continue as the year progresses. The outlook for the full year remains in line with expectations.
Review of Operations
UK
In the UK, improved profitability across both Services and Product Divisions resulted in overall operating profit growth of 10.3% to £16.4 million. This was despite a 7.6% decline in revenues, which was predominately due to hardware price decline.
Services Division
The total services revenue of the Division for H1 2006 was £134.5 million. Our Technology Solutions unit grew strongly on the back of a number of projects, while our Managed and Support Services businesses achieved modest growth in comparison.
Within the Services Division, we made further progress on standardisation and the implementation of a ‘shared services factory’, our delivery model that enables services to be easily repeated across clients, improving both the quality and cost-effectiveness of our delivery.
Managed Services
Whilst our Managed Services business unit saw a growing pipeline of opportunities in H1, revenue growth was somewhat disappointing. However, we continued to lay the foundations for future growth through the launch of a number of new propositions. These include offerings particularly designed to address a growing market for the contractual management of datacentre and other business-critical systems.
We were successful in securing a number of significant Managed Services contracts in H1 2006. These include a five-year contract with IT services firm Parity Group plc, worth more than £6 million, where Computacenter Services will be responsible for managing Parity's entire IT infrastructure, including its datacentre. The contract is expected to reduce Parity’s IT operational costs by approximately 25% over the term.
Technology Solutions
Increased demand for technology change projects to support business growth helped drive strong profit and revenue growth in H1. As with Managed Services, client datacentres were a particular focus in 2006, with a newly launched server virtualisation proposition for client datacentres generating a significant number of projects.
The strong performance of our Technology Solutions business is in part due to the increased value of our offerings to clients, for whom we increasingly underwrite some of the risk of technology integration projects. Approximately two thirds of our technology services billing is now based on delivered outcomes rather than on day rates.
A significant development in the first half was an agreement with Oracle to provide an application migration service for the company’s large number of independent software vendors. The service, which is designed to offer fast, low-risk and low-cost migrations, will be offered through our Solutions Centre.
Support Services
Our Support Services business has sought to capitalise on the growing trend for global outsourcing companies to subcontract IT support services to third parties. We have created a specialist sales team to target the systems integrator marketplace and, as a result, are now starting to see an encouraging pipeline of opportunities for 2007.
We have also extended our off-site disaster recovery activities, with our new Work Area Recovery service providing 200 fully provisioned user desks available at locations across the UK for client staff unable to occupy their usual premises. We also now offer a Fixed Server Recovery service, providing clients with access to a constantly available server facility that exactly matches their live configuration.
Key wins include a three-year contract with John Lewis Partnership for the support of all their desktops, laptops, printers and networks across the UK.
Product Division
Total UK products revenue declined to £518.8 million, largely attributable to substantial desktop and laptop price declines, in the order of 10% compared with H1 2005. However, improved product margins more than compensated for this revenue deterioration. The margin improvement came principally from a more favourable mix of business, including increased datacentre spend, strong demand from the financial services sector and a decline in low margin trade distribution sales.
A key development in the first half of the year was the launch of our revised webshop, Connect v6, which adds significantly to the competitiveness of our product offerings by reducing cost of sale and maximising cross-selling opportunities. The proportion of product sales completed over the internet continues to grow, with 16% of orders by volume now placed via our webshop, compared with 11% in 2005.
Corporate Hardware
We continued to see a shift in product mix towards enterprise server and networking products, and strengthening relationships with enterprise vendors such as Sun, IBM and Cisco.
Hardware sales were particularly strong in the financial markets and we saw growing interest in our range of value-added deployment services, including advisory services in the area of reducing operational costs.
Software
Our new Software business unit, created in 2005, continued to record strong revenue and profit growth, with gross profit from software sales up more than 50% on H1 2005. Some of this growth has been driven by merger and acquisition activity, with customers auditing and consolidating software expenditure across the merged entities to ensure compliance and reduce costs.
As well as actively targeting these organisations, we have also launched new systems that allow us to track customers’ software procurement cycles and identify licence renewal or extension opportunities at an early stage. Approximately £12 million of renewal opportunities have been identified in this way and £3.5 million closed to date.
Computacenter is increasingly considered a key value-added software partner to large organisations, as evidenced by the decision of the UK Association of Chief Police Officers to appoint us one of only three preferred suppliers for its multi-million pound framework agreement. The three-year agreement is expected to be worth up to £5 million per year.
