REG - Computacenter - Half-year Report <Origin Href="QuoteRef">CCC.L</Origin> - Part 2
25/08/2017 07:06
- Part 2: For the preceding part double click ID:nRSY9549Oa
Attributable to:
Equity holders of the parent 37,649 38,581 96,909
Non-controlling interests - 7 2
37,649 38,588 96,911
37,649
38,588
96,911
Consolidated balance sheet
Non-current assets
Property, plant and equipment 62,066 62,983 63,020
Investment property - 10,147 10,033
Intangible assets 80,005 75,816 76,285
Investment in associate 56 53 55
Deferred income tax asset 8,447 11,973 10,537
150,574 160,972 159,930
Current assets
Inventories 50,116 40,546 44,015
Trade and other receivables 666,512 525,493 740,371
Prepayments 68,670 63,516 58,959
Accrued income 119,336 98,179 80,554
Derivative financial instruments 6,237 4,694 8,127
Current asset investments - 35,000 30,000
Cash and short-term deposits 140,136 65,884 118,676
1,051,007 833,312 1,080,702
Total assets 1,201,581 994,284 1,240,632
Current liabilities
Trade and other payables 606,590 484,212 679,538
Deferred income 114,077 105,072 102,112
Financial liabilities 1,393 2,904 2,352
Derivative financial instruments 1,488 1,170 273
Income tax payable 19,816 12,275 17,410
Provisions 1,664 4,038 3,075
745,028 609,671 804,760
Non-current liabilities
Financial liabilities 1,442 1,339 1,832
Provisions 6,266 4,999 5,732
Deferred income tax liabilities 436 446 341
8,144 6,784 7,905
Total liabilities 753,172 616,455 812,665
Net assets 448,409 377,829 427,967
Capital and reserves
Issued capital 9,299 9,299 9,299
Share premium 3,913 3,913 3,913
Capital redemption reserve 74,957 74,957 74,957
Own shares held (9,700) (11,025) (12,115)
Translation and hedging reserves 25,859 11,359 22,685
Retained earnings 344,067 289,307 329,214
Shareholders' equity 448,395 377,810 427,953
Non-controlling interests 14 19 14
Total equity 448,409 377,829 427,967
Total equity
448,409
377,829
427,967
Consolidated statement of changes in equity
At 1 January 2016 9,297 3,830 74,957 (10,571) (11,161) 295,086 361,438 12 361,450
Profit for the period - - - - - 16,061 16,061 - 16,061
Other comprehensive income - - - - 22,520 - 22,520 7 22,527
Total comprehensive income - - - - 22,520 16,061 38,581 7 38,588
Cost of share-based payments - - - - - 1,697 1,697 - 1,697
Tax on share-based payments - - - - - (854) (854) - (854)
Exercise of options - - - 4,613 - (4,577) 36 - 36
Issue of shares 2 83 - - - - 85 - 85
Purchase of own shares - - - (5,067) - - (5,067) - (5,067)
Equity dividends - - - - - (18,106) (18,106) - (18,106)
At 30 June 2016 9,299 3,913 74,957 (11,025) 11,359 289,307 377,810 19 377,829
Profit for the period - - - - - 47,712 47,712 - 47,712
Other comprehensive income - - - - 11,326 (710) 10,616 (5) 10,611
Total comprehensive income - - - - 11,326 47,002 58,328 (5) 58,323
Cost of share-based payments - - - - - 1,648 1,648 - 1,648
Tax on share-based payments - - - - - 1,090 1,090 - 1,090
Exercise of options - - - 2,836 - (1,137) 1,699 - 1,699
Purchase of own shares - - - (3,926) - - (3,926) - (3,926)
Equity dividends - - - - - (8,696) (8,696) - (8,696)
At 31 December 2016 9,299 3,913 74,957 (12,115) 22,685 329,214 427,953 14 427,967
Profit for the period - - - - - 34,475 34,475 - 34,475
Other comprehensive income - - - - 3,174 - 3,174 - 3,174
Total comprehensive income - - - - 3,174 34,475 37,649 - 37,649
Cost of share-based payments - - - - - 1,865 1,865 - 1,865
Tax on share-based payments - - - - - 112 112 - 112
Exercise of options - - - 4,302 - (3,448) 854 - 854
Purchase of own shares - - - (1,887) - - (1,887) - (1,887)
Equity dividends - - - - - (18,151) (18,151) - (18,151)
