Interim Results
Synstar PLC
01 June 2004
Tuesday 1 June 2004
Synstar plc
Interim Results 2004
Resilient performance as Synstar moves through period of transition
Synstar plc, the pan-European IT services provider, today announces results for
the six months ended 31 March 2004. As announced at the group's preliminary
results in December 2003, Synstar is investing in transitioning the business to
focus on Managed Services and away from some parts of its legacy business. This
transition is progressing well.
Transition substantially executed
• Phase 4 of strategy completed on time
• Turnover from continuing operations growth has been achieved in the first
half. Lower margin revenues have been proactively reduced with higher margin
business providing growth
• Improvement in revenue mix has broadly maintained gross margins in
continuing operations
• Strong cash management has contained cash usage below expected levels
• Exit from French operations completed in January 2004
Managed services pipeline
• Managed Services pipeline expanding on track to reach run rate of 40 bids
per year; 16 significant new opportunities in first half
• Managed Services contract wins include West Midlands Police, CGG; other
major wins in Defence in UK and Holland
• Synstar's largest ever contract, a £200 million deal with Fujitsu,
beginning in April 2005, augmented by an additional contract running from
May 2004
Financial performance
H1 2004 H1 2003
Overall Performance
- Turnover £107.8m £111.5m
- Gross Margin 24.7% 26.1%
- Operating (Loss)/Profit (£0.3m) £3.7m
Continuing operations before exceptionals*
- Turnover £102.8m £101.9m
- Gross Margin 26.4% 27.2%
- Operating Profit £3.0m £4.6m
Adjusted Earnings per Share 1.3p 2.1p
Basic (Loss)/Earnings per Share (9.4p) 1.6p
* refer to the profit and loss account for a reconciliation of these items
Steve Vaughan, Chief Executive, commented:
'Phases 4 and 5 of our plan are no less ambitious than the first three phases,
completed last December. The restructuring is nearing completion and has so far
been delivered successfully. We are now securing the right sort of pipeline to
deliver on our commitments in Phase 5 for turnover growth. Our contract wins
showed good momentum in the first half and look set to continue in the second
half. Our additional contract for Fujitsu Logistics, announced in April, and the
pipeline of Managed Services deals suggest that Synstar should be able to
achieve turnover growth on continuing operations of about 8-10% in the current
financial year, and also in 2005. I am hopeful that the realignment of the
business will help in maintaining relatively stable margins going forward.
'We are clearly pleased that so much is being achieved during this period of
significant change with both the emphasis on Managed Services and our new
logistics business providing a solid foundation for future revenue growth in the
second half and thereafter.'
John Leighfield, Chairman of Synstar, added:
'This is a resilient financial performance given the extent of change in
Synstar's business over the past six months. The management's focus has been on
moving the company towards higher margin Managed Services contracts and we have
invested heavily to achieve this. The changes effected during this financial
period give us a strong base for the full year and the longer term market
leadership aspirations of the business.'
For more information, please contact:
Steve Vaughan / Stephen Gleadle Tel: 020 7831 3113 (on 1.06.04)
Synstar plc Tel: 01344 662744 (thereafter)
Ed Bridges / James Melville-Ross / Juliet Clarke
Financial Dynamics Tel: 020 7831 3113
Notes to editors on 5 Phase Strategy
In January 2001, Steve Vaughan set out a three-phase turnaround plan, which was
completed in December 2003. He then set out plans to accelerate the Group's
growth in phases 4 and 5.
Phase 1 - 3 - Focus & direction / Stabilise, improve & invest / Expand & roll
out
The first three phases of the strategy were intended to effect a turnaround in
the fortunes of the business, to focus on profit and cash generation and build a
stable foundation to grow the business. The Group invested in new management,
training and new standard service lines to allow it to focus on bigger,
multi-service deals alongside improved productivity and efficiency.
Phase 4 - Realign to Accelerate
In order to accelerate the Group's growth, and to address margin pressures in
its legacy Maintenance business, Synstar decided to realign the focus of its
business towards Managed Services and Business Continuity. The sales and
delivery channels were redeployed to facilitate this new focus.
Phase 5 - Focus on Growth
Phase 5 of the strategy aims to drive top line and margin growth, led by
Synstar's Managed Services operation. The Group also plans to exit or dispose
of its legacy activities such as networks, cabling and mobile.