Computacenter Direct
Our division targeting the growing market for IT product and services in the medium-sized business sector continued to grow strongly, with improved product margins and organic revenue growth of more than 60% over H1 2005.
Computacenter Direct continues to attract substantial numbers of new customers in its segment – averaging approximately 100 new customers per month in the first half. We expect this number to increase further following the launch of our new transactional website in June, which enables us to target and service customers whose preference is online procurement, whilst dramatically lowering our cost of sale.
We continue to invest for growth in this business, with 15 new telesales staff joining over the period and further recruitment anticipated for H2.
CCD
Despite an improvement in the profit performance of our trade distribution arm following the cost reduction programme in 2005, CCD continued to experience challenging conditions, with particularly fierce price competition in the high volume segment of the market.
Changes were made to the senior management of this unit and significant steps have been taken to increase the breadth of relationships across both customers and vendor partners. Whilst these are anticipated to bring longer-term benefits, CCD’s margins are expected to remain under pressure for the remainder of 2006.
RDC
Whilst trading conditions remain very competitive, RDC saw early signs in H1 that improvements initiated at the end of 2005 are beginning to take effect. In particular, the launch of the Computacenter Asset Recovery Services together with the creation of a new frontline sales team, have been instrumental in a number of significant service wins. Overall RDC remains profitable and some major wins in H1 from existing accounts are expected to boost performance further in H2.
Germany
Our German business recorded an H1 operating profit of £0.5 million (2005: loss of £1.5 million) on revenues that were broadly unchanged.
35% of revenues came from services where growth in the Managed Services contract base helped drive a 5.1% year-on-year revenue increase. We also began to see increasing client interest in converged phone and data networks and concerns over security compliance.
As in the UK, Computacenter Germany experienced a continuing shift in product mix, in terms of both volumes and revenues, towards products that attract higher margins, with increased demand for datacentre and networking technology and a subdued market for desktop systems.
To increase our share of the medium-sized business market, where we believe there are significant opportunities for growth, we created a national account team dedicated to winning new customers in this market.
An important development was the implementation of a centrally provided, shared-resource approach for the delivery of managed desktop and datacentre services. To support this approach, we have established a new computer centre in Frankfurt, enabling all services and applications managed on behalf of the client to be located and managed on our own systems. The first client for this offering is Cognis, with which we have signed a seven-year Managed Service contract covering 120 locations across 30 countries. We expect our investment in this shared services model, together with the creation of new national account teams and our focus on long-term client contracts to lead to future sales growth.
Significant wins in the period include the renewal of a worldwide Managed Services contract with Deutsche Börse, worth several million Euros, in which we will provide user support, management of moves and changes and engineering services for 5,000 IT seats across Germany, USA, Hong Kong and Dubai.
France
Our French business recorded an improvement on the first half of 2005, with revenue growth of 12.3% to £141.7 million (2005: £126.2 million) and operating loss reducing to £5.4 million (2005: £7.9 million). The operating loss improvement was due to the effects of the ongoing cost reduction programme and, in part, attributable to the non-recurring costs of that programme in H1 2005, of approximately £1.7 million.
We made progress in addressing the poor utilisation levels across our services activities, which had a significant impact on profit performance. At the same time, we improved maintenance customer service levels and continue to see a growing pipeline of new contracts in our projects business.
To accelerate growth and address rising demand for enterprise technology, particularly related to IBM products, Computacenter France invested in the development of specialist technical and sales skills in the enterprise solutions market.
We saw a marked decline in product margins in H1, largely fuelled by major vendors bypassing the channel and selling direct to clients. It is too early to say whether this margin decline will continue into the second half of the year and beyond.
Significant wins include a three-year Managed Services contract renewal with Elior Services, worth over £1.6 million covering user help desk, maintenance and installations, moves and changes for 6,000 users across 2,500 catering sites. We also won a maintenance contract with a leading French insurance company, covering the provision of laptop and printer maintenance services to approximately 4,000 users.
Belgium, Netherlands, and Luxembourg
Overall, our small Benelux operation showed a reduced loss of £82,000 (2005: £105,000 loss). Gross profit performance was strongest from Managed Services and product supply, with project and consultancy services remaining weak.
Key wins include a £4.6 million Belgian government-sponsored employee PC purchase contract, international procurement deals secured with Campbell and World Directories, and a major CRM deployment project, covering 19 countries, with OMRON in the Netherlands.
