REG - Computacenter - Half Yearly Report <Origin Href="QuoteRef">CCC.L</Origin> - Part 2
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improvements and Service levels in contract life leading to penalty clauses or financial underachievement and a lack of Service or technical innovation. • Customer dissatisfaction• Financial penalties • Contract cancellations• Reputational damage• Reduced margin • The Group Operating Model is in place in the UK, Germany and France. This incorporates mandatory gateway governance products
and processes, as well as the Group signing policy and Service management best practice.• We have an increasingly mature root
cause analysis and lessons learnt process for complex transformations.• We perform regular commercial and contract 'deep dives'
to manage Service productivity improvements.
M Not investing appropriately or over investing in the wrong automation, self-service and remote tools when compared to our competition. • Reduced margin• Win less new business • Contracts not renewed • This is linked to Risk F - we mitigate this through a range of measures including win/loss reviews, senior management forums
and strategy reviews where we consider our offerings alongside our competitors and where the market is going.
Mike Norris
28 August 2014
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
28 August 2014 28 August 2014
On behalf of the Board
Independent review report to Computacenter plc
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 30
June 2014 which comprises of the Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Cash Flow Statement and the
related explanatory notes that have been reviewed. We have read the other
information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our work, for this report, or for the conclusions
we have formed.
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 Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
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 (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
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 30 June 2014 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
28 August 2014
Consolidated income statement
For the six months ended 30 June 2014
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
Note £'000 £'000 £'000
Revenue 4 1,458,284 1,426,346 3,072,075
Cost of sales (1,268,013) (1,241,158) (2,668,814)
Gross profit 190,271 185,188 403,261
Administrative expenses (161,830) (159,003) (321,096)
Operating profit:
Before amortisation of intangibles and exceptional items 28,441 26,185 82,165
Amortisation of acquired intangibles (884) (1,296) (2,375)
Onerous contracts - (15,780) (15,739)
Non-cash impairment - (12,195) (12,195)
Other exceptional items (9,100) (1,324) (830)
Total exceptional items 6 (9,100) (29,299) (28,764)
Operating profit/(loss) 18,457 (4,410) 51,026
Finance revenue 771 1,001 1,351
Finance costs (1,194) (941) (1,852)
Profit before tax:
Before amortisation of intangibles and exceptional items 4 28,018 26,245 81,664
Amortisation of acquired intangibles (884) (1,296) (2,375)
Onerous contracts - (15,780) (15,739)
Non-cash impairment - (12,195) (12,195)
Other exceptional items (9,100) (1,324) (830)
Total exceptional items 6 (9,100) (29,299) (28,764)
Profit/(loss) before tax 4 18,034 (4,350) 50,525
Income tax expense:
Before amortisation of intangibles and exceptional items (8,036) (7,304) (19,325)
Tax on amortisation of intangibles 117 122 244
Tax on onerous contracts - 1,894 1,889
Tax on non-cash impairment - 1,014 1,014
Tax on other exceptional items - 146 (700)
Tax on exceptional items - 3,054 2,203
Exceptional tax items 6 - - (489)
Income tax expense 7 (7,919) (4,128) (17,367)
Profit/(loss) for the period 10,115 (8,478) 33,158
Attributable to:
Equity holders of the parent 10,115 (8,478) 33,160
Non-controlling interest - - (2)
Profit/(loss) for the period 10,115 (8,478) 33,158
Earnings per share
- basic for profit /(loss) for the period 8 7.4p (5.7)p 23.2p
- diluted for profit /(loss)for the period 8 7.4p (5.7)p 23.0p
Consolidated statement of comprehensive income
For the six months ended 30 June 2014
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
£'000 £'000 £'000
Profit/(loss) for the period 10,115 (8,478) 33,158
Items that may be reclassified to profit or loss:
Loss arising on cash flow hedge (376) (639) (1,403)
Income tax effect 81 149 326
(295) (490) (1,077)
Exchange differences on translation of foreign operations (5,811) 10,308 4,326
(6,106) 9,818 3,249
Total comprehensive income for the period 4,009 1,340 36,407
Attributable to:
Equity holders of the parent 4,009 1,341 36,407
Non-controlling interest - (1) -
4,009 1,340 36,407
Consolidated balance sheet
As at 30 June 2014
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 82,891 95,344 89,044
Intangible assets 95,710 94,393 98,870
Investment in associates 43 620 45
Deferred income tax asset 14,977 17,139 15,172
193,621 207,496 203,131
Current assets
Inventories 71,840 69,549 58,618
Trade and other receivables 532,520 521,307 667,722
Prepayments 56,745 54,892 61,579
Accrued income 69,180 68,161 53,140
Forward currency contracts 164 83 -
Financial asset - 31,412 -
Current asset investment 13 - 10,000 -
Cash and short-term deposits 70,982 76,336 91,098
801,431 831,740 932,157
Total assets 995,052 1,039,236 1,135,288
Current liabilities
Trade and other payables 482,414 474,528 604,945
Deferred income 109,060 107,860 115,986
Return of value - 74,965 -
Financial liabilities 11,614 11,650 8,147
Forward currency contracts 700 548 2,360
Income tax payable 9,118 4,144 10,239
Provisions 11 10,442 8,203 6,005
623,348 681,898 747,682
Non-current liabilities
Financial liabilities 5,350 8,974 11,540
Provisions 11 11,491 12,384 10,449
Deferred income tax liabilities 829 1,012 947
17,670 22,370 22,936
Total liabilities 641,018 704,268 770,618
Net assets 354,034 334,968 364,670
Capital and reserves
Issued capital 9,276 9,250 9,271
Share premium 4,597 3,654 4,362
Capital redemption reserve 74,963 74,957 74,963
Own shares held (11,655) (12,942) (11,976)
Foreign currency translation reserve 838 12,633 6,649
Retained earnings 276,002 247,404 281,388
Shareholders' equity 354,021 334,956 364,657
Non-controlling interest 13 12 13
Total equity 354,034 334,968 364,670
Approved by the Board on 28 August 2014
MJ Norris, Chief Executive
FA Conophy, Finance Director
Consolidated statement of changes in equity
Attributable to equity holders of the parent
Issued capital Share premium Capital redemption reserve Own shares held Foreign currency translation reserve Retained earnings Total Minority interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2013 9,234 3,769 74,957 (13,848) 2,325 345,893 422,330 13 422,343
Profit for the period - - - - - (8,478) (8,478) - (8,478)
Other comprehensive income - - - - 10,308 (490) 9,818 (1) 9,817
Total comprehensive income - - - - 10,308 (8,968) 1,340 (1) 1,339
Cost of share-based payment - - - - - 527 527 - 527
Tax on share-based payment transactions - - - - - (268) (268) - (268)
Exercise of options 1 57 - 906 - (906) 58 - 58
Bonus issue 15 (15) - - - - - - -
Expenses on bonus issue - (157) - - - - (157) - (157)
Return of value - - - - - (73,115) (73,115) - (73,115)
Equity dividends - - - - - (15,759) (15,759) - (15,759)
At 30 June 2013 9,250 3,654 74,957 (12,942) 12,633 247,404 334,956 12 334,968
Profit for the period - - - - - 41,638 41,638 (2) 41,636
Other comprehensive income - - - - (5,984) (587) (6,571) 3 (6,568)
Total comprehensive income - - - - (5,984) 41,051 35,067 1 35,068
Cost of share-based payment - - - - - 543 543 - 543
Tax on share-based payment transactions - - - - - 394 394 - 394
Exercise of options 27 1,137 - 966 - (966) 1,164 - 1,164
Expenses on bonus issue - (429) - - - - (429) - (429)
Redemption of shares (6) - 6 - - - - - -
Equity dividends - - - - - (7,038) (7,038) - (7,038)
At 31 December 2013 9,271 4,362 74,963 (11,976) 6,649 281,388 364,657 13 364,670
Profit for the period - - - - - 10,115 10,115 - 10,115
Other comprehensive income - - - - (5,811) (295) (6,106) - (6,106)
Total comprehensive income - - - - (5,811) 9,820 4,009 - 4,009
Cost of share-based payment - - - - - 1,724 1,724 - 1,724
Tax on share-based payment transactions - - - - - 27 27 - 27
Exercise of options 5 235 - 321 - (321) 240 - 240
Equity dividends - - - - - (16,636) (16,636) - (16,636)
At 30 June 2014 9,276 4,597 74,963 (11,655) 838 276,002 354,021 13 354,034
Consolidated cash flow statement
For the six months ended 30 June 2014
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
Note £'000 £'000 £'000
Operating activities