Chief Executive's Review
Introduction
In my full year review for 2003, I set out the challenges and opportunities
faced by Synstar. We have challenges from margin pressure in some parts of our
business, and opportunities for the growth of our Managed Services business. I
am pleased that the results and progress to date show that we are making
excellent progress with our strategy to exploit the opportunities and surmount
the challenges.
Our initial three-year, three-phase strategy was completed successfully at the
beginning of January with the disposal of our French business. We have now
focused our full management attention onto a group of businesses that are all
expected to make positive contributions to the Group. As announced in January
2004, the loss on disposal is significant (£14.3m, of which £8.5m is in cash),
but it is a necessary investment, both for the improvement in operating profit
of the Group, and the removal of a significant diversion of management time. We
are now able to concentrate fully on the strategy for the core of the business.
Strategy
We see our business developing as three closely related elements. The majority
of the business will be developed through Managed Services, either by
cross-selling to existing customers, or an increasing stream of larger, more
joined-up business. This is expected to be the major growth engine of the
company. Business Continuity represents a significant component of profit. Where
the cross-sell is not feasible or appropriate, we have built an organisation to
defend and develop this source of profit in the future. Thirdly, as highlighted
in our 2003 preliminary results, there are some legacy parts of our business
where we need to reduce our focus. Our experience of the logistics contract with
Fujitsu has shown that it is possible to convert this capability to better
sources of profit.
The success of the initial phases of this strategy can be measured in the short
term by two key indicators. Firstly, our progress with the restructuring project
to reshape the skills in the company. Secondly, the development of our pipeline
of Managed Services opportunities.
Progress with Restructuring
The £5 million restructuring cost announced in December 2003 has two aims.
Firstly to considerably accelerate our build up of skills to win and deliver
Managed Services, and secondly to reduce the emphasis on the legacy areas of the
business. We are on track to complete this transformation on time and on budget.
The first five months of this programme have seen about 140 staff changes across
the group. We have reduced the headcount in legacy areas significantly. We have
improved the quality of our sales force and customer managers, including the
appointment of a new sales manager in Belgium, a new general manager for our
business in the North of the UK, and half a dozen new Relationship Managers in
our UK business.
A key area of strengthening has been the Managed Services Centre of Excellence.
We have brought in a range of skills to identify larger opportunities, to design
solutions for them, to execute the complex sales programmes, and then to deliver
them effectively. We have added this talent in those areas required to drive
growth in the group. The bulk of the restructuring programme was completed, as
planned, by the end of May 2004.
Managed Services pipeline
We have increased our sales and marketing spend by 11.3% to build our Managed
Services pipeline, which is now developing well. Our aim is to accelerate
activity here to 40 significant bids per year. We expect to achieve this run
rate by the year end. In the first half we commenced 16 new opportunities (value
greater than £1m per annum). We have had some notable successes in the first
half - Managed Services wins with West Midlands Police (£1m) and CGG (Compagnie
Generale Geophysique) (£4m+), and other significant bid successes with the
addition to our Fujitsu business (£30-35m); a major expansion with a UK retail
bank (£7m); renewal and expansion of our business with the Met Office (£2.5m),
the UK Defence Communications Services Agency (£15m+) and Galileo (€21m); and
major new wins with our police and defence customers in Holland (total €13.5m).
I believe that this demonstrates our aim to accelerate the business is well on
track.
Business Continuity
Business Continuity (BC) is also progressing. We have now opened our second
centre in Luxembourg and signed customers such as the Bank of Bermuda. Our
Dublin centre has been expanded to 640 seats, our centre in Scotland has been
refurbished and we have a good BC business in Germany. We have expanded our
Newbury centre to provide a proactive infrastructure management service
capability. The profit from this part of our business remains healthy. As we
combine Business Continuity with other parts of our high availability offering,
we have good prospects. We are already seeing BC customers expanding
requirements into replication, managed hosting and other higher value services
that we are well placed to provide.