At 30 June 2017 9,299 3,913 74,957 (9,700) 25,859 344,067 448,395 14 448,409
(18,151)
At 30 June 2017
9,299
3,913
74,957
(9,700)
25,859
344,067
448,395
14
448,409
Consolidated cash flow statement
Operating activities
Profit before tax 47,527 23,570 87,073
Net finance income (317) (138) (50)
Depreciation of property, plant and equipment 8,505 7,009 15,631
Depreciation of investment property 91 113 227
Amortisation of intangible assets 6,316 6,820 13,197
Share-based payments 1,865 1,697 3,345
Exceptional gain on disposal of an investment property (4,320) - -
(Gain)/Loss on disposal of property, plant and equipment (528) 24 168
(Gain)/Loss on disposal of intangibles (688) 114 25
Exceptional loss from disposal of a subsidiary - - 522
Net cash flow from provisions (1,011) (957) (2,149)
Net cash flow from inventories (5,142) 9,161 7,185
Net cash flow from trade and other receivables 44,437 95,803 (73,980)
Net cash flow from trade and other payables (77,020) (137,922) 31,377
Other adjustments (506) 178 374
Cash generated from operations 19,209 5,472 82,945
Income taxes paid (7,785) (6,582) (14,711)
Net cash flow from operating activities 11,424 (1,110) 68,234
Investing activities
Interest received 676 689 1,629
Decrease/(increase) in current asset investments 30,000 (20,000) (15,000)
Acquisition of subsidiaries, net of cash acquired (7,662) - -
Proceeds from disposal of a subsidiary, net of cash disposed of - - (319)
Proceeds from disposal of property, plant and equipment 797 97 112
Proceeds from disposal of an investment property 14,450 - -
Proceeds from disposal of intangible assets 1,381 - -
Purchases of property, plant and equipment (6,916) (6,531) (17,641)
Purchases of intangible assets (2,931) (2,071) (4,943)
Net cash flow from investing activities 29,795 (27,816) (36,162)
Financing activities
Interest paid (359) (551) (1,579)
Dividends paid to equity shareholders of the parent (18,151) (18,106) (26,802)
Proceeds from share issues 854 121 1,820
Purchase of own shares (1,887) (5,067) (8,993)
Repayment of capital element of finance leases (1,024) (1,247) (2,679)
Repayment of loans (337) (942) (1,101)
New borrowings - - 1,512
Net cash flow from financing activities (20,904) (25,792) (37,822)
Increase/(decrease) in cash and cash equivalents 20,315 (54,718) (5,750)
Effect of exchange rates on cash and cash equivalents 1,145 8,861 12,746
Cash and cash equivalents at the beginning of the period/year 118,676 111,680 111,680
Cash and cash equivalents at the end of the period/year 140,136 65,823 118,676
Cash and cash equivalents at the end of the period/year
140,136
65,823
118,676
1 Corporate information
The interim condensed consolidated financial statements (Financial Statements)
of the Group for the six months ended 30 June 2017 were authorised for issue
in accordance with a resolution of the Directors on 25 August 2017.
Computacenter plc is a limited company incorporated and domiciled in England
whose shares are publicly traded.
2 Basis of preparation
The Financial Statements for the six months ended 30 June 2017 have been
prepared in accordance with International Accounting Standard 34 'Interim
Financial Reporting', as adopted by the European Union. They do not include
all of the information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's 2016 Annual
Report and Accounts which have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union.
The Group has maintained its positive cash position in the period. In order to
ensure that the Group can maintain its strong liquidity position it has a £40
million committed facility, which remained unutilised at the reporting date.
