| Wed 11 May 2005, 9:53 | | Dimension Data Holdings plc - Unaudited Interim Re |
|
Dimension Data Holdings plc - Unaudited Interim Results
Dimension Data Holdings plc
Incorporated in Great Britain under the Companies Act 1985
Registration Number: 3704278
Share Code: DDT ISIN number: GB0008435405
(`the Company`)
Unaudited Interim Results
Six months ended 31 March 2005
Dimension Data Holdings plc (`Dimension Data` or the `Group`) today announced
its results for the six months ended 31 March 2005.
Highlights
Robust growth of 15.4% in Group revenues on H1 2004
Solid growth of 10.6% in Network Integration revenues
Excellent growth of 43.6% in Solutions revenues
Gross margin stable at 20.9%
Group overheads well controlled, declining as a percentage of revenue to
19.0% (H1 2004: 20.3%)
Group operating profit (1) increases to $24.6 million (H1 2004:
$7.5 million)
Group operating margin (1) improves to 1.9% (H1 2004: 0.7%)
Cash and short term investments $408.1 million at 31 March 2005 (31 March
2004: $349.5 million)
Financial Summary
6 months to 6 months to
31 March 2005 31 March 2004
$`000 $`000
Group turnover 1,296,956 1,123,471
Associates turnover 57,366 53,218
Total turnover 1,354,322 1,176,689
Group operating profit (1) 24,616 7,528
Profit before tax 23,198 13,947
Profit after tax 11,835 4,783
Net profit for the period 6,263 1,369
US cents US cents
Basic earnings per ordinary share 0.5 0.1
Adjusted earnings / (loss) per ordinary
share (2) 0.4 (0.2)
Overview of Results (3)
The Group is pleased to report very good progress in the first half of FY 2005,
with robust revenue growth on H1 2004 and substantially improved returns. Group
revenues grew by 15.4% to $1,297 million, gross margins were stable and Group
operating profit (1) increased threefold.
The growth in revenue was fuelled by solid growth in our core Network
Integration line of business (up 10.6% on H1 2004) and an excellent performance
from our Solutions lines of business where revenues increased by 43.6% on H1
2004. As a result, Solutions now account for 28% of revenue, up from 22% in the
comparable period.
Gross margins (4) at 20.9% were slightly firmer than those achieved in H1 2004.
Reduced Product margins in some regions were more than compensated for by
better overall Services margins.
Growth in overheads was contained at 8.0%, well below the revenue growth rate
of 15.4%. As a result, the Group`s overheads declined as a proportion of
revenue from 20.3% in H1 2004 to the current level of 19.0%.
The results therefore reflect a pleasing increase in Group operating profit (1)
to $24.6 million from $7.5 million in H1 2004, with the Group operating margin
(1) widening to 1.9% (0.7% in the comparable prior period).
For the six months under review, the Group reflects net interest payable of
$8.5 million (H1 2004: $0.2 million).
The increase is due to the capitalisation of the Campus lease during the period
which resulted in an interest expense of $9.2 million.
Profit before tax (2) or the period of $22.4 million is a significant
improvement on the $10.2 million reported in H1 2004.
Net profit for the period was $6.3 million (H1 2004: $1.4 million).
Net cash generated from operating activities in the period was $21.3 million, a
pleasing reversal of H1 2004`s cash utilised by operations of $17.5 million.
This resulted in cash and short term investments of $408.1 million at 31 March
2005, up 16.8% on the balance as at 31 March 2004 of $349.5 million.
Despite some uncertainty prevailing in the wider IT Services environment, in
the market segments within which the Group operates, namely Network Integration
and Solutions, we continue to see good demand. As a result, the Group is
confident that it can continue to deliver profitable growth.