Consolidated income statement |
|
|
|
|
|
For the six months ended 30 June 2006 |
|
|
|
|
|
|
Unaudited six months ended 30 June 2006 |
|
Unaudited six months ended 30 June 2005 |
|
Year ended 31 Dec 2005 |
|
£'000 |
|
£'000 |
|
£'000 |
Revenue |
1,114,939 |
|
1,151,553 |
|
2,285,209 |
Cost of sales |
(969,619) |
|
(1,009,276) |
|
(1,996,381) |
Gross profit |
145,320 |
|
142,277 |
|
288,828 |
|
|
|
|
|
|
Distribution costs |
(9,304) |
|
(10,290) |
|
(19,928) |
Administrative expenses |
(124,013) |
|
(127,227) |
|
(241,634) |
Operating profit: |
|
|
|
|
|
Before share based payments |
12,003 |
|
4,760 |
|
27,266 |
Share based payments |
(568) |
|
662 |
|
392 |
Operating profit |
11,435 |
|
5,422 |
|
27,658 |
|
|
|
|
|
|
Finance costs |
(1,053) |
|
(1,275) |
|
(2,002) |
Finance income |
4,044 |
|
3,956 |
|
8,127 |
Share of profit of associate |
98 |
|
118 |
|
229 |
Profit before tax |
14,524 |
|
8,221 |
|
34,012 |
|
|
|
|
|
|
Income tax expense |
(6,434) |
|
(6,078) |
|
(13,579) |
Profit for the period |
8,090 |
|
2,143 |
|
20,433 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Equity holders of the parent |
8,090 |
|
2,184 |
|
20,406 |
Minority interests |
- |
|
(41) |
|
27 |
|
8,090 |
|
2,143 |
|
20,433 |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
– basic for profit for the year |
4.3p |
|
1.2p |
|
10.9p |
– diluted for profit for the year |
4.3p |
|
1.2p |
|
10.9p |
Consolidated balance sheet |
|
|
|
|
|
As at 30 June 2006 |
|
|
|
|
|
|
Unaudited six months ended 30 June 2006 |
|
Unaudited six months ended 30 June 2005 |
|
Year ended 31 Dec 2005 |
|
£'000 |
|
£'000 |
|
£'000 |
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
77,456 |
|
86,243 |
|
81,601 |
Intangible assets |
9,748 |
|
9,576 |
|
9,493 |
Investment accounted for using the equity method |
184 |
|
173 |
|
288 |
Deferred income tax asset |
5,582 |
|
1,548 |
|
5,528 |
|
92,970 |
|
97,540 |
|
96,910 |
Current assets |
|
|
|
|
|
Inventories |
87,733 |
|
88,205 |
|
100,233 |
Trade and other receivables |
365,120 |
|
388,269 |
|
382,970 |
Prepayments |
68,421 |
|
59,751 |
|
63,476 |
Forward currency contracts |
26 |
|
- |
|
191 |
Cash and short-term deposits |
161,862 |
|
144,832 |
|
164,797 |
|
683,162 |
|
681,057 |
|
711,667 |
Total assets |
776,132 |
|
778,597 |
|
808,577 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
269,250 |
|
299,577 |
|
315,997 |
Deferred income |
80,313 |
|
78,505 |
|
73,827 |
Financial liabilities |
70,519 |
|
57,867 |
|
64,131 |
Forward currency contracts |
- |
|
351 |
|
- |
Income tax payable |
8,006 |
|
5,005 |
|
5,712 |
Provisions |
1,585 |
|
1,700 |
|
2,190 |
|
429,673 |
|
443,005 |
|
461,857 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Financial liabilities |
704 |
|
664 |
|
275 |
Provisions |
13,384 |
|
14,722 |
|
14,007 |
Other non-current liabilities |
12 |
|
2,716 |
|
371 |
Deferred income tax liabilities |
837 |
|
1,455 |
|
1,393 |
|
14,937 |
|
19,557 |
|
16,046 |
Total liabilities |
444,610 |
|
462,562 |
|
477,903 |
Net assets |
331,522 |
|
316,035 |
|
330,674 |
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Issued capital |
9,543 |
|
9,504 |
|
9,505 |
Share premium |
76,004 |
|
74,628 |
|
74,680 |
Capital redemption reserve |
100 |
|
100 |
|
100 |
Own shares held |
(2,503) |
|
(2,503) |
|
(2,503) |
Other reserves |
(1,524) |
|
(2,517) |
|
(1,757) |
Retained earnings |
249,883 |
|
236,818 |
|
250,630 |
Shareholders' equity |
331,503 |
|
316,030 |