European operations
We have improved performance in Germany and expect that further restructuring
savings will move us into profit in the second half. Expansion of business with
several pan-European customers, renewals at BMW and a new BC business win with a
large oil company have all helped. We are now embarking on a more aggressive
programme to use our Data Management customer base to expand BC based services,
which should give a strong platform for growth. The businesses in Holland and
Spain have shown the significant improvements we expected.
Outlook
Phases 4 and 5 of our plan are no less ambitious than the first three phases,
completed in December. The restructuring is nearing completion and has so far
been delivered successfully. We are now securing the right sort of pipeline to
deliver on our commitments in Phase 5 for turnover growth. Our contract wins
showed good momentum in the first half and look set to continue in the second
half. The Fujitsu contract and the pipeline of Managed Services deals suggest
that Synstar should be able to achieve turnover growth on continuing operations
of about 8-10% in the current financial year and also in 2005. I am hopeful that
the realignment of the business will help in maintaining relatively stable
margins going forward.
We have made good progress in the transition to a managed services company,
which provides a much more sustainable outlook than one driven only by cost
reduction. Long term revenue growth based on multiple services delivered to
loyal customers is the best sort of business and is the real prize of the
strategy.
Finance Director's Review
Introduction
The results for the six months to 31 March 2004 reflect a solid performance
given the expected margin erosion communicated in our December 2003 preliminary
results announcement, along with the impact of the restructuring programme
announced at the same time.
Total revenue has fallen by 3% year on year with an increase of just under 1% in
continuing business, offset by a reduction in revenue from discontinued
operations, following the sale of the French businesses. An operating loss of
£0.3m has been recorded in the period, down from a profit of £3.7m in the first
half of last year. The fall is due to the exceptional costs of the restructuring
programme of £2.5m together with the expected fall in gross margin.
In order to explain the underlying trends, the year on year numbers have been
re-analysed to reflect the effect of the disposal of our French business in
January 2004.
Operating profit before exceptionals can be analysed as follows:
£'m H1 2004 H1 2004 H1 2004 H1 2003 H1 2003 H1 2003
Results Less Continuing Reported Less Continuing
before Discontinued Business Results Discontinued Business
exceptional Operations Operations
items
Revenue 107.8 (5.0) 102.8 111.5 (9.6) 101.9
Cost of Sales (80.2) 4.5 (75.7) (82.4) 8.2 (74.2)
Gross Margin 27.6 (0.5) 27.1 29.1 (1.4) 27.7
% 25.6% 26.4% 26.1% 27.2%
Sales and (6.4) 0.5 (5.9) (6.3) 1.0 (5.3)
Marketing
Administration (19.1) 0.9 (18.2) (19.1) 1.3 (17.8)
costs
Operating profit 2.1 0.9 3.0 3.7 0.9 4.6
The reported results are detailed within the profit & loss account.
The commentary below explains the changes in the continuing business, excluding
exceptional items.
Revenue from continuing operations
Revenue has increased by just under 1% to £102.8m (2003: £101.9m). Taking
account of the 4.1% appreciation of the Euro compared to sterling, the revenue
at constant currency is broadly level.
Within this, there has been a small increase in our Managed Services revenue
stream offset by a decrease in our German data management area. Business
Continuity revenues have fallen by £0.2m driven by a move away from low margin
sub-contracted consultancy work.
Overall the percentage of total revenues represented by long-term contracts for
the continuing business has remained broadly constant at 75%.
Gross Margin
The change in revenue mix has minimised the impact on the gross margin from
continuing operations and before exceptional items (2004: 26.4%, 2003: 27.2%).
Operating Expenses
Overall operating expenses before exceptional items in the continuing business
have increased 4.3% to £24.1m.
This has been driven by increased investment in our sales and marketing area as
part of our strategy to develop our Managed Services offering. Sales and
marketing expenditure has increased 11.3% to £5.9m while administration costs
have increased 2.2% to £18.2m.
Operating Profit
Arising from the above, operating profit before exceptionals on continuing
businesses has decreased by £1.6m to £3.0m. Operating margin on the same basis
has decreased from 4.5% to 2.9%.
This margin decrease is evidenced in our Computer Services segment (comprising
Managed Services and Maintenance) where the margin has reduced from 5.0% to
3.2%. Business Continuity margins have remained broadly constant at around 15%.