Review of Revenue and Trading
Group Turnover Six months ended Change on Change on
31 March 2005 Contribution H1 2004 H1 2004
$`000 to revenue Reported Like for Like (4)
Lines of business
Network Integration 712,640 55% 10.6% 6.5%
Solutions 358,740 28% 43.6% 34.4%
Other 225,576 17% (1.5%) 5.1%
Total 1,296,956 100% 15.4% 12.7%
Revenue Stream
Product 799,110 62% 16.8% 11.9%
Managed Services 331,670 26% 17.9% 11.3%
Professional Services 166,176 12% 5.1% 19.6%
Total 1,296,956 100% 15.4% 12.7%
Group revenues increased by 15.4% on H1 2004. Adjusting for the impact of
currency movements, and excluding acquisitions and disposals not fully
accounted for in either the current period or the comparable period, the
increase in Group revenues was 12.7%. In the analyses below, all references to
percentage change in turnover and gross profit margins are after making similar
adjustments for currency movements, acquisitions and disposals. Operating
profit (1) refers to reported numbers. The disposals having the most
significant effect are Proxicom in the US as well as the Software AG and Oracle
divisions in Africa. All changes are relative to H1 2004.
The Group`s most significant line of business is Network Integration,
comprising 55% of Group revenues for the period. Network Integration revenues
grew by 6.5%, supported by good demand in our larger, multinational accounts
and effective sales execution, particularly in the UK and the US.
The Group`s world class Network Integration capabilities were recognised at the
2005 Cisco Partner Summit when Dimension Data received numerous awards
including the Cisco Global Partner of the Year, in recognition of outstanding
performance, commitment to technical excellence and customer focus.
Five additional lines of business collectively comprise Solutions - namely,
Converged Communications, Customer Interactive Solutions (CIS), Datacentres and
Storage (DCS), Operating Environments and Messaging (OE&M) and Security. These
lines of business have been established to focus on high growth markets where
the Group, with its strong base of networking experience and skills, is very
well positioned to compete. The excellent 34.4% growth in Solutions revenue
validates our focus on these lines of business, and is the result of continuing
good demand, focused execution, as well as the leverage afforded by the Group`s
established global presence.
The Group`s Other businesses account for the remaining 17% of revenues. These
are operations which, although complementary to our Network Integration and
Solutions offerings, are unique to certain territories.
They include Internet Solutions (the South African internet service provider),
Express Data (the Australian distribution business) and certain Application
businesses.
Growth in Product revenue was 11.9%. Notable contributors were Asia, the UK,
the US and Express Data, where revenues grew strongly. Overall growth was
assisted by good demand in multinational accounts, where our global footprint,
logistics and fulfillment capabilities continue to differentiate us in the
market.
Services revenue increased by 13.9%, on the back of the Group`s investment in
Solutions capabilities and pull- through opportunities from product sales.
Strong growth was experienced in most regions.
Within Services, Managed Services revenues grew by 11.3%. In particular CIS
showed good growth and we introduced additional offerings in DCS and Converged
Communications. The US reported particularly strong growth. Merchants, our
managed call centre business, also grew revenues strongly with a number of
substantial multi year contract awards.
Professional Services revenues increased by 19.6%. Investment in skills,
particularly in the Solutions lines of business, generated results. The US and
Australia saw particularly pleasing growth.
The mix of Product and Services revenue was unchanged with Services
contributing some 38% to the Group`s revenues.
Regions
United
Africa Asia Australia Europe Kingdom
$`000 $`000 $`000 $`000 $`000
Six months ended
31 March 2005
Group turnover 245,790 212,517 260,512 239,520 121,730
Group operating
profit (1) 21,324 7,724 6,577 3,346 5,954
Six months ended
31 March 2004
Group turnover 207,644 176,947 221,698 220,865 99,275
Group operating
profit (1) 10,763 2,935 5,902 4,451 4,895
United
States Central Total
$`000 $`000 $`000
Six months ended
31 March 2005
Group turnover 213,048 3,839 1,296,956
Group operating
profit (1) 2,630 (22,939) 24,616
Six months ended
31 March 2004
Group turnover 195,244 1,798 1,123,471
Group operating
profit (1) 1,666 (23,084) 7,528
Africa
Africa`s revenue grew by 13.3%, and reported a healthy increase in the gross
margin which improved from 28.7% to 29.8%.
Product revenues grew by 9.3% and Services by 15.3%. Good Services growth was
achieved in most lines of business. In particular Merchants, the outsourced
call centre business, performed well, benefiting from the promotion of South
Africa as an attractive call centre destination.
Product gross margins improved slightly and Services margins were stronger on
the back of efficiencies in Managed Services and better utilisation in
Professional Services.
Within the lines of business, Network Integration grew by 12.1% and Solutions
by 30.8%, with DCS, Security and CIS all performing strongly.