Profit/(loss) before tax 18,034 (4,350) 50,525
Net finance expense/(income) 423 (60) 501
Depreciation 10,263 11,705 22,735
Amortisation 6,056 4,269 9,676
Impairment of intangible assets - 12,195 12,195
Share-based payments 1,724 527 1,070
Loss/(profit) on disposal of property, plant and equipment 106 (442) (215)
Loss on disposal of intangibles 133 103 642
(Increase)/decrease in inventories (15,167) 1,047 10,596
Decrease/(increase) in trade and other receivables 107,200 59,274 (94,982)
(Decrease)/increase in trade and other payables (108,140) (96,482) 52,997
(Decrease)/increase in customer contract provisions (2,375) 10,745 7,443
Other adjustments 623 267 (456)
Cash generated from/(used in) operations 18,880 (1,202) 72,727
Income taxes paid (8,592) (8,582) (9,624)
Net cash flow from operating activities 10,288 (9,784) 63,103
Investing activities
Interest received 1,197 956 1,741
Decrease in current asset investment - - 10,000
Acquisition of subsidiaries, net of cash acquired 10 (465) - -
Sale of property, plant and equipment 31 51 921
Purchases of property, plant and equipment (5,216) (4,245) (9,609)
Purchases of intangible assets (3,638) (3,095) (15,544)
Net cash flow from investing activities (8,091) (6,333) (12,491)
Financing activities
Interest paid (1,783) (830) (2,663)
Dividends paid to equity shareholders of the parent (16,636) (15,759) (22,797)
Return of Value - - (73,115)
Expenses on Return of Value - - (586)
Proceeds from issue of shares 240 58 1,222
Increase in other financial assets - (31,412) -
Repayment of capital element of finance leases (3,410) (4,090) (8,066)
Repayment of loans (2,378) (651) (2,766)
New borrowings 2,363 - 9,267
Net cash flow from financing activities (21,604) (52,684) (99,504)
Decrease in cash and cash equivalents (19,407) (68,801) (48,892)
Effect of exchange rates on cash and cash equivalents (1,363) 3,579 1,755
Cash and cash equivalents at the beginning of the period 90,334 137,471 137,471
Cash and cash equivalents at the end of the period 69,564 72,249 90,334
Notes to the accounts
1 Corporate information
The interim condensed consolidated financial statements of the Group for the
six months ended 30 June 2014 were authorised for issue in accordance with a
resolution of the Directors on 28 August 2014.
Computacenter plc is a limited company incorporated and domiciled in England
whose shares are publicly traded.
2 Basis of preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2014 have been preparedin 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 annual financial statements as at 31 December 2013 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 condensed consolidated
interim financial statements are the same as those applied by the Group in its
consolidated financial statements for the year ended 31 December 2013, except
for the adoption of new standards and interpretations as of 1 January 2014,
which did not have any impact on the accounting policies, financial position
or performance of the Group, as noted below:
· IAS 32 amendments - Offsetting financial assets and financial
liabilities
· IAS 39 amendments - Novation of derivatives and continuation of hedge
accounting
· IAS 36 amendments - Recoverable Amount Disclosures for Non-Financial
Assets
The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
4 Segment information
For management purposes, the Group is organised into geographical segments,
with each segment determined by the location of the Group's assets and
operations. The Group's business in each geography is managed separately and
held in separate statutory entities.
No operating segments have been aggregated to form the reportable operating
segments shown below.
Management monitors the operating results of its geographical segments
separately for the purposes of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on adjusted
operating profit or loss, which is measured differently from operating profit
or loss in the consolidated financial statements. Adjusted operating profit or
loss takes account of the interest paid on customer-specific financing ('CSF')
which management consider to be a cost of sale. Excluded from adjusted
operating profit are the amortisation of acquired intangibles and exceptional
items, as management do not consider these items when reviewing the underlying
performance of a segment.