|
330,655 |
Minority interest |
19 |
|
5 |
|
19 |
Total equity |
331,522 |
|
316,035 |
|
330,674 |
Approved by the Board on 11 September 2006
MJ Norris, Chief Executive FA Conophy, Finance Director
Consolidated statement of changes in shareholder's 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 2005 |
9,489 |
73,920 |
100 |
(2,503) |
(911) |
244,965 |
325,060 |
46 |
325,106 |
Exchange differences on retranslation of foreign operations |
- |
- |
- |
- |
(1,606) |
- |
(1,606) |
- |
(1,606) |
Net income/(expenses) recognised directly in equity |
- |
- |
- |
- |
(1,606) |
- |
(1,606) |
- |
(1,606) |
Profit for the period |
- |
- |
- |
- |
- |
2,184 |
2,184 |
(41) |
2,143 |
Total recognised income and expenses for the period |
- |
- |
- |
- |
(1,606) |
2,184 |
578 |
(41) |
537 |
Exercise of options |
15 |
708 |
- |
- |
- |
- |
723 |
- |
723 |
Cost of share based payments |
- |
- |
- |
- |
- |
(596) |
(596) |
- |
(596) |
Equity dividends |
- |
- |
- |
- |
- |
(9,735) |
(9,735) |
- |
(9,735) |
|
15 |
708 |
- |
- |
(1,606) |
(8,147) |
(9,030) |
(41) |
(9,071) |
At 30 June 2005 |
9,504 |
74,628 |
100 |
(2,503) |
(2,517) |
236,818 |
316,030 |
5 |
316,035 |
Exchange differences on retranslation of foreign operations |
- |
- |
- |
- |
760 |
- |
760 |
- |
760 |
Net income/(expenses) recognised directly in equity |
- |
- |
- |
- |
760 |
- |
760 |
- |
760 |
Profit for the period |
- |
- |
- |
- |
- |
18,222 |
18,222 |
14 |
18,236 |
Total recognised income and expenses for the period |
- |
- |
- |
- |
760 |
18,222 |
18,982 |
14 |
18,996 |
Exercise of options |
1 |
52 |
- |
- |
- |
- |
53 |
- |
53 |
Cost of share based payments |
- |
- |
- |
- |
- |
230 |
230 |
- |
230 |
Equity dividends |
- |
- |
- |
- |
- |
(4,640) |
(4,640) |
- |
(4,640) |
|
1 |
52 |
- |
- |
760 |
13,812 |
14,625 |
14 |
14,639 |
At 31 December 2005 |
9,505 |
74,680 |
100 |
(2,503) |
(1,757) |
250,630 |
330,655 |
19 |
330,674 |
Exchange differences on retranslation of foreign operations |
- |
- |
- |
- |
233 |
- |
233 |
- |
233 |
Net income/(expenses) recognised directly in equity |
- |
- |
- |
- |
233 |
- |
233 |
- |
233 |
Profit for the period |
- |
- |
- |
- |
- |
8,090 |
8,090 |
- |
8,090 |
Total recognised income and expenses for the period |
- |
- |
- |
- |
233 |
8,090 |
8,323 |
- |
8,323 |
Exercise of options |
38 |
1,324 |
- |
- |
- |
- |
1,362 |
- |
1,362 |
Cost of share based payments |
- |
- |
- |
- |
- |
568 |
568 |
- |
568 |
Equity dividends |
- |
- |
- |
- |
- |
(9,405) |
(9,405) |
- |
(9,405) |
|
38 |
1,324 |
- |
- |
233 |
(747) |
848 |
- |
848 |
At 30 June 2006 |
9,543 |
76,004 |
100 |
(2,503) |
(1,524) |
249,883 |
331,503 |
19 |
331,522 |
Consolidated cash flow statement |
|
|
|
|
|
For the six months ended 30 June 2005 |
|
|
|
|
|
|
Unaudited six months ended 30 June 2006 |
|
Unaudited six months ended 30 June 2005 |
|
Year ended 31 Dec 2005 |
|
£'000 |
|
£'000 |
|
£'000 |
Operating activities |
|
|
|
|
|
Operating profit from operations |
11,435 |
|
5,422 |
|
27,658 |
Adjustments to reconcile Group operating profit to net cash inflows from operating activities |
|
|
|
|
|
Depreciation |
6,869 |
|
8,032 |
|
15,535 |
Amortisation |
850 |
|
885 |
|
1,784 |
Share based payment |
568 |
|
(637) |
|
(366) |
Loss/(profit) on disposal of property, plant and equipment |
260 |
|
(155) |
|
(85) |
Loss on disposal of intangibles |
9 |
|
- |
|
- |
Dividend received from associate |
203 |
|
303 |
|
303 |
Decrease in inventories |
