RNS Number:2797J
Computerland UK PLC
06 December 2007
CPU.L
ComputerLand UK PLC
Interim results for the six months ended 31 October 2007
Highlights:
* Services revenues up 13% to #11.4m (2006/07 H1: #10.1m)
* Total revenue up 10% to #33.9m (2006/07 H1: #30.8m)
* Profit before tax* up 2% to #1.45m (2006/07 H1: #1.42m)
* Earnings per share* up 3% to 9.9p (2006/07 H1: 9.6p)
* Dividend per share up 8% to 2.7p (2006/07 H1: 2.5p)
* Net cash at period end up 20% to #8.75m (2006/07 H1: #7.31m)
* Before share-based payments, amortisation of customer intangibles and
exceptional item
Graham Gilbert, Chairman & CEO, commented:
"I am delighted to report that our managed services, project services and
product supply businesses all performed strongly during the first 6 months of
our financial year."
"Our managed services business enjoyed a strong performance during the half
across an expanded client base."
"Our clients are looking at ways to reduce their 'carbon footprint' and our
server consolidation expertise has enabled them to achieve this goal."
Press enquiries:
ComputerLand UK PLC Tel: 0115 931 8000
Graham Gilbert, Chairman & CEO
Mike Kent, Finance Director
Charles Stanley Securities Tel: 0207 149 6000
Mark Taylor
Biddicks Tel: 0207 448 1000
Shane Dolan
Chairman's Statement
Introduction
I am delighted to report that our managed services, project services and product
supply businesses all performed strongly during the first 6 months of our
financial year. Despite a weaker than expected performance from our hardware
maintenance business, we achieved record first half revenues and profit before
tax*. Overall our revenues during the half increased by 10% to #33.9 million
with our services revenues growing by 13% to #11.4 million.
In order to address the issues in our hardware maintenance business we have
implemented a number of measures to improve operating efficiency. These actions
led to a much improved performance during the second quarter and we are
expecting to make further progress in the remainder of our financial year.
During the half we have continued to increase the proportion of sales and
marketing resources focused on identifying and winning new managed services
contracts. We believe that this strategy, combined with our compelling service
proposition, will enable us to maximise our growth potential in the expanding
market for managed services.
Results
In the six months to 31 October 2007 profit before tax* increased by 2% to
#1.45m (2006/7 H1: #1.42m) on revenues up by 10% to #33.9m (2006/7 H1: #30.8m).
Earnings per share* rose 3% to 9.9p (2006/7 H1: 9.6p). Strong operating cash
flow led to net cash balances of #8.75m at the period end (2006/7 H1: #7.31m).
Profit before tax and earnings per share on an IFRS GAAP basis were #1.18m (2006
/7 H1: #1.26m) and 8.1p per share (2006/7 H1: 8.4p per share) respectively.
* Before share-based payments, amortisation of customer intangibles and
exceptional item totalling #0.27m or 1.8p per share (2006/7 H1: #0.16m or 1.2p
per share)
Dividend
The performance of our business during the past six months and optimism in our
future prospects has led your Board to declare an interim dividend of 2.7p (2006
/07: 2.5p) per share, an increase of 8% on the preceding year. The interim
dividend will be paid on 3 March 2008 to shareholders on the register on 1
February 2008.
Operating Overview
Our strategy is to provide medium and large organisations with a complete
solution for their IT infrastructure support, implementation and acquisition
requirements. We seek to differentiate ourselves by focusing on the quality and
efficiency of our service delivery model. Innovative use of proven technology
and methodologies enable us to deliver services which improve the effectiveness
of our customers IT whilst reducing their operating costs. A review of our
operations is set out below:
Managed Services
Our managed services business, which provides turnkey solutions for our clients'
desktop and server support requirements, enjoyed a strong performance during the
half. During the course of last year we added significantly to the scale of our
business and I am pleased to report that we have been achieving our operating
performance targets across our expanded client base. In addition to a strong
performance from our existing client base, I am delighted to report that towards
the end of our first half we started service delivery to a new managed service
client, Whitefriars Housing Association.
Project services
Strong demand for our Consultancy and Project Management services has led to a
particularly good performance in our projects business. Over the past six months
we have delivered projects across a range of platforms and technologies
including server consolidation, thin client, storage solutions and messaging.
Clients are looking at ways to reduce their 'carbon footprint' and our server
consolidation expertise has enabled them to achieve this goal by reducing the
number of servers, and hence electricity consumed, in their businesses.
Heightened environmental awareness and rising power costs are likely to create
an increasing demand for our skills in this area.
Hardware Support
During the second half of last financial year we migrated a number of legacy
software systems to a new integrated platform within our hardware maintenance
business. This migration led to a number of operational issues some of which
have continued to impact our performance in the current year. As a result we
implemented a recovery plan that led to a significant improvement in our
performance during the second quarter. Our new systems are now enabling us to
deliver our clients a service of the very highest quality and we expect the
financial performance of this business unit to continue to improve during the
remainder of our financial year.