Segmental performance for the periods to H1 2014, H1 2013 and Full Year 2013
were as follows:
Six months ended 30 June 2014 (unaudited)
UK Germany France Belgium Total
£'000 £'000 £'000 £'000 £'000
Revenue
Supply Chain revenue 434,042 326,830 193,037 15,862 969,771
Services revenue
Professional Services 59,768 55,446 10,316 1,473 127,003
Contractual Services 181,570 144,246 27,525 8,169 361,510
Total Services revenue 241,338 199,692 37,841 9,642 488,513
Total revenue 675,380 526,522 230,878 25,504 1,458,284
Results
Adjusted gross profit 102,291 69,648 14,734 3,256 189,929
Administrative expenses (77,342) (61,807) (20,406) (2,275) (161,830)
Adjusted operating profit/(loss) 24,949 7,841 (5,672) 981 28,099
Adjusted net interest 387 326 (738) (56) (81)
Adjusted profit/(loss) before tax 25,336 8,167 (6,410) 925 28,018
Exceptional costs - - (9,100) - (9,100)
Amortisation of acquired intangibles (240) (600) - (44) (884)
Statutory profit/(loss) before tax 25,096 7,567 (15,510) 881 18,034
Other segment information
Share-based payments 1,373 178 173 - 1,724
Six months ended 30 June 2013 (unaudited)
UK Germany France Belgium Total
£'000 £'000 £'000 £'000 £'000
Revenue
Supply Chain revenue 369,054 400,016 170,356 14,227 953,653
Services revenue
Professional Services 52,798 47,736 10,690 1,230 112,454
Contractual Services 170,297 155,676 26,711 7,555 360,239
Total Services revenue 223,095 203,412 37,401 8,785 472,693
Total revenue 592,149 603,428 207,757 23,012 1,426,346
Results
Adjusted gross profit 90,528 73,308 18,198 2,714 184,748
Administrative expenses (70,475) (63,605) (22,832) (2,091) (159,003)
Adjusted operating profit/(loss) 20,053 9,703 (4,634) 623 25,745
Adjusted net interest 625 144 (207) (62) 500
Adjusted profit/(loss) before tax 20,678 9,847 (4,841) 561 26,245
Exceptional items:
- onerous contracts - (15,780) - - (15,780)
- impairment of intangibles - - (12,195) - (12,195)
- exceptional costs - (1,324) - - (1,324)
- (17,104) (12,195) - (29,299)
Amortisation of acquired intangibles (396) (613) (242) (45) (1,296)
Statutory profit/(loss) before tax 20,282 (7,870) (17,278) 516 (4,350)
Other segment information
Share-based payments 378 64 85 - 527
Year ended 31 December 2013 (audited)
UK Germany France Belgium Total
£'000 £'000 £'000 £'000 £'000
Revenue
Supply Chain revenue 828,097 859,404 389,517 29,195 2,106,213
Services revenue
Professional Services 113,102 104,446 20,794 3,716 242,058
Contractual Services 344,930 307,592 56,008 15,274 723,804
Total Services revenue 458,032 412,038 76,802 18,990 965,862
Total revenue 1,286,129 1,271,442 466,319 48,185 3,072,075
Results
Adjusted gross profit 200,097 158,051 38,320 6,006 402,474
Administrative expenses (143,926) (127,403) (45,603) (4,164) (321,096)
Adjusted operating profit/(loss) 56,171 30,648 (7,283) 1,842 81,378
Adjusted net interest 791 173 (561) (117) 286
Adjusted profit/(loss) before tax 56,962 30,821 (7,844) 1,725 81,664
Exceptional items:
- onerous contracts - (15,739) - - (15,739)
- impairment of intangibles - - (12,195) - (12,195)
- exceptional costs 3,466 (3,105) (1,191) - (830)
3,466 (18,844) (13,386) - (28,764)
Amortisation of acquired intangibles (792) (1,225) (242) (116) (2,375)
Statutory profit/(loss) before tax 59,636 10,752 (21,472) 1,609 50,525
Other segment information
Share-based payments 838 (2) 234 - 1,070
5 Seasonality of operations
Historically revenues have been higher in the second half of the year than in
the first six months. This is principally driven by customer buying behaviour
in the markets in which we operate. Typically this leads to a more pronounced
effect on operating profit. In addition, the effect is compounded further by
the tendency for the holiday entitlements of our employees to accrue during
the first half of the year and to be utilised in the second half.