The Group's forecast and projections, which allow for reasonably possible
variations, show that the Group will continue to maintain its strong liquidity
position, and therefore supports the Directors' view that the Group has
sufficient funds available to meet its foreseeable requirements. The Directors
have concluded therefore that the going concern basis remains appropriate.
3 Significant Accounting Policies
The accounting policies applied by the Group in these Financial Statements are
the same as those applied by the Group in 2016 Annual Report and Accounts,
except for the adoption of new standards and interpretations as of 1 January
2017, which did not have any impact on the accounting policies, financial
position or performance of the Group.
IFRS 15, Revenue from Contracts with Customers, becomes effective for the
Group on 1 January 2018. The guidance permits two methods of
adoption: retrospectively to each prior reporting period presented (full
retrospective method), or retrospectively with the cumulative effect of
initially applying the guidance recognised at the date of initial application
(the cumulative catch-up transition method).
In our 2016 Annual Report and Accounts, we highlighted an expected adjustment
to our Supply Chain revenue where certain services will be presented as
'agency' revenue on a net basis compared to the current presentation as gross
'principal' revenue.
Further analysis performed since the 2016 Annual Report and Accounts was
published has identified that adjustments are also expected in relation to:
· Certain costs, such as win fees (a form of commission) will need to be
capitalised and spread over the life of the contract, as opposed to being
expensed as incurred;
· Certain elements of our Managed Services contracts, for example those
relating to Entry Into Service, will no longer be treated as separate
performance obligations for which revenue and costs are recognised as
incurred, but rather will be treated as part of the ongoing performance
obligations in the contract. This will result in the revenue and costs for
Entry Into Service being deferred and spread over the life of the contracts;
and
· Our analysis of which contracts are considered to be loss-making will
change, resulting in fewer onerous contract provisions being recognised.
The impact of these items, individually or in aggregate, may be material to
the revenue and profits in any given financial year, however there will be no
impact on cash in any given financial year nor is there expected to be any
ultimate long-term impact on the cumulative profits of the Group.
The Group's IFRS 15 impact assessment and implementation work remains ongoing,
alongside a quantification exercise which is expected to be finalised
coincidental with the 2017 Annual Report and Accounts.
4 Adjusted measures
The Group uses a number of non-Generally Accepted Accounting Practice
(non-GAAP) financial measures in addition to those reported in accordance with
IFRS. The Directors believe that these non-GAAP measures, detailed below, are
important when assessing the underlying financial and operating performance of
the Group.
Adjusted operating profit or loss, adjusted profit or loss before tax,
adjusted profit or loss for the period, adjusted earnings per share and
adjusted diluted earnings per share are, as appropriate, each stated before:
exceptional and other adjusting items including gain or loss on business
disposals, gain or loss on disposal of investment properties, amortisation of
acquired intangibles, utilisation of deferred tax assets (where initial
recognition was as an exceptional item or a fair value adjustment on
acquisition), and the related tax effect of these exceptional and other
adjusting items, as Management do not consider these items when reviewing the
underlying performance of the segment or the Group as a whole.
Additionally, adjusted gross profit or loss and adjusted operating profit or
loss includes the interest paid on customer-specific financing (CSF) which
Management considers to be a cost of sale.
A reconciliation between key adjusted and statutory measures is in the Group
Finance Director's review included within this announcement. Further detail is
also provided within note 5, Segment Information.
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.
No operating segments have been aggregated to form the reportable operating
segments shown below.
