Final Results
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Wednesday, 29 June 2011 |
ANITE PLC
Final results for the year ended 30 April 2011
Anite plc ("Anite" or "the Company"), the leading provider of software solutions to the international wireless and leisure travel industries, today announces its final results for the year ended 30 April 2011.
Financial highlights (adjusted) 1:
· Order intake up 42% to £116.6m (2010: £82.3m); book to bill ratio 1.2 (2010: 1.0)
· Revenue up 19% to £93.7m (2010: £78.8m)
· EBITDA up 25% to £22.2m (2010: £17.7m)
· Operating profit up 48% to £17.6m (2010: £11.9m)
· Operating margin of 19% (2010: 15%)
· Profit before tax up 62% to £16.0m (2010: £9.9m)
· Adjusted basic earnings per share up 67% to 4.0p (2010: 2.4p)
· Proposed final dividend up 13% to 0.735p (2010: 0.65p) - Total 1.05p (2010: 0.95p)
· Net cash of £27.7m (Apr 2010: £29.8m), stated before swap liability capped at £21.6m
Statutory results:
· Revenue from continuing operations up 19% to £93.7m (2010: £78.8m)
· Profit for the year of £9.4m (2010: loss of £3.4m)
· Statutory basic earnings per share 3.3p (2010: loss per share 1.2p); diluted earnings per share 3.1p (2010: loss per share 1.2p)
Operating highlights:
· Wireless revenue as a whole contributed 79% of group revenues (2010: 71%)
· Handset Testing:
- Outperformance during the year with strong final quarter
- Order intake £59.6m (2010: £32.2m); book to bill ratio 1.2 (2010: 0.9)
- LTE (4G) revenue growing and represented 34% of revenues (2010: 12%)
- Good demand for 3G products
· Network Testing:
- Outperformance during the year with particularly strong H1
- Order intake £23.0m (2010: £21.1m); book to bill ratio 1.0 (2010: 1.1)
- Invex acquisition broadened Network Testing's product portfolio and customer base
· Travel:
- Challenging year but tangible progress made
- Multi-year contract with TUI Travel PLC to implement @comRes in UK & Ireland
- Closing order book £63.2m (2010: £49.2m); book to bill ratio 1.7 (2010: 1.3)
1Adjusted results are for continuing operations before share-based payments, impairment of goodwill, impairment and amortisation of acquired intangible assets, restructuring costs, other gains and losses and recycled hedge losses.
Christopher Humphrey, Chief Executive, said:
"Anite reported strong growth in the year and made good progress in all three businesses.
"For 2012, we believe that there are good growth prospects led by the Wireless division.
"The Group has made an encouraging start to the new financial year. We remain optimistic about Anite's future progress."
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For further information, please contact: |
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Anite plc |
www.anite.com |
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Christopher Humphrey, Chief Executive Richard Amos, Group Finance Director |
01252 775200 |
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MHP Communications |
020 3128 8100 |
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Reg Hoare/Anthony Arthur/Giles Robinson |
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An analysts' meeting will be held today at 9.15 for 9.30 a.m. at the London Stock Exchange,
10 Paternoster Square, London, EC4M 7LS
Notes to editors
Anite plc, an international software and solutions company, operates in two defined markets. We focus on providing mobile device and network testing systems to the wireless market, and reservation and e-commerce solutions to the leisure travel industry. Both are based on our comprehensive knowledge of the sectors, and on our proprietary systems.
Our 500 staff work with many of the world's leading wireless and travel companies from our headquarters in the UK, and from offices in 14 countries throughout Europe, the Americas, Asia and the Middle East. Our services, which include implementation, systems integration and maintenance, enable us to meet our customers' needs and enable them to achieve their business objectives.
This preliminary results announcement contains forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results to differ from any future results or developments expressed or implied from the forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement and, save to the extent required by the applicable law or regulation, we do not undertake any obligation to update or renew any forward-looking statement.
Final results for the year ended 30 April 2011
All references to adjusted profit relate to continuing operations for the period, before share-based payments, impairment of goodwill, impairment and amortisation of acquired intangible assets, restructuring costs, other gains and losses and recycled hedge losses. See the attached income statement and notes for details. A reconciliation of adjusted results to reported statutory results is given in the Financial Review.
Chairman's Statement
Introduction
I am pleased to report that Anite performed strongly in the financial year ended 30 April 2011, compared to a relatively weak result last year. This performance was driven by significant revenue growth in our Wireless division which resulted in strong overall profit growth, above that expected by the Board at the start of the year.
Handset Testing reported a strong finish to the year with LTE (4G) products accounting for 34% of Handset Testing revenue compared to 12% in the previous financial year.
Network Testing had a good result benefitting from a recovery in customer spending and upgrades to customer networks.
Travel performed slightly below the Board's original expectations. However, profitability remains robust and tangible operational progress was made during the year. This culminated in the signing of a major contract with TUI Travel PLC and an increased closing order book.
Second half milestones
Two important milestones were achieved during the second half:
First, in January 2011, Anite acquired the Invex network test and measurement product line, which included two products that significantly widen our network testing product range in readiness for LTE roll outs in future years.
Secondly, in April 2011, Anite signed a multi-year contract with TUI Travel PLC to implement Anite's @comRes reservation system in TUI's UK & Ireland division.
Strategy and progress
We continue to make good progress with our strategy to position Anite as a global leader in Wireless test software, and to take advantage of the opportunities that will emerge from the development and roll-out of LTE technology. For the year, our Wireless revenues advanced and contributed 79% of Anite's total revenues (2010: 71%).
The Board believes that Wireless operates in a long-term growth market, which has high barriers to entry and relatively few major competitors. This enables the business to generate good profit margins and returns on investments.
In Travel, our strategy is to increase the business' long-term value as it transitions between legacy and new products. To achieve this, we will continue to strengthen and improve its market position by expanding the customer base and managing the migration of existing customers to our new product, @comRes, thus increasing recurring maintenance revenue.
Overall, the Board is committed to maintaining market leadership through continued investment in our R&D programmes.
Finally it is the Board's intention that the Group retains a strong financial position to provide financial flexibility.
Results summary
The Group's results were well ahead of last year and continue to demonstrate the underlying strength and profitability of our divisions: an adjusted operating margin of 22% (2010: 14%) was reported by the Wireless division as a whole and 21% (2010: 24%) by the Travel division.
Handset Testing benefited from improved market conditions, recovery in customer spending in 3G and growth in LTE orders in line with the progress of the technology. This produced a result substantially ahead of last year.
Network Testing also benefited from improved market conditions which led to a particularly strong first half result.
Travel reported reduced licence revenue compared to last year, leading to a fall in revenues and profits.
Overall Group adjusted operating profit was up 48% to £17.6m (2010: £11.9m) on revenues up 19% at £93.7m (2010: £78.8m).
Adjusted basic earnings per share were up 67% to 4.0p (2010: 2.4p).