6 Exceptional items
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
£'000 £'000 £'000
Operating profit
Onerous contracts - (15,780) (15,739)
Impairment of acquired intangible assets - (12,195) (12,195)
Redundancy and other restructuring costs (9,100) (1,324) (4,291)
Impairment of investment in associate - - (539)
Services contracts re-evaluation - - 4,000
(9,100) (29,299) (28,764)
Income tax
Tax on onerous contracts included in operating profit - 1,894 1,889
Tax on impairment of acquired intangible assets - 1,014 1,014
Tax on exceptional items included in operating profit - 146 (700)
Total tax on exceptional items - 3,054 2,203
Exceptional tax items
-Deferred tax asset in respect of France - - (2,184)
-Tax credit in relation to prior year R&D claim - - 1,695
- 3,054 1,714
Exceptional items after taxation (9,100) (26,245) (27,050)
2014
Computacenter France has incurred an exceptional charge of £9.1 million
relating to the estimated costs of a comprehensive restructuring plan within
the Group's French business that has been provided for at 30 June 2014.
The substantial restructuring exercise currently underway aims to reduce the
cost base, improve the competitiveness and therefore improve the profitability
of the Group's French business.
In line with our accounting policy, management has elected under IAS1 to
report this provision under the heading of "Exceptional Items" due to the
materiality, infrequency and nature of the restructuring plan. This election
provides the best guidance to users of our external reporting as to the
underlying profitability trends within the Group and to present the results of
the Group in a way that is fair, balanced and understandable. Excluding the
costs related to the restructuring plan is consistent with treatments of
similar costs in prior periods and presents the Adjusted Profit Before tax in
a way that enables users to better assess the quality of the Groups underlying
profitability.
Further details of the treatment of the restructuring costs are disclosed in
note 11.
2013
In Germany three managed service contracts were identified as onerous. A £2.1
million provision was made in December 2012 for these contracts. A further
provision for estimated future losses of £7.5 million was held as at December
2013. This further provision was classified as an exceptional item due to its
size and nature and the 2012 result was restated to be consistent.
Included within the German segment results in 2012 and 2013 were losses
incurred in relation to these onerous contracts. In order to provide a
clearer understanding of the performance of the remainder of the business,
losses previously recognised within the German operating result for these
contracts were reclassified within exceptional items. In 2012 trading losses
of £5.9 million were incurred on revenues of £15.4 million. In 2013 trading
losses of £8.2 million were incurred on turnover of £23.0 million.
The deterioration in the performance of Computacenter France led to an
assessment of their non-current assets. It was concluded that the forecasted
cash flows for the French cash generating unit did not fully support the value
of non-current assets in the business. This resulted in an impairment of £12.2
million of intangible assets in the French cash generating unit.
During 2013 Computacenter Germany continued its programme, from late 2012, to
reduce its net operating expenses. As a result, redundancy costs of £3.1
million were incurred during the year, which due to their size and nature were
included within exceptional items.
Similarly, Computacenter France began a programme to also reduce its SG&A and
restructure its business and senior management in line with the Group
Operating Model. Redundancy related expenses of £1.2 million were included in
the 2013 result.
Due to the continued adverse performance of our equity accounted associate,
ICS Solutions Limited, we decided to fully impair the £0.5 million recorded
value of our investment.
As part of our normal processes, we carried out a detailed evaluation of other
long-term Services contracts across the Group. As a result of this on-going
evaluation, management calculated that a positive change in certain estimates
resulted in a one-off gain of £4.0 million. Due to the nature of the change
in the estimates, and the size of the gain, it was decided to highlight this
as an exceptional item. This is consistent with the treatment of the
previously identified onerous contracts and provides a fairer and more
balanced understanding of our underlying growth in profitability.
During the year a deferred tax asset relating to losses carried forward in
France was written off for £2.2 million.
Tax relief from prior period Research and Development project spend on the
Group ERP platforms resulted in a prior year adjustment credited in the
statutory tax charge for the year. Due to the timing, materiality and one-off
nature of this relief, it was decided to classify it as an exceptional tax
item.
7 Income tax
The Group calculates the period income tax expense using the tax rate that
would be applicable to the total expected total annual earnings.