Managed Product Supply
Our product supply business performed well during the half as a result of demand
from new managed services clients. During the course of 2008 we expect to see
the first signs of demand generated by the adoption of Windows Vista in the
corporate market place.
People
These record results have been achieved as a result of the innovation, hard work
and dedication shown by our staff. I would like to extend my thanks to all of
our employees for their contribution.
Current trading and outlook
Early indications suggest that trading during November has been in line with our
expectations. We expect our business to continue to perform well during the
second half of the year and are optimistic about achieving a satisfactory
outcome for the year.
Graham Gilbert
Chairman
5 December 2007
Consolidated income statement
For the six months to 31 October 2007
Six months Six months Twelve
to to months to
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
--------------------------- ----- -------- -------- -------
Revenue 33,918 30,820 67,045
--------------------------- ----- -------- -------- -------
Operating profit before
share-based payments,
amortisation of customer
intangibles and exceptional
item 1,307 1,303 2,543
Share-based payments (49) (40) (121)
Amortisation of customer
intangibles (123) (124) (247)
Exceptional item 3 (100) - -
--------------------------- ----- -------- -------- -------
Operating profit 1,035 1,139 2,175
Finance income 145 121 238
Finance expense - - (2)
--------------------------- ----- -------- -------- -------
Profit before tax 1,180 1,260 2,411
Income tax expense 4 (361) (411) (778)
--------------------------- ----- -------- -------- -------
Profit for the period 819 849 1,633
--------------------------- ----- -------- -------- -------
Earnings per share - pence
- Basic 6 8.1 8.4 16.2
- Diluted 6 8.1 8.4 16.2
--------------------------- ----- -------- -------- -------
A statement of recognised income and expense is not included as there are no
unrecognised gains or losses.
Consolidated balance sheet
As at 31 October 2007 As at As at As at
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
---------------------------- ----- -------- -------- --------
Non current assets
Property, plant and equipment 1,095 1,220 1,173
Intangible assets 929 1,164 1,108
---------------------------- ----- -------- -------- --------
2,024 2,384 2,281
Current assets
Inventories 1,558 1,441 1,639
Trade and other receivables 8,073 9,081 9,126
Cash and cash equivalents 8,748 7,313 8,377
---------------------------- ----- -------- -------- --------
18,379 17,835 19,142
Current liabilities
Trade and other payables 11,633 12,125 12,797
Deferred income 3,837 3,793 3,959
Current tax liability 200 267 213
Deferred tax liability 3 - 16
---------------------------- ----- -------- -------- --------
15,673 16,185 16,985
---------------------------- ----- -------- -------- --------
Net current assets 2,706 1,650 2,157
---------------------------- ----- -------- -------- --------
Net assets 4,730 4,034 4,438
---------------------------- ----- -------- -------- --------
Equity
Issued capital 204 204 204
Share premium 1,114 1,114 1,114
Investment in own shares (340) (133) (289)
Retained earnings 3,752 2,849 3,409
---------------------------- ----- -------- -------- --------
Total equity 7 4,730 4,034 4,438
---------------------------- ----- -------- -------- --------
Group cash flow statement
For the six months to 31 October 2007
Six months Six months Twelve
to to months to
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
---------------------------- ----- -------- -------- --------
Net cash inflow from operating
activities 8 1,079 1,105 3,080
Investing activities
Purchases of intangible assets
- computer software (26) (147) (392)
Purchases of property, plant
and equipment (116) (256) (502)
---------------------------- ----- -------- -------- --------
Net cash used in investing
activities (142) (403) (894)
---------------------------- ----- -------- -------- --------
Financing activities
Equity dividends paid (503) (2,444) (2,696)
Purchase of own shares (240) (18) (224)
Sale of own shares 177 67 105
---------------------------- ----- -------- -------- --------
Net cash used in financing
activities (566) (2,395) (2,815)
---------------------------- ----- -------- -------- --------
---------------------------- ----- -------- -------- --------
Increase/(decrease) in cash
and cash equivalents 371 (1,693) (629)
Cash and cash equivalents at
beginning of period 8,377 9,006 9,006
---------------------------- ----- -------- -------- --------
Cash and cash equivalents at
end of period 8,748 7,313 8,377
---------------------------- ----- -------- -------- --------
Notes to the interim report
1. Basis of preparation
With effect from 1 May 2006, the Group is required to report its financial
statements in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Commission. This interim report to 31 October 2007 is
the first financial information adopting the recognition and measurement
requirements of IFRS and conforming with the IFRS accounting policies expected
to be applied in the consolidated financial statements for the year ended 30
April 2008. These policies are set out on the Group's website at
www.computerland.co.uk in a document which restates the financial information at
1 May 2006 (date of transition), for the year ended 30 April 2007 and for the
six months ended 31 October 2006, in accordance with the IFRS accounting
policies.
As permitted, this interim report has been prepared in accordance with UK
listing rules and not in accordance with IAS 34 'Interim Financial Reporting'
and is therefore not fully compliant with IFRS.