The year-end financial position was robust. Net cash as at 30 April 2011 was £27.7m (31 October 2010: net cash of £28.4m). The reported level of net cash is before taking account of the liability on the currency swap which, as previously announced, will be settled on 31 October 2011 for £21.6m. The year-end closing net cash is also stated after a £5.9m impact in the second half for shares purchased for the Employee Benefit Trust and for the cost of the acquisition of the Invex product line.
Dividend
The Board is recommending a final dividend of 0.735p per share (2010: 0.65p) representing a 13% increase. The dividend will be paid on 25 October 2011 to shareholders on the register at 16 September 2011. This increase reflects the Board's intention to maintain a progressive dividend policy, the dividend having been held last year despite reduced earnings.
People
On behalf of the Board, I would like to thank all employees for their contribution, hard work and support during the period.
Summary and outlook
Anite reported strong growth in the year and made good progress in all three businesses.
Travel is now in its best shape for a number of years after a period of declining profits. It has a strong order book and sales pipeline. By the end of the current year, we expect it to be demonstrating the path to renewed growth from its robust and profitable core.
2011 saw improved financial performance within the Wireless division, driven by both customer spending recovery and organic business growth. We believe the recovery phase is complete and that its 2012 results will be driven by business growth alone. Wireless is better positioned to take advantage of its existing and new markets than in the past and we believe that the LTE opportunity is also likely to be deeper and longer lasting than previous technologies.
For 2012 overall, we believe that there are good growth prospects led by the Wireless division. The Group has made an encouraging start to the new financial year. We remain optimistic about Anite's future progress.
Clay Brendish
Chairman
Chief Executive's review
Overview
I am pleased to report that our business has emerged strongly from the economic downturn, both operationally and financially.
The economic environment - which, particularly in the first half of last year, had restricted customers' spending - continued to improve. Following a strong end to the year, revenue and adjusted operating profit were both well ahead of market expectations. While we are not complacent about the economic outlook, the market has undoubtedly improved. We have an advantage in that our business is geographically diversified: our Wireless customers are based throughout the world, from the US to China, and Travel's principal customers are throughout Europe.
In the Wireless division, there was not only an increase in what customers were prepared to spend on legacy - 2G and 3G - products, but there was also increased investment in LTE.
Handset Testing revenue growth came from our core product area of Conformance Testing (CT) and also the newer product areas of Development Testing (DT) and Interoperability Testing (IOT). In our 2010 annual report, I explained how we had decided to develop our own LTE hardware platform, the Anite 9000 Mobile Test Accelerator - this product was launched in December 2009. It has been subsequently upgraded in the current year and has been well received by our customers. This, combined with other R&D investment over the year, means we are well positioned for future growth.
In our Network Testing business we acquired a new product line thereby extending both our product portfolio and customer base.
Our Travel business, which over recent years had lost customers through business failures and continuing market consolidation, has weathered the storm and is now in much better shape. It is now firmly established with TUI, Europe's largest travel operator. This relationship was further strengthened when Travel signed a contract with the UK & Ireland division of the TUI business at the end of the year.
Strategy
Group strategy
Our overall goal is to deliver shareholder value by concentrating on our Wireless division which exhibits good long-term growth potential due to strong growth drivers and market position.
Our Travel business is in the middle of a transition between older legacy technology and a new more flexible and scalable platform. We look to build further value in this business through this transition.
Wireless strategy
Consumer demand for smartphones and the push by device manufacturers to offer greater functionality are causing data transmission to grow exponentially, with the result that mobile network operators (MNOs) are under pressure to increase capacity and speed to match customers' expectations.
This has meant that chipset and mobile phone manufacturers are being challenged by the operators to accelerate the pace of technological change to keep up with the increasing data demand.
Our Handset Testing business enables the global chipset and handset manufacturers to increase their speed and reduce their cost to market, and achieve the technological advances that are needed to develop new phones and devices.
Our Network Testing business provides products for network operators to optimise their networks and improve efficiency and customer experience.
Our strategy in both Wireless businesses is to invest in early R&D to keep these highly specialised products at the leading edge, and to offer our customers the latest technology as soon as it is needed. We believe this commitment to our customers and the market will deliver us further growth in revenue and profit as the market continues to develop.
We will offer an increasing range of products to assist our Wireless customers to exploit technology change around the world. In Handset Testing this involves developing products in Development and Interoperability Testing to complement our market leading Conformance Test capability. In Network Testing we have, for example, just acquired benchmarking and scanner products to augment our other network testing tools.
Demand for legacy technologies has proved more sustained than expected and we continue to invest in this area. However our main focus is currently on LTE, although the pace of change is accelerating and we are already planning for the next generation.
The major focus in meeting these demands will be internally developed products, but these may also be supplemented by small selected acquisitions if appropriate.
Travel strategy
Travel provides reservation systems for tour operators, ferry and cruise companies. The systems we provide are complex, substantial and provide functionality that is critical to our customers' operations. Once implemented they generally remain in situ for many years requiring continued support and enhancement to cope with the customers' changing business requirements. Each implementation typically includes a considerable bespoke element to it to meet specific requirements. All of this means that our relationships with customers are generally very long-term and built on our deep industry (or domain) knowledge.
In the past we have supplied, hosted and maintained such systems for customers. As the leisure travel industry has become more complex and companies have consolidated, there is an increasing trend for operators to run their own systems in-house. As such, we are adapting our business towards a more traditional software and support model. Our @com product is the only leisure travel reservation system with the flexibility and capability to cope with the volumes of enquiries and bookings seen by the large tour operators.
Our strategy in Travel is in part to maintain and develop the products to exploit our technological leadership in leisure travel reservation systems which service the mid and upper tier tour operators in international markets. To this end most of the additional product functionality which will accelerate growth can be developed in-house. However there are certain small product extensions that could be acquired in order to save time and expense, creating a faster delivery to market.
The nature of the leisure travel industry and the products we now provide offer us the opportunity to expand our market from our historic UK focus to other markets in Europe, in particular Germany. We will build on our success in creating UK and central European versions of @comRes for TUI and will continue with our long-term plans for migrating customers from our legacy ATOP system to @comRes.
Our markets
Anite is structured into two market-facing divisions: Wireless and Travel. Wireless has two businesses: Handset Testing provides specialist systems, hardware and software to enable manufacturers to design new chipsets, devices and data cards effectively and to bring them to the market quickly; Network Testing provides the technology that enables MNOs to test the efficiency and effectiveness of their mobile phone networks - and to ensure a consistently high-quality service for users of mobile devices - by carrying out live testing with different makes of handsets and devices.
Wireless market
The Wireless market continues to grow rapidly. In less than 40 years - the first call was made on a portable cellular phone in April 1973 - the number of active mobile connections has grown to five billion. It is estimated that 1.55 billion phones will be sold in 2011, up 16.1% on 2010(i), and the total number of subscribers will increase from 5.4 billion in 2010 to 7.6 billion in 2015(ii). Sales of smartphones are expected to grow 61% year-on-year (i) - making the market ever more complex. While there is little growth in voice and text in developed markets, mobile data traffic is expected to grow by 6.3 exabytes (1 billion gigabytes) a month by 2015, a 25-fold increase over 2010(iii).