The charge based on the profit/(loss) for the period comprises:
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
£'000 £'000 £'000
UK corporation tax
- operating result 6,653 5,329 14,395
- exceptional items - - (891)
Total UK corporation tax 6,653 5,329 13,504
Foreign tax
- operating result 2,159 2,196 5,031
- exceptional items - (613) (1,994)
Total foreign tax 2,159 1,583 3,037
Adjustments in respect of prior periods (103) - (509)
Deferred tax
- operating result (790) (489) 139
- adjustments in respect of prior periods - - 25
Exceptional items - (2,295) 1,171
Total deferred tax (790) (2,784) 1,335
7,919 4,128 17,367
The main rate of corporation tax will be reduced to 20% from 1 April 2015, as
enacted in the July 2013 Finance Act. The new rates will be applied, as
appropriate, in the year-end accounts.
8 Earnings per ordinary share
Earnings per share (EPS) amounts are calculated by dividing profit
attributable to ordinary equity holders by the weighted average number of
ordinary shares outstanding during the year (excluding own shares held).
Diluted earnings per share amounts are calculated by dividing profit
attributable to ordinary equity holders by the weighted average number of
ordinary shares outstanding during the year (excluding own shares held)
adjusted for the effect of dilutive options.
Adjusted basic and adjusted diluted EPS are presented to provide more
comparable and representative information. Accordingly the adjusted basic and
adjusted diluted EPS figures exclude the amortisation of acquired intangibles
and exceptional items.
Unaudited Unaudited Audited
H1 2014 H1 2013 Year 2013
£'000 £'000 £'000
Profit/(loss) attributable to equity holders of the parent 10,115 (8,478) 33,160
Amortisation of acquired intangibles attributable to equity holders of the parent 884 1,296 2,375
Tax on amortisation of acquired intangibles (117) (122) (244)
Exceptional items within operating profit 9,100 29,299 28,764
Tax on exceptional items included in operating profit - (3,054) (2,203)
Exceptional tax items - - 489
Adjusted profit after tax 19,982 18,941 62,341
No.'000 No '000 No '000
Basic weighted average number of shares (excluding own shares held) 135,961 149,512 142,665
Effect of dilution:
Share options 1,423 1,416 1,428
Diluted weighted average number of shares 137,384 150,928 144,093
H1 2014 H1 2013 Year 2013
pence pence pence
Basic earnings per share 7.4 (5.7) 23.2
Diluted earnings per share 7.4 (5.7) 23.0
Adjusted basic earnings per share 14.7 12.7 43.7
Adjusted diluted earnings per share 14.5 12.5 43.3
9 Dividends paid and proposed
A final dividend for 2013 of 12.3p per ordinary share was paid on 20 June
2014. An interim dividend in respect of 2014 of 5.9p per ordinary share,
amounting to a total dividend of £8,030,000, was declared by the Directors at
their meeting on 28 August 2014. This interim report does not reflect this
dividend payable.
10 Business combinations
Update on acquisitions made in 2012
On 28 December 2012 the Group acquired 100 per cent of the voting shares of
NEWIS SA and its subsidiary, Informatic Services IS SA for a cash
consideration of E2.3million. Additional consideration of E0.6million
(£0.5million, translated as at the date of the payment of February 2013) was
paid, based on the terms of the Purchase Agreement. Details of the book and
fair values of the net assets acquired are disclosed in note 16 of the
December 2012 Annual Report and Accounts.
11 Provisions
Customer contract provisions Restruc-turing provisions Property provisions Total provisions
£'000 £'000 £'000 £'000
At 1 January 2013 2,108 - 8,720 10,828
Arising during the period 10,672 - - 10,672
Utilised - - (1,015) (1,015)
Amounts unused reversed - - (281) (281)
Exchange adjustment 193 - 190 383
At 30 June 2013 12,973 - 7,614 20,587
Arising during the period - - 130 130
Utilised (3,107) - (181) (3,288)
Amounts unused reversed - - (451) (451)
Exchange adjustment (315) - (209) (524)
At 31 December 2013 9,551 - 6,903 16,454
Arising during the period - 9,000 65 9,065
Utilised (2,375) - (588) (2,963)
Exchange adjustment (299) (231) (93) (623)
At 30 June 2014 6,877 8,769 6,287 21,933
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