Segmental performance for the periods to H1 2017, H1 2016 and Full Year 2016
were as follows:
Six months ended 30 June 2017 (unaudited)
Revenue
Supply Chain revenue 428,780 515,000 175,163 19,293 1,138,236
Services revenue
Professional Services 66,314 74,460 10,108 1,069 151,951
Managed Services 183,175 173,473 43,363 10,131 410,142
Total Services revenue 249,489 247,933 53,471 11,200 562,093
Total revenue 678,269 762,933 228,634 30,493 1,700,329
Results
Adjusted1 gross profit 101,587 96,346 20,672 4,194 222,799
Administrative expenses (83,739) (74,626) (19,180) (3,850) (181,395)
Adjusted1 operating profit 17,848 21,720 1,492 344 41,404
Adjusted1 net interest 400 135 (77) (4) 454
Adjusted1 profit before tax 18,248 21,855 1,415 340 41,858
Exceptional items:
- exceptional gains - 1,460 - - 1,460
Total exceptional items - 1,460 - - 1,460
Exceptional gain on disposal of an investment property 4,320 - - - 4,320
Amortisation of acquired intangibles - (65) - (46) (111)
Statutory profit before tax 22,568 23,250 1,415 294 47,527
Statutory profit before tax
22,568
23,250
1,415
294
47,527
The reconciliation for adjusted1 operating profit to statutory operating
profit, as disclosed in the Consolidated Income Statement, is as follows:
Six months ended 30 June 2017 (unaudited)
Adjusted1 segment operating profit 17,848 21,720 1,492 344 41,404
Add back interest on CSF 1 136 - - 137
Amortisation of acquired intangibles - (65) - (46) (111)
Exceptional items - 1,460 - - 1,460
Segment operating profit 17,849 23,251 1,492 298 42,890
Other segment information
Share-based payments 1,599 345 (79) - 1,865
Share-based payments
1,599
345
(79)
-
1,865
Six months ended 30 June 2016 (unaudited)
Revenue
Supply Chain revenue 408,448 395,395 160,569 15,837 980,249
Services revenue
Professional Services 58,194 62,943 8,063 851 130,051
Managed Services 178,477 149,453 32,158 7,831 367,919
Total Services revenue 236,671 212,396 40,221 8,682 497,970
Total revenue 645,119 607,791 200,790 24,519 1,478,219
Results
Adjusted1 gross profit 91,080 75,219 19,259 3,706 189,264
Administrative expenses (77,050) (65,703) (18,354) (3,121) (164,228)
Adjusted1 operating profit 14,030 9,516 905 585 25,036
Adjusted1 net interest 457 (36) (158) (14) 249
Adjusted1 profit before tax 14,487 9,480 747 571 25,285
Exceptional items:
- exceptional losses - - (1,114) - (1,114)
Total exceptional items - - (1,114) - (1,114)
Amortisation of acquired intangibles - (561) - (40) (601)
Statutory profit/(loss) before tax 14,487 8,919 (367) 531 23,570
Statutory profit/(loss) before tax
14,487
8,919
(367)
531
23,570
The reconciliation for adjusted1 operating profit to operating profit, as
disclosed in the Consolidated Income Statement, is as follows:
Six months ended 30 June 2016 (unaudited)
Adjusted1 segment operating profit 14,030 9,516 905 585 25,036
Add back interest on CSF 5 106 - - 111
Amortisation of acquired intangibles - (561) - (40) (601)
Exceptional items - - (1,114) - (1,114)
Segment operating profit/(loss) 14,035 9,061 (209) 545 23,432
Other segment information
Share-based payments 1,375 306 16 - 1,697
Share-based payments
1,375
306
16
-
1,697
Year ended 31 December 2016
Revenue
Supply Chain revenue 899,822 934,214 335,612 37,907 2,207,555
Services revenue
Professional Services revenue 118,636 138,218 15,470 1,868 274,192
Managed Services revenue 357,473 319,744 69,446 16,987 763,650
Total Services revenue 476,109 457,962 84,916 18,855 1,037,842
Total revenue 1,375,931 1,392,176 420,528 56,762 3,245,397
Results
Adjusted1 gross profit 202,556 175,273 42,520 7,479 427,828
Adjusted1 administrative expenses (155,812) (139,683) (39,649) (6,524) (341,668)
Adjusted1 operating profit 46,744 35,590 2,871 955 86,160
Adjusted1 net interest 717 (212) (208) (28) 269
Adjusted1 profit before tax 47,461 35,378 2,663 927 86,429
Exceptional items:
- exceptional losses on redundancy and other restructuring costs - - (1,169) - (1,169)
- gain on reversal of fair value adjustments - 3,045 - - 3,045
Total exceptional items - 3,045 (1,169) - 1,876
Exceptional loss on disposal of a subsidiary (522) - - - (522)
Amortisation of acquired intangibles - (627) - (83) (710)
Statutory profit before tax 46,939 37,796 1,494 844 87,073
Statutory profit before tax
46,939
37,796
1,494
844
87,073
The reconciliation for adjusted1 operating profit to statutory operating
profit, as disclosed in the Consolidated Income Statement, is as follows:
Year ended 31 December 2016
Adjusted1 operating profit 46,744 35,590 2,871 955 86,160
Add back interest on CSF 9 210 - - 219
Amortisation of acquired intangibles - (627) - (83) (710)
Exceptional items - 3,045 (1,169) - 1,876
Statutory operating profit 46,753 38,218 1,702 872 87,545
Statutory operating profit
46,753
38,218
1,702
872
87,545
Restatement
The revenue for work performed by other Computacenter entities on behalf of
several key French contracts has been reclassified to the French Segment,
consistent with the way information is reported and monitored internally.