While this increase in traffic is to be expected in developing countries, such as India, where there are few or no fixed-line networks and most access to the internet is made on wireless networks, even in developed economies people are increasingly using their mobile devices to access data, rather than fixed-line phones or desk-top computers.
In time, we expect manufacturers to reduce the number of different models they produce, but advances in technology will always result in new models and devices, which will need to be tested and verified. Over the next five years, production of the now-dominant 2G (GSM) units will gradually decline - from more than 700 million in 2010 to an estimate of fewer than 300 million - while shipments of 3G (WCDMA) devices will continue to increase - from 400 million in 2010 to an estimated 950 million in 2015 - and LTE devices will grow from virtually nothing in 2010 to around 75 million in 2015(iv). On the network side, there are plans for LTE networks - which, again will need to be tested and verified - to increase from something under 100 at the moment to more than 300(v).
3G, when it was introduced, was a solution looking for a problem and as a result there was a very slow take up in its use. LTE is a solution to a real problem: the huge increase in data-intensive applications that is overloading network capacity. That, combined with network operators' constant drive to reduce costs, demanded the introduction of a new, more efficient, technology. LTE, which we have supported from the outset, is now universally accepted as the most effective solution to the problem of delivering the necessary data capacity.
While LTE is being adopted far more quickly than 3G was, the speed of adoption is being influenced by a number of factors: spectrum allocation from governments; the legacy technology on networks; and the economic pressures of the past two years, which have constrained the level of investment needed to achieve the necessary upgrades in infrastructure. Although we do not expect LTE to be implemented in the UK until 2013/14, it is already in the process of being adopted in the US, Japan, China and some mainland European countries. For the first time, the US is leading the roll-out of a new technology; because it was an early and rapid adopter of the smart phones, it has the biggest problem. At this early point in the development of the LTE market we estimate that less than 40% of Handset Testing customers are developing LTE products. However this number is growing.
Travel market
In the Travel market in recent years, a combination of consumers having tighter budgets; natural events, such as volcanic ash clouds, earthquakes and tsunamis; political unrest; and rising oil prices have put the leisure travel industry under pressure, and many smaller operators have struggled to survive or have gone out of business. The resulting consolidation means that, while the market itself has not shrunk, the number of operators has.
Consolidation in the leisure travel industry has resulted in the large companies becoming even larger, so that fewer companies are managing greater volumes of business. Their IT systems - which have the potential to improve profitability by making buying, selling and back-office functions more economical - have, however, generally failed to keep pace. In addition, particularly in the UK and the Nordic region, traditional tour operators face increasing competition from internet travel companies.
Our industry-leading reservation and e-business system is scaleable and is, therefore, particularly suitable for large businesses. It has achieved considerable success with Europe's leading leisure travel business, TUI, and has the potential to achieve the same increases in efficiency and profitability for many others - including tour operators, specialist holiday companies, leisure park operators, accommodation providers, and cruise and ferry operators.
Our solutions
Wireless
Handset Testing Solutions
Our Handset Testing business has been a world leader in Wireless testing solutions for 20 years, enabling chipset and mobile device manufacturers test the viability, improve the quality and reduce the time to market of their products. Originally focused on Conformance Testing (CT) - ensuring that devices complied with industry standards and were able to deliver the service expected of them - we have more recently expanded into Development Testing (DT) - helping our customers develop viable early-stage devices - and Interoperability Testing (IOT) - simulating real world network conditions to ensure that devices can communicate effectively with one another on different networks.
Our technology, which has a long lifespan and is easy to use, enables manufacturers to identify and resolve problems early in the development process, and helps them reduce costs and show a clear return on investment. While a large proportion of customers buy our standard products, we offer major customers a degree of customisation and are uniquely flexible in allowing product licences to be shared across R&D sites, and our solutions to be used across departments.
Our products test the entire range of devices - from second-generation (2G) through to the latest fourth-generation (4G). New devices must be able to work on multiple generations of technology to maintain a connection; the need for new devices to contain legacy and new-generation technology makes it difficult for new entrants to the test market as they need to be able to provide a comprehensive range of test cases.
We develop and verify test script packages to be used on our simulation systems - we currently offer around 2,500 for CT alone - and a number of the larger network operators specify that manufacturers must validate their devices on an Anite test system. We now also offer to customise our IOT tests to specific network configurations.
We lead the market in the development of CT cases and have consistently led the LTE conformance-testing market where we currently have around 245 validated test scripts(vi). This market is driven by the certification schemes administered by the standard setters, such as the Global Certification Forum (GCF) - a partnership between mobile network operators, mobile device manufacturers and the test industry - which has created an independent certification programme to help ensure interoperability between mobile devices and networks, worldwide.
Conformance testing for LTE became mandatory in December 2010 and is beginning to gather momentum. We are now developing our technology to support LTE Advanced, which is significantly faster than LTE, in preparation for the time when it can be supported by the networks.
Network Testing Solutions
Our Network Testing business provides products under the Nemo brand for MNOs and network equipment manufacturers to measure the coverage and quality of mobile phone networks. Our product portfolio was expanded when, in January 2011, in anticipation of the roll-out of LTE networks over the next five years, we acquired the Invex network test and measurement product line, which includes benchmarking and scanner products. The acquisition included existing customer commitments, and 19 employees based in Virginia, USA, who are primarily involved in R&D.
When the process of integrating the Invex products into our Nemo portfolio is complete - by the end of the first half of this financial year - we will offer our customers one of the strongest and most versatile range of products available in the market. In addition, because our technology all operates on the same software, it enables data on the quality of the networks to be compared more consistently.
Our measurement tools are designed to meet the needs of all our customers, regardless of their internal processes and means of testing. They provide a wide range of information, from call quality, data download and upload speeds, to signal reliability, the interaction of neighbouring cells, and the efficiency with which devices "hand-off" from one cell to another as they move in a vehicle, on foot or in a building.
The products range from Nemo Handy, an easy-to-use handheld device that can be used for indoor and outdoor testing - upgraded in February 2011 - to Nemo Outdoor, a powerful laptop-based solution - a new version was released in April 2011. The latter is used for "drive testing" by an engineer, who drives around an area to compare coverage and quality at all times of day and night, and in all weather conditions. The newly acquired Invex benchmarking product enables a large number of devices to be measured simultaneously without radio interference, while Nemo Autonomous - upgraded in January 2011 - can be installed in any vehicle to provide a cost-effective, unmanned continuous stream of data.
The software embedded in our products enables MNOs and their sub-contractors to manage and analyse vast quantities of data, quickly and efficiently, either on our post-processing analyser or on third-party processing tools.
We sell to around 100 countries. During the year, we increased our sales force and developed our network of local partners. In addition to their sales function, these partners offer technical help to customers as well as supporting all the major network standards. While significant volumes of LTE business will not begin until the commercial networks are rolled out, we have already sold LTE equipment to network equipment manufacturers and operators in the US and mainland Europe.