Internet Solutions grew revenue by 11.7%. Although the proposed deregulation of
the South African telecoms market is expected to create new opportunities to
offer voice services to our customer base, uncertainty remains as to the
regulatory framework pending finalisation of the Convergence Bill, expected in
June 2005.
The involvement of our Black Economic Empowerment partners since the second
half of FY 2004 continues to provide opportunities within sub-Saharan Africa
and the South African public sector. We have been awarded contracts with the
Pan African Parliament, the South African Revenue Services, the State
Information Technology Agency and various metropolitan councils.
Operating profit doubled to $21.3 million from $10.8 million in H1 2004, and
operating margin increased to 8.7% of revenue from 5.2%. All key lines of
business contributed to a much improved operating result from Africa for the
period. The first time capitalisation of the Campus lease in the current period
benefited operating profit by $5.3 million, relative to what would have been
the position had the Campus continued to be treated as an operating lease.
Asia
Datacraft continued to deliver strongly improved profitability, having achieved
revenue growth of 20.1%.
Excellent growth was reported in Solutions revenues, with the primary drivers
being Security, DCS and Converged Communications. Robust demand from enterprise
and service provider customers, as well as internal investment in new sales
specialists and technical skills, supported growth.
Product revenue growth of 23.9% was fuelled by the increases across the board
in Solutions, while Services increased by 14.1%.
Gross margins increased to 17.0% from 15.7% in H1 2004, driven by improved
Services margins. Operating profit increased significantly to $7.7 million from
$2.9 million in H1 2004 reflecting a widening of the operating margin to 3.6%
from 1.7%.
Most of the countries within the region performed well during the period, with
India again being an important contributor and the ASEAN region countries
delivering good growth. Whilst Korea continued to make good progress with its
recovery programme, the operation in China has yet to report an adequate
improvement in its operating performance.
Australia
Australia`s revenues grew by 11.8%, with Product growth at 11.2% and Services
at 13.6%. Gross margin declined to 19.4% from 20.2%, due to some softening in
Product margins and a higher contribution from Express Data. Services margins
also declined slightly.
Network Integration grew by 9.8% and Solutions by 9.7%, with good growth in
CIS, OE&M and Security.
Express Data grew revenues strongly by 17.8%.
The benefit of good growth in Professional Services revenues was offset by
slower growth in Managed Services.
Operating profit increased to $6.6 million from $5.9 million in H1 2004.
Continental Europe
Continental Europe`s results were disappointing. Overall revenues declined by
0.8% and gross margin declined to 20.9% from 22.3%. Product margins were stable
but pricing pressures on Managed Services and inadequate Professional Services
volumes led to lower overall Services margins. The result was a reduction in
operating profit to $3.3 million from $4.5 million in H1 2004.
Although our Solutions strategy is working well and Solutions revenues
increased by 46.6% on H1 2004, this was offset by a disappointing performance
in the core Network Integration line of business where revenues declined by
10.9%. This was caused mainly by underperformance in Germany, Sweden and Spain.
The German business, having achieved its turnaround plan in FY 2004 continued
to trade profitably in H1 2005, but did not deliver an acceptable sales
performance during the period. Corrective action has been taken, and our order
trend has been positive in the last two months. In Sweden, one large contract
resulted in losses in H1 2005 and negatively impacted Professional Services
margins. This has been rectified. In Spain, inadequate volumes impacted
profitability. We expect substantially improved performances from these three
countries in H2 2005.
On the positive side, Belgium, Italy, Luxembourg and the Netherlands grew ahead
of expectations.
UK
UK revenues grew by 15.7% and gross margin declined marginally to 22.7% from
23.0% in H1 2004.
Product revenue growth of 15.2% was achieved predominantly out of the UK`s
substantial multinational customer base. Managed and Professional Services
revenues grew at similar levels, supported in the case of Managed Services by
an improved performance from Merchants.
Solutions revenues increased by 24.6%, with strong growth from Converged
Communications, Security and CIS.
Product margins were unchanged, with the overall reduction in gross margin
reflecting a changing mix as a result of the higher contribution from Merchants
at lower margins.
Operating profit improved to $6.0 million from $4.9 million in H1 2004.
USA
The US delivered an excellent improvement on H1 2004, with revenues up 21.2%
and gross margin expanding to 14.9% from 13.4%.