Historically these revenues have been recorded in the segment where the
associated underlying subsidiary recognises the revenues in their statutory
accounts. For segmental analysis, all of our offshore internal service
provider entities (e.g. Computacenter USA) are allocated to the UK Segment
apart from Computacenter Switzerland which is within the German Segment. As
the work performed in certain offshore subsidiaries has grown within the UK
Segment, Management decided to reallocate these revenues inter-segmentally to
reflect better where the portfolio co-ordination and operational
responsibility lies and where the benefits should accrue. We have therefore
restated the French and UK Managed Services revenue for 2016, to assist with
understanding the growth in each business and to ensure period-on-period
comparisons reflect true underlying growth. This has no impact on Group
revenue or on segmental profitability, as the margins were previously shared
on the same basis that the revenue now reflects. All discussion within this
Interim Report on segmental Managed Services revenues for the UK and France
reflect this reclassification and resultant prior period restatement.
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 Dividends paid and proposed
A second interim dividend for 2016 of 15.0 pence per ordinary share was paid
on 9 June 2017. An interim dividend in respect of 2017 of 7.4 pence per
ordinary share, amounting to a total dividend of £9.1 million, was declared by
the Directors at their meeting on 22 August 2017. The expected payment date of
the dividend declared is Friday 13 October 2017. This interim report does not
reflect this dividend payable.
8 Exceptional items
Operating profit
Redundancy and other restructuring costs - (1,114) (1,169)
Onerous contracts 1,460 - -
Gain on reversal of fair value adjustments - - 3,045
1,460 (1,114) 1,876
Gain on disposal of an investment property 4,320 - -
Loss on disposal of a subsidiary - - (522)
Exceptional items before taxation 5,780 (1,114) 1,354
Income tax
Tax on onerous contracts included in operating profit (351) - -
Tax on gain on reversal of fair value adjustments - - (192)
Exceptional items after taxation 5,429 (1,114) 1,162
Exceptional items after taxation
5,429
(1,114)
1,162
2017:
Included within the current period are the following exceptional items:
· The remaining provisions for the last two onerous contracts in Germany
were released, for an exceptional gain of £1,461,000. These provisions were
originally booked in 2013 and the contracts have now returned to
profitability, so the provisions are no longer required. As these provisions
were booked as exceptional items, this release has also been classified as
such.
· The disposal of an investment property in Braintree, Essex, was
completed on 26 May 2017 for £14.5 million. This property was associated with
a former subsidiary of the Group, R.D. Trading Limited, which was itself sold
in February 2015. Due to the size and non-operational nature of the
transaction, the £4.3 million gain on disposal, net of £0.2 million disposal
costs, has been classified as exceptional.