Travel Solutions
Our Travel business helps companies in the leisure travel industry run their businesses efficiently. As the UK's market-leading supplier of software to travel companies, our technology enables them to sell an increasingly diverse choice of holiday products through a range of sales channels - including call centres, travel agents and the internet - to price by currency and market, to manage their inventory, to connect with other industry providers, and to improve productivity and customer service. Our technology has a long life cycle and many of our customers have been using our legacy ATOP product for more than 15 years.
Our @comRes solution has the potential to reduce tour operator back-office costs significantly. It enables customers to reduce operating costs significantly by standardising processes across all markets and types of holiday, and can be scaled up to cope with an increasing work load as the business grows.
In what continues to be a challenging economic environment, price and capacity are the keys to success. Our flexible software enables leisure travel companies to reduce costs while, at the same time, manage a wider range of products. It also enables international companies, such as our major customer, TUI, to tailor their product offerings to meet national characteristics: in the UK and Nordic countries, for example, consumers tend to buy holidays including flights, but in Germany many holidays are "land-based" - consumers buy time at a hotel, but make their own travel arrangements.
As a stand-alone system, @comRes offers the key functions of reservations, content and customer relationship management, and operational finance. It is also the core around which our @com eBusiness Suite is built. This integrated enterprise resource planning (ERP) solution - which includes supplier contracting, dynamic supplier connectivity, sales, inventory management, customer documentation, supplier notification, and accounts receivable and payable - can be bought and implemented in modules.
Outlook
In the past financial year, the Group took a large step in the right direction.
Handset Testing is a leader in the mobile device testing market and the investment we made in designing our own hardware is beginning to pay off. We have established a leading position in LTE Conformance Testing and for the foreseeable future that will continue to be our key market. However we believe that our longer-term growth prospects are being greatly improved by the continued growth in Interoperability Testing.
Network Testing's prospects have been enhanced by the Invex acquisition and its growing global presence. Its broad suite of products means that it is well set to continue to grow, albeit in the first half it is unlikely to exceed the very strong comparative period last year.
Following the recent contract success, our Travel business is approaching an inflexion point. While it is likely to take some time for the world economy, and therefore the leisure travel industry, to recover to pre-2008 levels, we are confident that our software's scalability, combined with our reputation for successful implementation, places us in an excellent position for steady long-term growth.
Nobody is immune to the volatility of the global economy, however we believe that our investment in R&D and our market positions will enable us to win and retain business.
We are a small, agile company that focuses on what customers need. I am confident that we will continue to make good progress.
Christopher Humphrey
Chief Executive
Sources: (i) CCS Insight; (ii) 4G Americas; (iii)Cisco Visual Networking Index, 2011 (iv)Deutsche Bank, Informa, Global Mobile Daily, CDG, GSMA (v)4G Americas; (Vi)GCF Device Certification Criteria database
Review of operations*
*Throughout this review, reference to adjusted results means the results for continuing operations before, where applicable, share-based payments, impairment of goodwill, impairment and amortisation of acquired intangible assets, restructuring costs, other gains and losses and recycled hedge losses.
The results for the Group overall demonstrated an encouraging recovery from the difficult trading period of twelve months ago, with progress in both Wireless businesses more than compensating for a reduction in revenue and profit in the Travel business.
The main driver for growth was an increase in demand for new generation LTE products in Handset Testing and a recovery in the level of demand for existing technology 3G products in both Handset Testing and Network Testing.
Travel continues to be impacted by reduced demand for its legacy products, whilst growth in revenues for its @comRes product was affected by delays in transitioning from the successful implementation project in TUI Germany and Central Europe to a new project to implement in TUI UK and Ireland. The full contract for TUI UK was signed in the last month of the year and has resulted in a significant increase in the Travel order book.
Wireless Division
Handset Testing
The adjusted results for the Handset Testing business for the year show considerable year on year growth, albeit against a historically low comparative period. Order intake grew 85% to £59.6m (2010: £32.2m), revenue increased by 39% to £49.6m (2010: £35.8m), and adjusted operating profit almost trebled to £10.0m (2010: £3.5m).
The main driver for growth in revenue was the increasing demand for our LTE products which include the Anite 9000 hardware platform. The evolution of the Anite 9000 has continued with the release of a new version at the end of 2010. This has been well received by customers and the innovation and progress with the product have been considerable since its launch in December 2009. We have a competitive roadmap that will see further innovation in the next twelve months.
LTE related revenues increased nearly four times from £4.3m in 2010 to £16.7m, representing 34% of Handset Testing revenue in the year. Whilst part of the LTE demand was for products for Development Testing we also saw early stage demand for LTE Conformance and Interoperability Testing solutions.
In addition to the LTE demand, Handset Testing also saw a recovery in demand for 3G products. This in part reflected a catch-up in the first half of the year of spending by customers who, in the previous financial year, had deferred investments due to the economic climate. However, demand for 3G solutions was also driven by investment in HSPA+, the latest iteration of the technology, as operators sought to increase the performance of their existing 3G networks and device manufacturers invested in and upgraded test equipment to develop products to exploit the improved networks. HSPA+ is also a technology used by some operators as part of a transition to LTE.
The impact on Handset Testing's results of the weaker average sterling exchange rate against the US dollar compared with the previous year, and its effect on translating overseas subsidiaries' revenue on a constant-currency basis, resulted in a revenue benefit of £0.3m, with an immaterial impact on profit. The effect, however, of transactional currency movements - transacting for sales in currencies different from our base currency - and year-end currency balances, resulted in an overall exchange gain of £0.5m (2010: £0.4m loss) - a £0.9m positive impact on profits year-on-year.
On a regional basis, Asia Pacific saw the most significant growth, more than doubling revenue to £17.0m (2010: £8.4m). EMEA increased 11% to £13.1m from £11.8m in 2010, whilst the biggest region, Americas, increased 25% to £19.5m (2010: £15.6m).
Net revenue margin in Handset Testing (revenue less third-party hardware cost as a percentage of revenue) fell, as predicted, to 75% (2010: 82%). This was caused by the greater mix of hardware related orders fulfilled during the year, compared to the largely software related revenue of the prior period. This was in part because of the higher proportion of LTE revenue this year; the current stage of the LTE development cycle means that orders tend to be for more hardware at this stage with related software orders (for test scripts and upgrades) following as the use of the systems matures. In addition, net revenue percentages for 2G/3G products also fell, as more hardware was shipped.
Continued investment in R&D was a feature of the Handset Testing business in the last financial year. The cash spent on R&D projects reduced slightly to £10.2m (2010: £10.5m), however due to a planned increase in spend on writing LTE conformance test scripts, there was a net capitalisation of R&D costs of £1.0m (2010: net amortisation of £0.6m) meaning that the profit and loss charge reduced in the period to £9.2m (2010: £11.1m). Throughout last year, Anite consistently led the market on numbers of validated conformance test scripts. We currently have around 245 scripts validated by the standards bodies, some 52 more than our nearest competitor. The breadth of our test script offering is helping us win early conformance test system orders as that market starts to develop having become mandatory at the end of 2010.