12,846 |
|
27,770 |
|
16,824 |
Decrease/(increase) in trade and other receivables |
14,240 |
|
29,832 |
|
(25,904) |
(Decrease)/increase in trade and other payables |
(41,629) |
|
(5,423) |
|
29,925 |
Currency and other adjustments |
(73) |
|
609 |
|
287 |
Cash generated from operations |
5,578 |
|
66,638 |
|
65,961 |
Income taxes paid |
(4,744) |
|
(12,591) |
|
(18,366) |
Net cash flow from operating activities |
834 |
|
54,047 |
|
47,595 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Interest received |
4,066 |
|
4,721 |
|
9,086 |
Sale of subsidiary net of cash disposed of |
- |
|
(252) |
|
(252) |
Sale of property, plant and equipment |
22 |
|
89 |
|
205 |
Purchases of property, plant and equipment |
(1,400) |
|
(5,284) |
|
(6,950) |
Purchases of intangible assets |
(1,115) |
|
(1,403) |
|
(3,385) |
Funds received from settlement of net asset claim on previously acquired subsidiary |
- |
|
- |
|
26,918 |
Net cash flow from investing activities |
1,573 |
|
(2,129) |
|
25,622 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Interest paid |
(1,293) |
|
(1,071) |
|
(2,063) |
Dividends paid to equity holders of the parent |
(9,405) |
|
(9,735) |
|
(14,418) |
Proceeds from issue of shares |
1,362 |
|
722 |
|
776 |
Repayment of capital element of finance leases |
(1,320) |
|
(250) |
|
(321) |
Increase/(decrease) in factor financing |
2,066 |
|
(20,498) |
|
(6,401) |
Net cash flows from financing activities |
(8,590) |
|
(30,832) |
|
(22,427) |
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents |
(6,183) |
|
21,086 |
|
50,790 |
Effect of exchange rates on cash and cash equivalents |
(156) |
|
2,493 |
|
1,576 |
Cash and cash equivalents at beginning of period |
132,911 |
|
80,545 |
|
80,545 |
Cash and cash equivalents at end of period |
126,572 |
|
104,124 |
|
132,911 |
Analysis of net funds |
|
|
|
|
|
Cash and cash equivalents |
126,572 |
|
104,124 |
|
132,911 |
Factor financing |
(33,805) |
|
(16,804) |
|
(31,542) |
Finance leases |
(646) |
|
(694) |
|
(652) |
Loans |
(1,482) |
|
(326) |
|
(326) |
Net funds |
90,639 |
|
86,300 |
|
100,391 |
Notes to the accounts
1 Accounting policies
Basis of preparation
The unaudited interim financial statements have been prepared on the basis of the accounting policies set out in the Group’s statutory accounts for the year ended 31 December 2005. The taxation charge is calculated by applying the Directors’ best estimate of the annual tax rate to the profit for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts.
2 Segment information
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.
Segmental performance for the period to 30 June 2006 was as follows:
Segmental analysis |
|
|
|
|
|
|
Unaudited six months ended 30 June 2006 |
|
Unaudited six months ended 30 June 2005 |
|
Year ended 31 Dec 2005 |
|
£'000 |
|
£'000 |
|
£'000 |
Revenue by geographic market |
|
|
|
|
|
UK |
661,095 |
|
715,517 |
|
1,351,307 |
Germany |
297,671 |
|
299,983 |
|
618,238 |
France |
141,732 |
|
126,206 |
|
295,784 |
Benelux |
14,441 |
|
9,847 |
|
19,880 |
Total |
1,114,939 |
|
1,151,553 |
|
2,285,209 |
|
|
|
|
|
|
Gross profit by geographic market |
|
|
|
|
|
UK |
91,115 |
|
88,130 |
|
169,876 |
Germany |
40,397 |
|
40,720 |
|
87,709 |
France |
12,606 |
|
12,383 |
|
28,941 |
Benelux |
1,202 |
|
1,044 |
|
2,302 |
Total |
145,320 |
|
142,277 |
|
288,828 |
|
|
|
|
|
|
Operating profit/(loss) by geographic market |
|
|
|
|
|
UK |
16,432 |
|
14,904 |
|