On a country basis, the UK has been more affected than Continental Europe. In
Continental Europe, increases in operating profit in Holland and Spain have
broadly offset a decrease in operating profit in Belgium.
Exceptional item
The exceptional charge to operating profits relates to the restructuring of the
business to re-align resources to develop the Managed Services business. This
involves spending on technical and project management skills to deliver
transition projects and complex service delivery requirements together with the
sales and sales support skills needed to create these solutions for customers.
We have also strengthened the senior management team needed to sponsor these
high-level customer relationships and manage a faster rate of change in the
organisation. The spend relates to redundancies, together with retraining and
redeployment of existing employees.
Loss on disposal of discontinued operations
On 6 January 2004, the Group disposed of its three French trading entities, SCS
France SA, Atelsi SA and SBC SARL to Nisa Conseil, a limited company registered
in France.
The consideration received for the sale was a cash payment of £0.2m. The
exceptional item before tax of £14.3m (of which £8.5m is cash) relates to the
loss on the sale of the business and associated costs. This also includes
goodwill previously written off to reserves of £3.1m, which is recycled through
the profit and loss account. The tax effect is a cost of £0.2m.
Interest and Taxation
Consistent with the first half of 2003 the business generated £0.1m of interest
(2003: £0.1m).
It is expected that the tax rate on continuing operations will be 32% for the
full year (2003 excluding France: 26%).
Earnings per Share
Adjusted earnings per share has decreased 38% to 1.3p (2003: 2.1p). Basic
earnings per share has fallen from 1.6p to a loss of (9.4p) reflecting the
impact of the loss on disposal of France and the restructuring charge.
Net Funds and Cash Flow
The business remained ungeared at 31 March 2004 with net cash balances of £12.8m
(31 March 2003: £19.2m; 30 September 2003: £26.9m). As previously reported,
the timing of receipts from customers and payments to suppliers heavily
influences the cash balance at 31 March and 30 September.
The cash usage of £13.8m since 30th September 2003 has been minimised by strong
control over working capital, analysed as follows:
£'m
Operating profit before exceptional cost 2.1
Depreciation less capital expenditure 0.3
Underlying working capital improvement 0.8
Net interest received 0.1
Tax paid (2.1)
____
Underlying cashflow 1.2
Disposal of French business (8.5)
Fujitsu contract costs (5.0)
Restructuring cost (1.5)
____
Cash usage in 6 months to 31st March (13.8)
Summary
These results reflect the transitioning of the business to focus on Managed
Services in geographies where we are more able to make long-term profits. The
transition programme is now substantially complete with £2.5m of the total
expected cost of £5m having been spent or committed to be spent by 31st March.
The actions taken to date should provide a good basis for further improvements
in the performance of the business.
Consolidated Profit and Loss Account
for the six months ended 31 March 2004
Before Exceptional
exceptional items
items (Note 3) Total 12 months
6 months to 6 months to 6 months to 6 months to to
31 March 31 March 31 March 31 March 30 September
Notes 2004 2004 2004 2003 2003
£'000 £'000 £'000 £'000 £'000
Turnover 2
Continuing operations 102,845 - 102,845 101,940 206,595
Discontinued operations 4,973 - 4,973 9,577 16,383
Total turnover 107,818 - 107,818 111,517 222,978
Cost of sales (80,200) (1,011) (81,211) (82,386) (163,432)
Gross profit 27,618 (1,011) 26,607 29,131 59,546
Selling and marketing costs (6,399) (138) (6,537) (6,306) (12,237)
Administration expenses (19,082) (1,335) (20,417) (19,143) (38,793)
Operating profit
Continuing operations 3,032 (2,484) 548 4,588 11,843