Other fixed costs in Handset Testing increased by £3.2m compared to the same period last year. The majority of this increase resulted from increased staff costs, as investments were made in the sales function to drive revenue growth and in customer support to reflect the growing installed base of systems in the field. Additional non-staff related costs in this area were also incurred in improving diagnostic and calibration capabilities. Headcount in Handset Testing increased to 180 at the year-end (2010: 173) as a result of increases within R&D and in sales and marketing to support the larger revenue base.
As a result of the factors described above, Handset Testing's operating margin doubled from 10% to 20%.
Network Testing
Adjusted results for the Network Testing business show orders increasing 9% to £23.0m (2010: £21.1m) while revenue increased by 21% to £24.1m (2010: £20.0m). Net revenue percentage (revenue less cost of third-party hardware as a proportion of revenue) was essentially unchanged at 72% (2010: 71%), while adjusted operating profit increased by 42% to £6.4m (2010: £4.5m). The results above include results for the Invex product line from its acquisition on 10 January 2011. Invex contributed £0.2m of revenue in the first four months of Anite ownership. It broke even over that period, following the capitalisation of £0.5m of R&D costs associated mainly with the development of a new benchmarking platform.
The market for network testing tools was particularly strong in the first half of the year, as customers caught up with spending following the economic climate related reduction in the prior year. Business activity levels in the second half of the year were at more normal levels. The second half of the year also saw the first minor sales of LTE products in network testing, although levels are not expected to become material until 2013.
The effect on Network Testing of currency movements in translating the overseas subsidiaries' results back to sterling was a translation loss of £0.9m on revenue and £0.3m on profits. This was mainly as a result of the average exchange rate of the US Dollar weakening against the Euro year-on-year. The impact of transactional currency movements from the dollar/euro as a result of the division's trade in America and the Far East, resulted in a £0.3m exchange gain (2010: £0.1m loss) giving a positive £0.4m transactional impact on profits year-on-year.
While Network Testing's revenue in EMEA increased by 33%, to £12.2m, and in the Americas by 44%, to £5.6m, in Asia it declined by 9%, to £6.3m.
The cash spent by Network Testing on R&D increased to £2.7m (2010: £2.1m). In the period, significant upgrades were launched to the existing Nemo Outdoor and Analyze platforms and a new product developed, Nemo Handy-A (an Android based product). Following the acquisition of the Invex product line, we also undertook significant work integrating Nemo's software to the Invex benchmarking hardware platform and the FSR1 scanning receiver. Part of the R&D investment spend was on finalising the first version of the new 4G capable platform and preparing it for production. Further work was undertaken on new features for the FSR1 scanning receiver including new frequency band variations to meet European and Asian customer requirements. £0.5m of the investment in hardware developments was capitalised, resulting in the P&L charge for R&D remaining virtually unchanged at £2.2m (2010: £2.1m).
Other fixed costs in Network Testing increased by £1.2m to £8.7m (2010: £7.5m) mainly due to increased staff costs. This was due to the cost of the additional staff taken on with Invex; to increased headcount in sales and marketing; and to additional sales commission and bonuses reflecting the growth achieved. Headcount at the year end was 103 including 19 new staff members taken on with Invex. This compares to 83 at the last year end.
Overall, after all the factors above, operating margins for the Network Testing business increased from 23% last year to 27% this year.
Travel
Full-year adjusted results for the Travel division show a mixed picture, with revenue reducing by 13% to £20.0m (2010: £23.0m) and adjusted operating profit declining 25% to £4.2m (2010: £5.6m). On the positive side, the Travel business had a stronger year with respect to order intake. Orders signed in the year were up 17% to £34.0m (2010: £29.0m), representing a book to bill ratio of 1.7 compared to 1.3 in the previous financial year. The major order signed in the last twelve months was a multi-year contract with TUI Travel PLC for the implementation of Anite's @comRes reservation system in TUI's UK & Ireland division. Travel's closing order book increased 28% from £49.2m to £63.2m.
The TUI UK deal is an extension of the initial evaluation contract signed towards the end of the previous financial year for which the first delivery was made in the latter stages of the current financial year. It also follows on from the successful implementation of @comRes in TUI's business in Germany and Central Europe. That project has been running for five years and the final deliveries were achieved on time in the second half of the year. The system is now live in Germany and Central Europe and will be carrying in excess of four million passengers per year.
The Travel business continued to suffer a decline in legacy managed services and maintenance revenues, as the effect of tour operator companies such as Globespan and Goldtrail ceasing trading impacted on year-on-year revenues. In addition, licence revenue was down £1.2m on the prior year at £1.5m (2010: £2.7m). The business did benefit in the first half by £1.0m from the re-negotiation of an existing managed services contract but in comparison lacked the repetition of a bonus payment of £0.8m received in the prior first half year related to the successful delivery of a key customer contract milestone.
Translational currency effects in Travel are negligible as results from overseas subsidiaries are immaterial. The transactional effect of euro-denominated business and assets reduced profits by £0.1m (2010: £0.1m increase), a net adverse effect of £0.2m year-on-year.
In the year, 51% of revenue came from the @comRes product compared with 47% in the previous year, and 98% (2010: 98%) of total revenue came from UK and Europe. Passenger numbers on @comRes systems are now running at just under six million a year (2010: four million), illustrating the continuing progress being made by this product.
Control of costs, given the revenue decline, was another feature of the Travel business in the year. Variable cost of sales reduced by £0.7m, in line with the revenue decline for third party product sales. Fixed costs fell £1.0m on the prior year, with the biggest reduction being in sales and marketing costs and property costs. Headcount at the end of the year had been reduced to 167 (2010: 176).
The Travel business has recently signed an extension to the lease on its current office location. The extension is until March 2021 and at the same time provides for the surrender of all the additional surplus property currently leased in Slough. This leaves Travel with an appropriately sized facility from which to serve its customers over the next ten years.
Overall, Travel's operating margin remained healthy at 21%, although down on the 24% achieved in the prior year.
Other Group costs
The divisional performances above are stated before unallocated corporate costs, which include an element of head office staff costs, Directors' remuneration, professional fees and other non-operational costs. During the year unallocated Group costs increased by £1.3m to £3.0m (2010: £1.7m).
Within this increase, non-operational surplus property costs were £0.7m (2010: £0.1m), due mainly to a tenant at one of the properties going into administration. The balance of the other increase in fixed costs is mainly driven by staff costs including bonuses and the full year impact of prior year recruitment.
Christopher Humphrey
Chief Executive
Financial review
The Group's results for the year ended 30 April 2011 reflected a recovery from the prior year, as overall markets were more helpful and we started to see returns on the investments made over the last two years. Results benefitted from the operational gearing of our businesses, with incremental revenue yielding high incremental margins with a lower rate of growth in fixed costs.
The following analysis is for our continuing operations, which comprise the Handset Testing and Network Testing businesses in our Wireless division, and the Travel division.
On 7 January 2011 we acquired the Invex product line for the Network Testing business. The results for Invex for the four months of ownership were immaterial to the overall Group results but further details are set out in note 9 of the attached results.