Product revenues were up by 16.9% and Services by 44.6%. The strong growth in
Services revenue came from investment in sales and technical capacity, the
provision of additional on-site engineers to customers, and the benefits in
Managed Services of successes in large multinational accounts.
Solutions revenue grew by 24.8% over the period with strong contributions from
our Converged Communications and Security Solutions.
Improvements were achieved in both Product and Services margins with Managed
Services margins improving as a result of scale benefits and more effective
utilisation of resources in Professional Services.
Operating profit increased to $2.6 million from $1.7 million in H1 2004.
Central
The `Central` expense of $22.9 million comprises the net cost of our holding
company and global logistics operations, and the ongoing central investment in
our Solutions and Services strategy.
Included in this expense is an amount of $2.8 million in respect of the full
Group cost of new share incentive schemes introduced in the current financial
period. Excluding this amount, the reported expense in respect of `Central` was
$20.1 million, reflecting a significant reduction on the $23.1 million reported
in H1 2004.
Overheads
We continued to make good progress in reducing our overheads as a proportion of
revenue in all regions.
During the period this percentage for the Group overall decreased to 19.0% from
20.3% in H1 2004.
Total overheads for the period were $246.5 million, an increase of 8.0%.
Overheads include depreciation on the buildings in respect of the capitalised
Campus lease. This capitalisation reduced overheads by $5.3 million relative to
the operating lease treatment of the Campus in the prior period. In addition
$2.8 million was expensed relating to new share incentive schemes established
in the current period.
The improvement in the overhead ratio was achieved through continued focus
across the Group on cost containment and efficiencies, and despite the cost of
increased investment in new technical and sales skills, particularly in the
Solutions lines of business.
Net interest payable and income from investments
Net interest payable was $8.5 million. Total interest payable was $15.1 million
including interest on the capitalised Campus lease ($9.2 million) and the
Group`s convertible bonds ($2.5 million). Total interest receivable for the
period was $6.6 million.
Income on short term investments and other investments was $2.3 million.
Taxation
Group taxation for the period was $11.4 million. Excluding the adjustment to
the prior year`s tax provision of $1.0 million this represents an effective
rate of 55.2% on profit before tax, goodwill amortisation and exceptional
items. As Group profitability continues to improve, particularly in those
territories which are not currently tax paying, we expect this effective tax
rate to reduce.
Liquidity and Capital Resources
In November 2004 the Group exercised its option to acquire, for $5.0 million,
the bare dominium (freehold) in respect of its leased premises in Sandton,
South Africa. As a result, the accounting treatment of the lease was changed
from an operating to a finance lease, and the fair value of the lease
obligation was capitalised. Consequently, the Group`s total long term debt of
$271.5 million now includes the capitalised Campus lease ($140.5 million).
Other long term liabilities comprise the existing convertible bonds of $102.5
million and a South African loan of $28.5 million.
Total Group cash and short term investments at 31 March 2005 amounted to $408.1
million. Cash generated from operations for the period was $21.3 million - a
reversal of the $17.5 million cash utilisation for the equivalent period in
2004.
Currency
The following table reflects the average and period end exchange rates against
the US dollar of SA Rand, Australian Dollar, Sterling and Euro:
Six months ended Six months ended
31 March 2005 31 March 2004
Currency Average Period end Average Period end
South African Rand 5.981 6.329 6.595 6.321
Australian Dollar 1.294 1.294 1.345 1.327
Sterling 0.530 0.532 0.561 0.548
Euro 0.759 0.772 0.818 0.821
Year ended
30 September 2004
Currency Average Period end
South African Rand 6.406 6.406
Australian Dollar 1.401 1.395
Sterling 0.552 0.556
Euro 0.820 0.811
Accounting Standards - IFRS
With effect from the year ending 30 September 2006, Dimension Data Holdings plc
will prepare its consolidated financial statements under International
Financial Reporting Standards (IFRS). Adjustments to the 2004 closing retained
earnings and restatements of the results for H1 2005 and the year ending 30
September 2005, in accordance with IFRS, will be published when the Group
reports its 31 March 2006 results.