Discontinued operations (895) - (895) (906) (3,327)
Total operating (loss) profit 2 2,137 (2,484) (347) 3,682 8,516
Loss on disposal of discontinued
operations 3 - (14,285) (14,285) - -
(Loss) Profit on ordinary activities
before interest and taxation 2,137 (16,769) (14,632) 3,682 8,516
Interest receivable and similar income 185 - 185 191 343
Interest payable and similar charges (87) - (87) (76) (143)
(Loss) Profit on ordinary activities
before taxation 2,235 (16,769) (14,534) 3,797 8,716
Tax on (loss) profit on ordinary 4 (1,002) 417 (585) (1,216) (2,818)
activities
Tax on loss on disposal 4 - (200) (200) - -
(Loss) profit on ordinary activities
after taxation and for the period 1,233 (16,552) (15,319) 2,581 5,898
Dividends - - - - (813)
(Loss) profit for the financial period 1,233 (16,552) (15,319) 2,581 5,085
(Loss) Earnings per share 5
Basic (9.4p) 1.6p 3.6p
Diluted (9.4p) 1.6p 3.6p
Adjusted basic 1.3p 2.1p 5.7p
Consolidated Statement of Total Recognised Gains and Losses
for the six months ended 31 March 2004
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
(Loss) profit for the financial period (15,319) 2,581 5,898
Currency translation differences on foreign
currency net investments (832) 1,144 1,416
Total recognised (losses) profits relating to the period
and since the last annual report and accounts (16,151) 3,725 7,314
Consolidated Balance Sheet
as at 31 March 2004
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Fixed assets
Tangible assets 31,256 34,122 33,167
Current assets
Stocks 2,084 1,833 2,440
Debtors - amounts falling due within one year 45,241 50,597 49,777
Debtors - amounts falling due after one year 5,516 1,995 2,658
Cash at bank and in hand 12,820 19,213 26,922
65,661 73,638 81,797
Creditors: Amounts falling due within one year (64,398) (65,348) (69,317)
Net current assets 1,263 8,290 12,480
Total assets less current liabilities 32,519 42,412 45,647
Creditors: amounts falling due after more than one year (345) - (459)
Net assets 32,174 42,412 45,188
Capital and reserves
Called-up share capital 1,625 1,625 1,625
Profit and loss account 30,549 40,787 43,563
Total shareholders' funds - all equity 32,174 42,412 45,188
Reconciliation of Movement in Group Shareholders' Funds
for the six months ended 31 March 2004
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
(Loss) profit for the period (15,319) 2,581 5,898
Dividend proposed - - (813)
(15,319) 2,581 5,085
Currency translation differences (832) 1,144 1,416
Goodwill transferred to profit & loss account
in respect of the disposal of a business 3,137 - -
Net (reduction) addition to shareholders' funds (13,014) 3,725 6,501
Opening shareholders' funds 45,188 38,687 38,687
Closing shareholders' funds 32,174 42,412 45,188
Consolidated Cash Flow Statement
for the six months ended 31 March 2004
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
Notes £'000 £'000 £'000
Net cash inflow from operating activities 6 4,013 9,330 24,959
Returns on investments and servicing of finance 7 98 115 200
Taxation 7 (2,087) (273) (1,637)
Capital expenditure 7 (7,377) (6,972) (13,711)
Disposals 7 (8,476) - -
Net cash (outflow) inflow before financing (13,829) 2,200 9,811
Financing 7 - (814) (814)
(Decrease) increase in cash in the period 8 (13,829) 1,386 8,997
Notes to the Interim Financial Information
1. Preparation of the interim financial information
The interim financial information has been prepared on the basis of the
accounting policies set out in the group's 2003 statutory accounts.
The balance sheet at 30 September 2003 and the results for the year ended 30
September 2003 have been abridged from the group's 2003 statutory accounts which
have been filed with the Registrar of Companies; the auditors' opinion on those
accounts was unqualified and did not include a statement under s237 (2) or (3)
of the Companies Act 1985.
The interim information does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985.