Principal accounting policies
The principal accounting policies are unchanged with the exception that this year is the first time since the adoption of IFRS3 (revised 2008) that acquisition costs have been required to be written off in the period as incurred. Acquisition costs incurred during the year have been disclosed within "restructuring costs" and are excluded from the definition of adjusted profits. The Group has not adopted early any of the new standards from IFRS9 to IFRS13.
Financial results
Revenue from continuing operations was up 19% at £93.7m (2010: £78.8m) and adjusted profit before tax increased 62% to £16.0m (2010: £9.9m).
Reconciliations of adjusted EBITDA of £22.2m (2010: £17.7m) to the operating profit of £13.9m (2010: loss £1.8m), and adjusted operating profit of £17.6m (2010: £11.9m) to the reported profit before tax for the year of £12.2m (2010: loss £4.0m), are set out in the tables below. The reconciling items are those that, in the opinion of the Board, are either one-off in nature or are non-cash related and are not, therefore, indicative of the Group's underlying trading.
|
|
2011 |
2010 |
|
|
£m |
£m |
|
Adjusted EBITDA |
22.2 |
17.7 |
|
Depreciation |
(2.8) |
(3.2) |
|
Amortisation of intangible assets |
(1.8) |
(2.6) |
|
Adjusted operating profit |
17.6 |
11.9 |
|
Share-based payments |
0.1 |
(2.4) |
|
Amortisation of acquired intangible assets |
(3.6) |
(4.2) |
|
Impairment of goodwill and acquired intangible assets |
- |
(6.2) |
|
Restructuring costs |
(0.2) |
(0.9) |
|
Operating profit/(loss) |
13.9 |
(1.8) |
|
|
2011 |
2010 |
|
|
£m |
£m |
|
Adjusted operating profit |
17.6 |
11.9 |
|
Net finance charges excluding recycled hedge losses |
(1.6) |
(2.0) |
|
Adjusted profit before tax |
16.0 |
9.9 |
|
Share-based payments |
0.1 |
(2.4) |
|
Amortisation of acquired intangible assets |
(3.6) |
(4.2) |
|
Impairment of goodwill and acquired intangible assets |
- |
(6.2) |
|
Restructuring costs |
(0.2) |
(0.9) |
|
Other gains and losses |
- |
0.4 |
|
Net finance charges: recycled hedge losses |
(0.1) |
(0.6) |
|
Profit/(loss) from continuing operations before tax |
12.2 |
(4.0) |
Currency effects
Movements in exchange rates in the year had an overall positive effect on the results compared with the previous year. Year-on-year, the average exchange rate for the US dollar strengthened 2% against sterling, from £1= US$1.60 to £1 = US$1.57, although the average rate of the euro weakened by 4%, from £1= €1.13 to £1 = €1.18. The net effect of these changes on the translation of results from overseas subsidiaries was to reduce revenue by £0.6m and adjusted operating profit by £0.3m.
The closing exchange rates at the year end, which affect the conversion of foreign-exchange denominated balance sheet items - such as cash, and trade debtors and creditors - saw mixed movements of the foreign currencies against sterling. The closing rate for the euro was £1= €1.123 (2010: £1 = €1.153), an appreciation of 3% on the previous year; however the closing exchange rate for the US dollar was £1= US$1.666 (2010: £1= US$1.526), a depreciation of 9% on the previous year.
The transactional effect of business units trading in currencies other than their local currency and the revaluation of foreign currency balance sheet accounts into local currency also has an effect on the Group. Where possible, these exposures are hedged, or minimised, by converting foreign currency balances back into local functional currencies. In the year these transactions had an approximate net £0.5m positive effect, compared with a net £0.7m adverse effect in the previous year, resulting in £1.2m overall positive impact on operating profit. The relative currency impact on divisional results is discussed in the Review of operations.
Revenue
Revenue from continuing operations increased in the year by 19% to £93.7m (2010: £78.8m). The two Wireless businesses both recorded strong growth, more than offsetting a decline in Travel. Details of this are set out in the Review of operations. Geographically, revenue by destination showed a slight increase in sales to Asia compared to the prior year: UK 16% (2010: 19%); EMEA 32% (2010: 36%); Americas 27% (2010: 25%); and Rest of World (mainly Asia) 25% (2010: 20%).
In revenue by type, the principal changes in the year were strong increases in sales of software licences and third party equipment, which increased by 31% to £58.0m (2010: £44.3m). Recurring revenues (software maintenance and managed services) increased marginally to £27.0m (2010: £26.4m) as a decline in Travel offset growth in both Wireless businesses. As a result, the proportion of recurring revenues was 29% compared to 34% in 2010.
Cost of sales and gross profit
Overall cost of sales increased by 29% to £38.2m (2010: £29.7m). Within this the costs of third party hardware sold on to customers increased 50% to £20.7m (2010: £13.8m). The increase relates to Handsets, where more hardware systems were sold this year as explained in the Review of operations. Other cost of sales, mainly staff costs directly associated with the delivery of revenue and to support the growing number of installed systems, increased 10% to £17.5m (2010: £15.9m). Gross profit in the year increased to £55.5m (2010: £49.1m), slightly less than the corresponding increase in revenue, with gross margin reducing to 59% (2010: 62%).
Operating expenses
Total operating expenses in the period decreased to £41.6m (2010: £50.9m). A detailed breakdown is given in note 2.5.
Within the total operating expenses are one off and non-cash items not charged to Adjusted operating profit, and underlying operating expenses that are charged to Adjusted operating profit. The latter totalled £37.9m (2010: £37.2m).
Within underlying operating expenses, R&D costs incurred by the Wireless businesses, reduced by £1.8m to £11.4m (2010: £13.2m). The reduction followed the high level of spend in the prior year on developing the LTE product in Handset Testing. It is sales of this product that have been responsible for much of the recent growth in Handset Testing revenues. The in-year profit and loss charge has also reduced because amortisation costs of previously capitalised developments reduced to £1.2m from £1.9m. Amounts capitalised in the year increased to £2.7m (2010: £1.3m) and included £2.2m incurred in Handset Testing (2010: £1.3m) on developing the market leading suite of conformance test cases, and £0.5m in Networks (2010: nil) on developing the next generation of Invex benchmarking product and adding new capability to the FSR1 scanner.
Other underlying operating expenses increased £2.4m from £24.0m in 2010 to £26.4m. The main increase has been in staff costs, particularly in the Handset Testing business as explained in the Review of operations.
After the underlying operating expenses, adjusted operating profit was £17.6m (2010: £11.9m), an increase of 48%. Adjusted EBITDA was up 26% at £22.2m (2010: £17.7m).
One-off and non-trading operating expenses excluded from adjusted profit calculations totalled £3.7m (2010: £13.7m). These included amortisation of acquired intangible assets of £3.6m (2010: £4.2m), a credit for share-based payments of £0.1m (2010: charge of £2.4m), and a charge of £0.3m (2010: £nil) for the costs associated with acquiring the Invex product line. The comparative period included £7.1m associated with the closure of Handset Testing's WiMAX operation in April 2010; there was no similar write off in the year ended 30 April 2011.