The Group`s current view is that the major effects of moving from accounting
under UK GAAP to IFRS will be in the following areas:
Effects of Changes in Foreign Exchange Rates (IAS 2 and IAS 21)
Accounting for financial instruments (IAS 32 and IAS 39)
Goodwill acquired in a business combination (IFRS 3)
Share-based payment (IFRS 2)
Leases (IAS 17)
A programme is underway to ensure that the Group is ready to report under IFRS
in 2006, and able to produce IFRS compliant information for comparative
purposes for 2005. We will communicate the anticipated impact of the IFRS
conversion more fully during the second half of the calendar year.
NOTES:
(1) Before associates, goodwill amortisation, impairment and exceptional items
(2) Before goodwill amortisation, impairment and exceptional items
(3) Unless otherwise indicated, comparisons are to the equivalent prior period
being the six months ended 31 March 2004. All references to $ are to US$.
H1 2004 refers to the six months ended 31 March 2004
H1 2005 refers to the six months ended 31 March 2005
(4) After adjusting for the impact of currency movements, and excluding
acquisitions and disposals not fully accounted for in either the
current period or the comparable period.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 31 March 2005
Note Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2005 2004 2004
$`000 $`000 $`000
Turnover
Group turnover 1,296,956 1,123,471 2,368,044
Associates 57,366 53,218 115,990
Total turnover 1,354,322 1,176,689 2,484,034
Operating profit before
associates, goodwill
amortisation, impairment and
exceptional items 24,616 7,528 25,666
Exceptional operating
income/(costs) 1,4 3,416 - (27,632)
28,032 7,528 (1,966)
Goodwill amortisation (636) - (366)
Goodwill and investment
impairment - - (8,402)
Group operating profit/(loss) 27,396 7,528 (10,734)
Share of operating profit in
associates 4,002 2,346 7,343
Goodwill amortisation and
impairment and
investment impairment -
associates (422) (184) (11,215)
Total operating profit/(loss) 30,976 9,690 (14,606)
(Loss)/profit on sale of
fixed assets and
investments 1 (1,565) 3,901 4,900
Profit/(loss) on ordinary
activities before interest 29,411 13,591 (9,706)
Income from other fixed asset
investments 2,279 600 4,614
Net interest
(payable)/receivable 4 (8,492) (244) 705
Profit/(loss) on ordinary
activities before taxation 23,198 13,947 (4,387)
Tax on profit/(loss) on
ordinary activities 2 (11,363) (9,164) (33,238)
Profit/(loss) on ordinary
activities after taxation 11,835 4,783 (37,625)
Equity minority interests (5,572) (3,414) (178)
Profit/(loss) for the period 6,263 1,369 (37,803)
Earnings/(loss) per ordinary
share US Cents US Cents US Cents
Before goodwill amortisation
and exceptional items 3 0.4 (0.2) 0.9
Basic 3 0.5 0.1 (2.8)
CONSOLIDATED BALANCE SHEET
as at 31 March 2005
Restated
Unaudited Unaudited Audited
31 March 31 March 30 September
2005 2004 2004
Note $`000 $`000 $`000
Fixed assets
Intangible assets 5,621 - 976
Tangible assets 4 222,450 98,506 92,467
Investments in associates 27,554 44,624 25,781
Other investments 41,591 37,173 39,013
297,216 180,303 158,237
Current assets
Stock 109,037 99,176 104,871
Debtors 5 603,390 617,668 547,205
Short term investments 11,022 18,894 10,946
Cash at bank and in hand 397,030 330,615 414,093
1,120,479 1,066,353 1,077,115
Creditors: amounts falling
due within one year 6 (702,655) (650,614) (666,210)
Net current assets 417,824 415,739 410,905
Total assets less current
liabilities 715,040 596,042 569,142
Creditors: amounts falling
due after more
than one year 4 (271,478) (130,469) (133,039)
Provisions for liabilities
and charges 4 (21,195) (21,211) (41,875)
Equity minority interests (114,413) (105,859) (104,377)
Total net assets 307,954 338,503 289,851
Capital and reserves
Equity shareholders` funds 307,954 338,503 289,851
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 March 2005
Restated
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 30 September
31 March 2005 31 March 2004 2004
Note $`000 $`000 $`000
Group operating profit/(loss) 27,396 7,528 (10,734)
Depreciation 22,789 21,590 42,519
Goodwill amortisation and
impairment