2016:
Included within the current period are the following exceptional items:
· During the period a Line of Business restructure was agreed with the
business in France. This initiative reduced the underutilised resources within
our Professional Services arm and completed in H2 2016. The full cost of £1.0
million was recognised as at 30 June 2016. This restructure has seen
Computacenter France exit the direct provision of Group Field Maintenance
Services. This Line of Business had materially decreased over time, leading to
a significant resourcing overcapacity. Any future residual customer
requirement will be sub-contracted to an existing third party provider.
· Computacenter France continued to complete its responsibilities under
the Social Plan that related to the substantial restructuring
exercise that occurred in 2014. An additional cost of £0.1 million was
recognised as part of the wind-down of the Social Plan. As the redundancy and
restructuring costs were previously treated as an exceptional item on
recognition, this further provision was also treated as an exceptional item.
9 Business Contribution
cITius AG ('Citius')
On 1 January 2017, the Group acquired 100 per cent of the voting shares of
cITius for an initial consideration of CHF 2.8 million and agreed to a maximum
undiscounted contingent consideration of CHF 1.5 million, dependent upon the
achievement of agreed performance criteria over the next three and a half
years. The acquisition-related costs amounted to CHF 41,500 and are included
in the interim Consolidated Income Statement. Due to the size of the balance,
the acquisition cost is not treated as an exceptional item. cITius is based in
Switzerland and is an IT service provider. The acquisition has been accounted
for using the purchase method of accounting.
The book and fair values of the net assets at date of acquisition and at 30
June 2017 were as follows:
Intangible assets
Comprising:
Software 123 123
Total intangible assets 123 123
Property, plant and equipment 302 302
Inventories 17 17
Trade and other receivables 297 297
Cash and short-term deposits 422 422
Trade and other payables (183) (183)
Net assets acquired 978 978
Goodwill arising on acquisition 2,107
3,085
Discharged by:
Cash paid on acquisition 2,212
Contingent consideration 873
3,085
Cash and cash equivalents acquired
Cash and short-term deposits (422)
Cash outflow on acquisition 2,663
Cash outflow on acquisition
2,663
There were no differences between the provisional fair values and the book
values at acquisition. The initial accounting for the acquisition of cITius
has only been provisionally determined at the end of the interim reporting
period. At the date of finalisation of these consolidated interim financial
statements, the necessary market valuations and other calculations had not
been finalised and they have therefore only been provisionally determined
based on the Management's best estimates.
Included in the £2.1 million of goodwill that arose on acquisition are certain
intangible assets that cannot be individually separated and reliably measured
from the acquiree due to their nature. These items include the expected value
of synergies and an assembled workforce.
From the date of acquisition to 30 June 2017, cITius contributed £1.4 million
to the Group's revenue and £0.2 million to the Group's profit after tax.
The previous shareholders of cITius included the current Managing Director of
Computacenter Switzerland, who owned 30 per cent at the time of the
acquisition, as a result £0.1 million was paid in cash and a further £0.9
million will be payable in three and a half years contingent on the
achievement of profit based targets. The acquisition of cITius was made on
terms equivalent to those that would have prevailed in an arm's-length
transaction.
Contingent consideration
Based on the performance of the business in 2017 and the forecasted
performance for the next three and a half years, Management's assessment is
that it is highly probable that the maximum contingent consideration will
become payable and accordingly the discounted maximum contingent consideration
has been included in the provisional fair value to the Group.
TeamUltra Limited ('TeamUltra')
On 1 April 2017, the Group acquired 100 per cent of the voting shares of
TeamUltra for an initial consideration of £2.6 million and agreed to a maximum
undiscounted contingent consideration of £3.5 million, dependent upon the
achievement of agreed performance criteria over the next three and a half
years. The acquisition-related costs amounted to £30,000 and are included in
the interim Consolidated Income Statement.
Due to the size of the balance, the acquisition cost is not treated as an
exceptional item. TeamUltra is based in the United Kingdom and is an IT
service provider. The acquisition has been accounted for using the purchase
method of accounting.