The significant reduction in share-based payment costs was because in the first half of the current year, a £2.1m credit was recorded for maturing schemes that had lapsed because the non-market vesting conditions had not been achieved. Against this has been included a £2.0m charge, which includes £0.2m charge (2010: £nil) for employer National Insurance costs associated with grants anticipated to vest.
After these non-operational costs, the Group reported an overall operating profit of £14.0m (2010: operating loss of £1.8m).
Other gains and losses
Other gains and losses, which are excluded from the calculation of adjusted profit before tax, were a net £nil in the current year (2010: cost of £0.4m).
Group finance costs
The Group had an excess of £27.7m of cash over borrowings at 30 April 2011 (30 April 2010: £29.8m), but incurred a net finance charge of £1.7m (2010: £2.6m). This was principally because the borrowings within the capital structure were fixed at the relatively high long-term rates available when the facilities were put in place in 2006, but surplus cash earns interest only at current low rates. This position will normalise in November 2011 when the current facilities and interest arrangements expire. The net finance charge includes £0.1m (2010: £0.6m) in respect of the recycling of a fair-value loss on a cash flow hedge, previously included directly in equity and now reclassified through the profit and loss back into equity (see note 5). This charge is excluded from adjusted profit before tax calculations.
Taxation
The tax charge for the year on continuing operations was £3.3m (2010: £0.4m). The tax rate on the statutory operating profit was 26.8% (2010: negative rate on loss (10.9%) primarily as a result of adjustments to the provisions made in that year for deferred tax). The underlying adjusted tax rate on adjusted profit before tax is 27.7% (2010: 29.7%). Tax paid in the year was £2.0m (2010: £1.7m).
Shareholder returns
After taking account of the factors described above, adjusted basic earnings per share were 4.0p (2010: 2.4p), an increase of 67%; adjusted diluted earnings per share similarly increased 65% to 3.8p (2010: 2.3p). The statutory basic earnings per share for continuing operations was 3.1p (2010: loss per share 1.5p).
The Board has proposed a final dividend of 0.735p per share (2010: 0.65p) making a total for the year of 1.05p (2010: 0.95p) which is covered 3.8 times by adjusted basic earnings.
Balance sheet
Trade and other receivables
Trade and other receivables increased to £31.9m at 30 April 2011 compared to £24.5m at the previous year end. The main reason for the increase is trade debtors which, net of provisions, have increased by 24%, from £20.4m to £25.3m. This is mainly due to the growth in revenue, which is up 19% year on year. Debtor days at 30 April 2011 have actually decreased to 76 days from 78 at the previous year end.
Trade and other payables
Trade and other payables increased to £30.5m at 30 April 2011 from £25.8m at the prior year end. The increase is mainly due to accruals, including bonus and commissions related to the strong close to the year and to trade creditors with increased purchases in the final month of the year to satisfy the year-end product demand.
Cash flow
Cash generated from operations was £17.2m (2010: £14.2m). This represented a conversion of 77% of adjusted EBITDA (2010: 81%). Within this there was a net working capital increase of £3.3m (2010: increase of £1.6m). This was caused by the increase in trade debtors and partial offset in trade creditors referred to above.
Net payments for finance costs were £1.7m (2010: £1.4m), whilst tax payments increased to £2.0m from £1.7m in the prior year, reflecting increased profits made by overseas entities.
Capital expenditure in the period was £3.5m (2010: £2.5m). Significant purchases included £1.6m (2010: £1.1m) on Anite 9000 development equipment. £2.7m was incurred on capitalised development expenditure (2010: £1.3m), as explained above.
Dividends paid to shareholders totalled £2.8m (2010: £2.8m) and a further £5.4m (2010: £0.2m) was incurred during the year on purchasing shares into the Company's employee benefit trust. The acquisition of the Invex product line cost £1.3m of cash in the year and there is a further potential cash payment of £0.6m that is deferred until the acquired operation achieves certain revenue milestones. The majority of that deferred payment is expected to be settled in the coming financial year.
After these movements, net cash decreased by £2.1m (2010: net cash increase of £2.5m). The net cash balance at 30 April 2011 was, as a result, £27.7m (30 April 2010: £29.8m). This net cash balance is stated before taking account of the liability on the foreign currency swap which is due to be settled on 31 October 2011 and which is capped at £21.6m.
Borrowings and facilities
The outstanding balance on the Group's term loan facility at 30 April 2011 was £10.0m (2010: £15.0m). This is covered by £37.7m of cash and cash equivalents at 30 April 2011 (30 April 2010: £44.8m). The facility expires on 30 November 2011.
The Group also has further borrowing facilities available, including a syndicated revolving facility of £20.0m (2010: £20.0m) and a net overdraft facility of £5.0m (2010: £5.0m). Both were undrawn at 30 April 2011. The revolving facility is due to expire on 30 November 2011 and the overdraft on 31 January 2012.
In view of the current strong cash position, the availability of banking facilities, the maturity profile of debt obligations and forecast cash position over the next eighteen months, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, Anite continues to adopt the going concern basis in preparing the consolidated financial statements.
Richard Amos
Group Finance Director
Consolidated income statement
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
Continuing operations |
|
|
|
|
Revenue |
2.1 |
93,694 |
78,770 |
|
Cost of sales |
|
(38,184) |
(29,710) |
|
Gross profit |
|
55,510 |
49,060 |
|
Distribution costs |
|
(11,358) |
(10,708) |
|
Research and development |
|
(12,838) |
(15,666) |
|
Administrative expenses |
|
(17,354) |
(24,529) |
|
Operating expenses |
2.5 |
(41,550) |
(50,903) |
|
Operating profit before share-based payments, amortisation of acquired intangible assets,impairment of goodwill and acquired intangible assets and restructuring costs |
2.2 |
17,660 |
11,856 |
|
Share-based payments |
6 |
126 |
(2,436) |
|
Amortisation of acquired intangible assets |
|
(3,582) |
(4,231) |
|
Impairment of goodwill and acquired intangible assets |
|
- |
(6,172) |
|
Restructuring costs |
3 |
(244) |
(860) |
|
Operating profit/(loss) |
2.2 |
13,960 |
(1,843) |
|
Other gains and losses |
4 |
19 |
473 |
|
Finance income |
5 |
484 |
222 |
|
Finance charges |
5 |
(2,242) |
(2,843) |
|
Profit/(loss) from continuing operations before tax |
|
12,221 |
(3,991) |
|
Tax expense |
7 |
(3,270) |
(436) |
|
Profit/(loss) from continuing operations |
|
8,951 |
(4,427) |
|
Profit from discontinued operations |
|
484 |
1,000 |
|
Profit/(loss) for the year |
|
9,435 |
(3,427) |
|
Profit/(loss) attributable to equity holders of the parent |
|
9,435 |
(3,427) |
|
Continuing and discontinued operations |
|
|
|
|
Earnings per share - basic |
8 |
3.3p |
(1.2)p |
|
- diluted |
|
3.1p |
(1.2)p |
|
Continuing operations |
|
|
|
|
Earnings per share - basic |
8 |
3.1p |
(1.5)p |
|
- diluted |
|
2.9p |
(1.5)p |
Consolidated statement of comprehensive income
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
|
|
|
|
|
Retained profit/(loss) for the year |
|
9,435 |
(3,427) |
|
Exchange differences arising on translation of foreign operations |
|
1,941 |
24 |
|
Cash flow hedges taken to equity |
|
404 |
189 |
|
Recycling of fair value loss on cash flow hedges from equity to profit or loss1 |