and investment impairment 636 - 8,768
(Profit)/loss on sale of
tangible fixed assets (182) 865 2,388
Increase in stock (4,142) (10,595) (14,503)
Increase in debtors (55,992) (116,424) (30,640)
Increase in creditors 31,989 79,127 52,198
Other non-cash items (1,234) 448 27,475
Net cash inflow/(outflow) from
operating activities 21,260 (17,461) 77,471
Returns on investments and
servicing of finance 997 (1,685) 3,044
Taxation (10,350) (27,165) (21,975)
Capital expenditure and
financial investment 4 (30,505) (13,032) (31,410)
Acquisitions and disposals (2,433) 4,797 1,083
Cash (outflow)/inflow before
use of liquid
resources and financing (21,031) (54,546) 28,213
Management of liquid resources (59) 8,121 8,461
Financing (5,080) 191 2,922
(Decrease)/increase in cash in
the period 7 (26,170) (46,234) 39,596
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 31 March 2005
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 30 September
31 March 2005 31 March 2004 2004
$`000 $`000 $`000
Profit/(loss) for the period 6,263 1,369 (37,803)
Currency translation
differences on foreign
currency net investments 10,838 26,103 16,798
Total recognised
profits/(losses) relating
to the period 17,101 27,472 (21,005)
1. EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
Six months Six months Year ended
Note ended ended 30 September
31 March 2005 31 March 2004 2004
$`000 $`000 $`000
Campus asset impairment a) (17,785) - -
Release/(provision) for Campus
onerous lease b) 19,001 - (25,064)
Insurance captive cells c) 2,200 - -
Other - - (2,568)
3,416 - (27,632)
Investments written down - - (8,402)
Goodwill and investment impairment
- associates - - (10,061)
- - (18,463)
Total exceptional operating
income/(costs) 3,416 - (46,095)
Other exceptional items
(Loss)/profit on sale of fixed
assets and investments d) (1,565) 3,901 4,900
Total other exceptional items (1,565) 3,901 4,900
Total exceptional items before
taxation and equity minority
interests 1,851 3,901 (41,195)
a) Impairment of land and buildings in South Africa subsequent to the
capitalisation of the Campus lease obligation (Note 4).
b) Release of the prior period onerous lease provision in respect of the Campus
lease obligation (Note 4).
c) Recognition of insurance captive cell assets, previously expensed.
d) Includes a provision relating to the potential vesting of shares in the
South African business to the Black Economic Empowerment Consortium.
2. TAX ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 30 September
31 March 2005 31 March 2004 2004
$`000 $`000 $`000
Payable in respect of the
current period 11,167 7,298 17,144
Share of associates`
taxation 1,203 1,227 2,584
Adjustment to prior years`
tax provision (1,007) 639 13,510
Total tax charge 11,363 9,164 33,238
3. EARNINGS/(LOSS) PER ORDINARY SHARE
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 30 September
31 March 2005 31 March 2004 2004
$`000 $`000 $`000
Profit/(loss) before
goodwill amortisation,
impairment and
exceptional items 5,470 (2,348) 11,434
Exceptional items (net of
tax and minorities) 1,851 3,901 (47,717)
Goodwill amortisation (1,058) (184) (1,520)
Profit/(loss) for the period 6,263 1,369 (37,803)
`000 `000 `000
Weighted average number of
ordinary shares 1,342,991 1,342,151 1,342,286
US Cents US Cents US Cents
Adjusted earnings/(loss)
per ordinary share before
goodwill amortisation and
exceptional items 0.4 (0.2) 0.9
Basic earnings/(loss) per
ordinary share 0.5 0.1 (2.8)
4. CAPITALISATION OF LEASED ASSET
On 16 November 2004, the Group acquired the bare dominium (freehold) over the
Campus property for $5.0 million. From that date the Campus lease has been
accounted for as a finance lease.
The balance sheet effects of the capitalisation are as follows:
Increase in land and buildings of $145.7 million and a corresponding long
term liability was raised.
The asset was impaired by $17.8 million.
$19.0 million of the provision for the onerous operating lease was released.
The net book value of the asset, after exchange differences, at 31 March 2005
amounted to $124.7 million.
The carrying value of the liability, after exchange differences, at 31 March
2005 amounted to $140.5 million.