The interim financial statements do not constitute statutory accounts as defined
by section 240 of the Companies Act 1985. The figures for the year ended 30
April 2007 have been extracted from the statutory accounts for the year ended 30
April 2007, which were prepared in accordance with United Kingdom accounting
standards (UK GAAP). These figures have been restated to conform with IFRS. The
statutory accounts for the year ended 30 April 2007, published under UK GAAP,
were reported on by the auditors without qualification or statement under
section 237(2) or (3) of the Companies Act 1985 and have been delivered to the
Registrar of Companies.
As noted above the results for the six months ended 31 October 2006 and year
ended 30 April 2007 have been restated, with the full details of the restatement
available in a separate document. To aid understanding of this interim report,
the effects of the restatement of revenue, profit before taxation and net assets
are shown below:
Six months Six months Twelve Twelve
to to months to months to
31 October 31 October 30 April 30 April
2006 2006 2007 2007
(Unaudited) (Unaudited) (Audited) (Audited)
#'000 #'000 #'000 #'000
--------------------- -------- -------- -------- --------
Revenue as previously
reported 30,824 67,034
Maintenance contracts
(IAS 18) (4) 11
--------------------- -------- -------- -------- --------
Revenue as reported
under IFRS 30,820 67,045
--------------------- -------- -------- -------- --------
Profit before tax as
previously reported 1,256 2,466
Goodwill amortisation
(IFRS 3) 105 211
Amortisation of customer
intangibles (IFRS 3) (124) (247)
Maintenance contracts
(IAS 18) (2) 7
Employee benefits (IAS 19) 19 (39)
Lease incentives (SIC 15) 6 4 13 (55)
-------- --------
--------------------- -------- -------- -------- --------
Profit before tax as
reported under IFRS 1,260 2,411
--------------------- -------- -------- -------- --------
--------------------- -------- -------- -------- --------
Net assets as previously
reported 4,412 4,853
Goodwill amortisation
(IFRS 3) (891) (785)
Amortisation of customer
intangibles (IFRS 3) 793 670
Maintenance contracts
(IAS 18) (157) (148)
Employee benefits (IAS 19) (97) (155)
Lease incentives (SIC 15) (169) (162)
Deferred tax (IAS 12) (12) (9)
Current tax 155 (378) 174 (415)
-------- --------
--------------------- -------- -------- -------- --------
Net assets as reported
under IFRS 4,034 4,438
--------------------- -------- -------- -------- --------
2. Segmental analysis
All of the group's operations are based in the UK. There is only one class of
business activity undertaken by the group, being the provision of IT services
and products.
3. Exceptional Item
The exceptional item relates to the resignation of a former Director.
4. Income tax expense
The income tax expense for the period is calculated by applying the anticipated
effective rate of tax for the year ended 30 April 2008 to the profit before tax.
The anticipated effective rate is 30.6% (2006/07: 32.6%).
5. Dividends
After the balance sheet date, the directors declared an interim dividend of 2.7p
per share (2006/07 H1: 2.5p per share).
6. Earnings per share
The calculation of earnings per ordinary share is based on a profit after tax of
#819,000 (2006/07 H1: profit after tax of #849,000) and on a weighted average of
10,054,417 (2006/07 H1: 10,107,588) ordinary shares in issue during the period.
The calculation of diluted earnings per ordinary share is based on a profit
after tax of #819,000 (2006/07 H1: profit after tax of #849,000) and weighted
average ordinary shares of 10,105,876 (2006/07 H1: 10,136,088).
The calculation of earnings per ordinary share before share-based payments,
amortisation of customer intangibles and exceptional item, is based on a profit
after tax of #997,000 (2006/07 H1: profit after tax of #966,000). This profit
excludes share-based payments of #49,000 (2006/07 H1: #40,000), amortisation of
customer intangibles of #123,000 (2006/07 H1: #124,000), exceptional item of
#100,000 (2006/07 H1: #nil) and related tax thereon. The weighted average number
of shares in issue during the period remains unaltered.
7. Reconciliation of movements in total equity
Six months Six months Twelve
to to months to
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
------------------------------ --------- -------- --------
Opening equity 4,438 5,540 5,540
Profit for the period 819 849 1,633
Dividends (503) (2,444) (2,696)
Share-based payments 39 40 80
Movement in investment in own shares (63) 49 (119)
------------------------------ --------- -------- --------
Closing equity 4,730 4,034 4,438
------------------------------ --------- -------- --------
8. Reconciliation of operating profit to net cash inflow from operating
activities
Six months Six months Twelve
to to months to
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
------------------------------ -------- ------- --------
Operating profit 1,035 1,139 2,175
Share-based payments 49 40 121
Depreciation and amortisation 393 334 732
Movement in working capital (156) (164) 586
------------------------------ -------- ------- --------
Net operating cash inflow 1,321 1,349 3,614
Finance income received 145 121 238
Finance expense paid - - (2)
Income taxes paid (387) (365) (770)
------------------------------ -------- ------- --------
Net cash inflow from operating
activities 1,079 1,105 3,080
------------------------------ -------- ------- --------
9. The interim financial statements for the six months ended 31 October 2007
were approved by the board and authorised for issue on 5 December 2007. Copies
of this interim report are being sent to all shareholders and will be available
to the public from the company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
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