2. Segmental analysis
6 months to 31 March 6 months to 31 March 12 months to 30 September
2004 2003 2003
Continuing Discontinued Continuing Discontinued Continuing Discontinued
£'000 £'000 £'000 £'000 £'000 £'000
a. Turnover by destination
UK and Republic of Ireland 72,402 - 72,338 - 146,735 -
France 19 4,966 370 9,516 679 16,261
Germany 11,520 - 12,440 - 23,952 -
Rest of Europe 18,904 7 16,792 61 35,229 122
102,845 4,973 101,940 9,577 206,595 16,383
b. Class of business
Turnover:
Computer Services 93,287 4,729 92,203 9,048 186,724 15,337
Business Continuity 9,558 244 9,737 529 19,871 1,046
102,845 4,973 101,940 9,577 206,595 16,383
Operating profit:
Computer Services
- Pre Exceptional Items 3,007 (967) 4,570 (1,022) 12,013 (3,528)
- Exceptional Items (Note 3) (2,441) - - - - -
Business Continuity
- Pre Exceptional Items 1,422 72 1,463 116 2,746 201
- Exceptional Items (Note 3) (43) - - - - -
Central expenditure (1,397) - (1,445) - (2,916) -
548 (895) 4,588 (906) 11,843 (3,327)
Net assets:
Computer Services 22,803 27,172 23,163
Business Continuity 2,616 2,721 1,904
Unallocated net assets 6,755 12,519 20,121
32,174 42,412 45,188
2. Segmental analysis (continued)
6 months to 31 March 6 months to 31 March 12 months to 30 September
2004 2003 2003
Continuing Discontinued Continuing Discontinued Continuing Discontinued
£'000 £'000 £'000 £'000 £'000 £'000
c. Geographical segment
Turnover:
UK and Republic of Ireland 73,303 - 72,810 - 148,762 -
Rest of Europe 29,542 4,973 29,130 9,577 57,833 16,383
102,845 4,973 101,940 9,577 206,595 16,383
Operating profit:
UK and Republic of Ireland
- Pre Exceptional Items 3,809 - 5,443 - 13,761 -
- Exceptional Items (Note 3) (744) - - - - -
Rest of Europe
- Pre Exceptional Items 620 (895) 590 (906) 998 (3,327)
- Exceptional Items (Note 3) (1,740) - - - - -
Central expenditure (1,397) - (1,445) - (2,916) -
548 (895) 4,588 (906) 11,843 (3,327)
Net assets:
UK and Republic of Ireland 20,676 23,072 19,034
Rest of Europe 4,743 6,821 6,033
Unallocated net assets 6,755 12,519 20,121
32,174 42,412 45,188
In relation to the discontinued operations in France, the profit and loss
includes for the 6 months to 31 March 2004 cost of sales of £4,450,000 (6
months to 31 March 2003 - £8,147,000; year ended 30 September 2003 -
£14,600,000), gross profit of £523,000,(6 months to 31 March 2003 - £1,430,000;
year ended 30 September 2003 - £1,783,000) sales and marketing costs of £502,000
(6 months to 31 March 2003 - £1,061,000; year ended 30 September 2003 -
£1,845,000) and administration expenses of £916,000 (6 months to 31 March 2003 -
£1,275,000; year ended 30 September 2003 - £3,265,000).
Unallocated net assets consist of group cash, taxation payable, and other
centrally held or managed assets and liabilities.
3. Exceptional Items
6 months to
31 March
2004
£'000
Total operating items charged to cost of sales 1,011
Total operating items charged to sales and marketing costs 138
Total operating items charged to administration expenses 1,335
Total operating exceptional items 2,484
Loss on disposal of discontinued operations 14,285
Total exceptional Items before tax 16,769
The exceptional charge to operating profit relates to the restructuring of the
business in order to re-align resources to develop the Managed Services
business. This involves spending on technical and project management skills to
deliver transition projects and complex service delivery requirements together
with the sales and sales support skills needed to create these solutions for
customers. This includes investment in the senior management team needed to
sponsor these high-level customer relationships and manage the rate of change in
the organisation. The spend relates to redundancies together with the retraining
and redeployment of existing employees.
On 6 January 2004, the Group disposed of its three French trading entities, SCS
France SA, Atelsi SA and SBC SARL to Nisa Conseil, a limited company registered
in France.
The consideration received for the sale was a cash payment of £0.2m. The
exceptional charge of £14.3m (of which £8.5m is in cash) relates to the loss on
the sale of the business and associated costs. This also includes goodwill
previously written off to reserves of £3.1m, which is recycled through the
profit and loss account. The results of the French subsidiaries have been
disclosed as discontinued operations. The tax effect is a cost of £0.2m.