The profit and loss effects of the capitalisation in the current period are
as follows:
Depreciation for the period amounted to $0.9 million.
Lease payments for the period up to 16 November 2004 of $2.0 million
were expensed.
Interest expense for the period amounted to $9.2 million.
5. DEBTORS
Restated
Unaudited Unaudited Audited
31 March 2005 31 March 2004 30 September
2004
$`000 $`000 $`000
Amounts falling due within
one year:
Trade debtors 424,527 419,460 421,593
Other debtors 37,902 45,006 27,955
Prepayments and accrued
income 110,369 85,954 72,077
Taxation authorities 18,380 38,949 15,606
Deferred taxation 12,212 28,299 9,974
603,390 617,668 547,205
6. CREDITORS
Restated
Unaudited Unaudited Audited
31 March 2005 31 March 2004 30 September
2004
$`000 $`000 $`000
Amounts falling due within
one year:
Bank loans and overdrafts 503 2,684 372
Trade creditors 259,097 243,778 262,596
Taxation and social
security 95,549 98,259 98,926
Other creditors 94,185 73,657 73,917
Accruals 138,496 127,453 126,195
Deferred income 113,256 100,070 104,093
Deferred consideration 1,569 4,713 111
Total creditors 702,655 650,614 666,210
7. ANALYSIS OF NET CASH
At 1
October Cash Reclassi-
2004 flow fication
$`000 $`000 $`000
Cash at bank and in hand 414,093 (26,039) -
Bank overdraft (372) (131) -
413,721 (26,170) -
Short term investments 10,946 59 -
Debt due within two to five years (28,098) 5,390 (104,941)
Debt due more than five years (104,941) 6,180 104,941
Total 291,628 (14,541) -
Other At 31
non-cash Exchange March
changes movements 2005
$`000 $`000 $`000
Cash at bank and in hand - 8,976 397,030
Bank overdraft - - (503)
- 8,976 396,527
Short term investments - 17 11,022
Debt due within two to five years (2,903) (425) (130,977)
Debt due more than five years (154,862) 8,181 (140,501)
Total (157,765) 16,749 136,071
8. BASIS OF PREPARATION
Statutory financial information
The unaudited interim results have been prepared on a basis consistent with the
accounting policies set out in the Dimension Data Holdings plc Annual Report
and Accounts for the year ended 30 September 2004.
The interim results should therefore be read in conjunction with the 2004
Annual Report and Accounts.
The interim results for the six months to 31 March 2005, which were approved by
the Board of Directors on 10 May 2005 and which include certain comparative
information with respect to the year ended 30 September 2004, do not comprise
statutory accounts within the meaning of section 240 of the Companies Act 1985.
Full accounts for the year ended 30 September 2004, incorporating an
unqualified independent auditors` report, have been filed with the Registrar of
Companies.
Restatement
The comparative balance sheet and cash flow statement at 31 March 2004 have
been restated. Amounts due from and to taxation authorities have been
separately categorised between debtors and creditors. At 31 March 2004, debtors
increased by $38.9 million and creditors increased by the same amount.
9. Copies of this report are being sent to shareholders, and are available to
the public at the Company`s registered office, Fleet Place House, 2 Fleet
Place, London EC4M 7RT.
INDEPENDENT REVIEW REPORT TO DIMENSION DATA HOLDINGS plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 March 2005 which comprises the consolidated profit and
loss account, the consolidated balance sheet, the consolidated cash flow
statement, the consolidated statement of total recognised gains and losses and
related notes 1 to 8. We have read the other information contained in the
Interim Report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Directors` responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of Group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with United Kingdom auditing standards and
therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review, we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2005.
Deloitte & Touche LLP
Chartered Accountants
London
10 May 2005
Enquiries:
Dimension Data Holdings plc
Jeremy Ord, Chairman
Brett Dawson, Chief Executive Officer
David Sherriffs, Chief Financial Officer
Karen Cramer, Investor Relations (UK)
Mobile: +(44) 793 202 0296
Office: +(44) 20 7651 7000
karen.cramer@uk.didata.com
Internet address: www.didata.com
Press enquiries:
Louise Taylor - LT Consulting Ltd
Mobile: +44 778 844 3220
Office: +(44) 20 7223 8776