The book and fair values of the net assets at date of acquisition and at 30
June 2017 were as follows:
Property, plant and equipment 23 23
Trade and other receivables 2,767 2,767
Cash and short-term deposits 370 370
Trade and other payables (2,982) (2,982)
Net assets acquired 178 178
Goodwill arising on acquisition 4,905
5,083
Discharged by:
Cash paid on acquisition 2,575
Contingent consideration 2,508
5,083
Cash and cash equivalents acquired
Cash and short-term deposits (370)
Cash outflow on acquisition 4,713
Cash outflow on acquisition
4,713
There were no differences between the provisional fair values and the book
values at acquisition. The initial accounting for the acquisition of TeamUltra
has only been provisionally determined at the end of the interim reporting
period. At the date of finalisation of these consolidated interim financial
statements, the necessary market valuations and other calculations had not
been finalised and they have therefore only been provisionally determined
based on the Management's best estimates.
Included in the £4.9 million of goodwill that arose on acquisition are certain
intangible assets that cannot be individually separated and reliably measured
from the acquiree due to their nature. These items include the expected value
of synergies and an assembled workforce.
From the date of acquisition to 30 June 2017, TeamUltra contributed £1.6
million to the Group's revenue and £0.1 million to the Group's profit after
tax.
Contingent consideration
Based on the performance of the business in 2017 and the forecasted
performance for the next three and a half years, Management's assessment is
that it is highly probable that the maximum contingent consideration will
become payable and accordingly the discounted maximum contingent consideration
has been included in the provisional fair value to the Group.
If the acquisition of TeamUltra had been completed on the first day of the
financial year, Group's revenue for the period would have been £1,701,846,000
and Group's profit would have been £34,494,000.
10 Income tax
Tax for the six months period in charged at 27.5 per cent (six months ended 30
June 2016: 31.9 per cent; year ended 31 December 2016: 26.8 per cent),
representing the best estimate of the average annual effective tax rate
expected for the full year, applied to the pre-tax income of the six month
period.
11 Earnings per 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 period (excluding own shares held).
To calculate diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential shares. Share options granted to employees where the exercise price
is less than the average market price of the Company's ordinary shares during
the period are considered to be dilutive potential shares.
Profit attributable to equity holders of the parent 34,475 16,061 63,773
Profit attributable to equity holders of the parent
34,475
16,061
63,773
Basic weighted average number of shares (excluding own shares held) 120,842 120,617 120,540
Effect of dilution:
Share options 888 879 1,344
Diluted weighted average number of shares 121,730 121,496 121,884
Diluted weighted average number of shares
121,730
121,496
121,884
Basic earnings per share 28.5 13.3 52.9
Diluted earnings per share 28.3 13.2 52.3
Diluted earnings per share
28.3
13.2
52.3
12 Fair value measurements recognised in the consolidated balance sheet
Financial instruments which are recognised at fair value subsequent to initial
recognition are grouped into Levels 1 to 3 based on the degree to which the
fair value is observable. The three levels are defined as follows:
1. Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
2. Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
3. Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
At 30 June 2017 the Group had forward currency contracts, which were measured
at Level 2 fair value subsequent to initial recognition, to the value of a net
asset of £4,749,000 (30 June 2016: £3,524,000, 31 December 2016: £7,854,000).
The net realised gains from forward currency contracts in the period to 30
June 2017 of £6,006,000 (30 June 2016: £1,335,000, 31 December 2016:
£940,000), are offset by broadly equivalent realised losses/gains on the
related underlying transactions. There were no transfers between Level 1 and
Level 2 during the period (2016: nil).
The foreign currency forward contracts are measured based on observable spot
exchange rates, the yield curves of the respective currencies as well as the
currency basis spreads between the respective currencies. All contracts are
fully cash collateralised, thereby eliminating both counterparty and the
Group's own credit risk.
The carrying value of the Group's short-term receivables and payables is a
reasonable approximation of their fair values. The fair value of all other
financial instruments carried within the Group's financial statements is not
materially different from their carrying amount.
13 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 comparative figures for the financial year ended 31 December 2016 are not
the company's statutory accounts for that financial year. Those accounts have
been reported on by the company's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
This information is provided by RNS
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