4. Tax on (loss) profit on ordinary activities
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
UK Corporation tax
- Continuing operations 659 866 3,393
- Adjustment to tax charge in respect of previous periods - - (880)
Overseas tax
- Continuing operations (74) 350 467
- Discontinued operations 200 - -
Adjustment in respect of prior year
- Overseas taxation (continuing operations) - - (292)
Group tax charge 785 1,216 2,688
Deferred tax - - 130
785 1,216 2,818
The group tax charge represents the estimated annual effective tax rate applied
separately to the adjusted (loss) profit on continuing and discontinued ordinary
activities, and the estimated annual effective rate applied to the operating
exceptional items. The interim period is regarded as an integral part of the
annual period and all tax liabilities are disclosed as such.
The overseas tax on discontinued operations represents a £0.2m charge in
exceptional items relating to the sale of the Group's French business.
5. (Loss) earnings per share
Basic earnings per share are calculated in accordance with Financial Reporting
Standard 14 Earnings per Share, based on loss after charging tax of £15,319,000
(6 months to 31 March 2003 - profit of £2,581,000; year ended 30 September 2003
- profit of £5,898,000) and 162,500,000 (6 months to 31 March 2003 -
162,500,000; year ended 30 September 2003 - 162,500,000) ordinary shares, being
the weighted average number of shares in issue during the period.
Diluted earnings per share is the basic earnings per share after allowing for
the dilutive effect of options, in issue. The number of shares used for the
diluted calculation is 163,094,402 (6 months to 31 March 2003 - 162,889,139)
year ended 30 September 2003 - 163,080,000).
The adjusted basic earnings per share information has been calculated on
continuing operations before exceptional costs and net of taxation. This
measure has been changed from prior periods to exclude discontinued operations
as the Directors believe this additional measure provides a better indication of
the underlying trends in the business.
The calculations of earnings per share are based on the following profits and
numbers of shares:
5. (Loss) earnings per share (continued)
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
(Loss) profit for the period for basic (loss)
earnings per share (15,319) 2,581 5,898
Discontinued Operations 895 906 3,327
Exceptional items 16,552 - -
Profit for the period for adjusted basic
earnings per share 2,128 3,487 9,225
Weighted average number of shares in issue:
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
'000 '000 '000
For basic (loss) earnings per share 162,500 162,500 162,500
Exercise of options and warrants 594 389 580
For diluted (loss) earnings per share 163,094 162,889 163,080
6. Reconciliation of operating profit to net cash inflow
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Operating (loss) profit (347) 3,682 8,516
Depreciation charge 7,723 6,933 14,090
(Increase) decrease in stocks (171) 252 (66)
(Increase) decrease in debtors (6,985) 2,636 2,604
Increase (decrease) in creditors 3,793 (4,173) (185)
Net cash inflow from operations 4,013 9,330 24,959
7. Analysis of cash flows
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Returns on investments and servicing of finance:
Interest paid (87) (76) (143)
Interest received 185 191 343
98 115 200
Taxation:
Net tax paid (2,087) (273) (1,637)
Capital expenditure:
Purchase of fixed assets (7,377) (6,972) (13,711)
Disposals:
Disposal consideration 210 - -
Disposal costs paid (823) - -
Cash balances disposed (7,863) - -
(8,476) - -
Financing:
Repayment of loans - (814) (814)
8. Reconciliation of net cashflow to movement in net funds
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Net (decrease) increase in cash during period (13,829) 1,386 8,997
Cash outflow from decrease in debt - 814 814
Movement in finance leases (69) - 146
Movement in net funds resulting from cashflows (13,898) 2,200 9,957
Foreign currency and other changes (273) 574 672
Movement in net funds in period (14,171) 2,774 10,629
Net funds at beginning of period 27,068 16,439 16,439
Net funds at end of period 12,897 19,213 27,068
9. Analysis of net funds
Cash at Finance
bank leases Total
£'000 £'000 £'000
At 30 September 2003 26,922 146 27,068
Cashflows during period (13,829) (69) (13,898)
Foreign exchange (273) - (273)
At 31 March 2004 12,820 77 12,897
10. Approval of Interim financial information
This interim financial information was approved by the Board of Directors on
Friday 28th May 2004.
11. Shareholder information
The interim information is being sent to all shareholders and copies are
available to the public from the registered office of the company; Synstar
House, 1 Bracknell Beeches, Old Bracknell Lane West, Bracknell, Berkshire, RG12
7QX. The company's registered number is 3416147.
This information is provided by RNS
The company news service from the London Stock Exchange
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