5 |
133 |
655 |
|
Fair value losses on net investment hedges (net of foreign exchange)2 |
|
- |
(2,735) |
|
Gain on sale of shares from employee benefit trust |
|
5 |
3 |
|
Recognition of equity-settled share-based payments before tax |
6 |
(305) |
2,446 |
|
Tax credit/(charge) taken directly to other comprehensive income |
7 |
226 |
(134) |
|
Total comprehensive income/(loss) |
|
11,839 |
(2,979) |
1 The fair value losses recycled to the income statement in the year are disclosed within finance charges (note 5).
2 The net loss of £nil (2010: £2,735,000) comprises the fair value loss on the net investment hedge of £nil (2010: £2,796,000) relating to the effective portion of the cross currency swaps less the foreign exchange gain of £nil (2010: £61,000)
Consolidated statement of changes in equity
|
|
Issued share capital |
Share premium account |
Own shares |
Merger reserve |
Capital redemption reserve |
Other reserves |
Retained earnings |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Balance at 1 May 2009 Changes in equity for the year to 30 April 2010 |
33,644 |
25,485 |
(3,657) |
722 |
2,741 |
(5,087) |
30,062 |
83,910 |
|
Movements in total comprehensive loss |
|
|
|
|
|
|
||
|
Retained loss for the year |
- |
- |
- |
- |
- |
- |
(3,427) |
(3,427) |
|
Exchange differences arising on translation of foreign operations |
- |
- |
- |
- |
- |
24 |
- |
24 |
|
Cash flow hedges taken to equity |
- |
- |
- |
- |
- |
189 |
- |
189 |
|
Recycling of fair value loss on cash flow hedges from equity to profit or loss |
- |
- |
- |
- |
- |
655 |
- |
655 |
|
Fair value losses on net investment hedges (net of foreign exchange) |
- |
- |
- |
- |
- |
(2,735) |
- |
(2,735) |
|
Revaluation of own shares in employee benefit trust |
- |
- |
(429) |
- |
- |
- |
429 |
- |
|
Sale of own shares from employee benefit trust |
- |
- |
400 |
- |
- |
- |
(400) |
- |
|
Gain on sale of shares from employee benefit trust |
- |
- |
- |
- |
- |
- |
3 |
3 |
|
Recognition of equity-settled share-based payments before tax |
- |
- |
- |
- |
- |
- |
2,446 |
2,446 |
|
Tax credit/(charge) taken directly to other comprehensive income |
- |
- |
- |
- |
- |
206 |
(340) |
(134) |
|
Total comprehensive loss for the year |
- |
- |
(29) |
- |
- |
(1,661) |
(1,289) |
(2,979) |
|
Issue of share capital |
8 |
15 |
- |
- |
- |
- |
- |
23 |
|
Purchase of own shares into employee benefit trust |
- |
- |
(209) |
- |
- |
- |
- |
(209) |
|
Dividend paid |
- |
- |
- |
- |
- |
- |
(2,795) |
(2,795) |
|
Balance at 30 April 2010 |
33,652 |
25,500 |
(3,895) |
722 |
2,741 |
(6,748) |
25,978 |
77,950 |
|
Changes in equity for the year to 30 April 2011 |
|
|
|
|
|
|
|
|
|
Movements in total comprehensive income |
|
|
|
|
|
|
||
|
Retained profit for the year |
- |
- |
- |
- |
- |
- |
9,435 |
9,435 |
|
Exchange differences arising on translation of foreign operations |
- |
- |
- |
- |
- |
1,941 |
- |
1,941 |
|
Cash flow hedges taken to equity |
- |
- |
- |
- |
- |
404 |
- |
404 |
|
Recycling of fair value loss on cash flow hedges from equity to profit or loss |
- |
- |
- |
- |
- |
133 |
- |
133 |
|
Sale of own shares from employee benefit trust |
- |
- |
17 |
- |
- |
- |
(17) |
- |
|
Gain on sale of shares from employee benefit trust |
- |
- |
- |
- |
- |
- |
5 |
5 |
|
Recognition of equity-settled share-based payments before tax |
- |
- |
- |
- |
- |
- |
(305) |
(305) |
|
Tax (charge) /credit taken directly to other comprehensive income |
- |
- |
- |
- |
- |
(559) |
785 |
226 |
|
Total comprehensive income for the year |
- |
- |
17 |
- |
- |
1,919 |
9,903 |
11,839 |
|
Issue of share capital |
28 |
60 |
- |
- |
- |
- |
- |
88 |
|
Purchase of own shares into employee benefit trust |
- |
- |
(5,351) |
- |
- |
- |
- |
(5,351) |
|
Dividend paid |
- |
- |
- |
- |
- |
- |
(2,826) |
(2,826) |
|
Balance at 30 April 2011 |
33,680 |
25,560 |
(9,229) |
722 |
2,741 |
(4,829) |
33,055 |
81,700 |
Consolidated balance sheet
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
Non-current assets |
|
|
|
|
Goodwill |
|
58,690 |
57,323 |
|
Other intangible assets |
|
19,254 |
19,171 |
|
Property, plant and equipment |
|
9,226 |
10,038 |
|
Deferred tax assets |
|
2,491 |
2,406 |
|
|
|
89,661 |
88,938 |
|
Current assets |
|
|
|
|
Inventories |
|
4,722 |
4,452 |
|
Trade and other receivables |
10 |
31,939 |
24,518 |
|
Derivative financial assets |
|
486 |
856 |
|
Current tax assets |
|
224 |
267 |
|
Cash and cash equivalents |
13 |
37,667 |
44,803 |
|
|
|
75,038 |
74,896 |
|
Total assets |
|
164,699 |
163,834 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
11 |
(30,538) |
(25,758) |
|
Bank borrowings |
12 |
(9,995) |
(4,988) |
|
Current tax payable |
|
(8,257) |
(7,439) |
|
Derivative financial liabilities |
|
(22,394) |
(49) |
|
Provisions |
14 |
(4,794) |
(4,611) |
|
|
|
(75,978) |
(42,845) |
|
Non-current liabilities |
|
|
|
|
Bank borrowings |
12 |
- |
(9,979) |
|
Deferred tax liabilities |
|
(3,561) |
(4,389) |
|
Derivative financial liabilities |
|
- |
(23,569) |
|
Provisions |
14 |
(3,460) |
(5,102) |
|
|
|
(7,021) |
(43,039) |
|
Total liabilities |
|
(82,999) |
(85,884) |
|
Net assets |
|
81,700 |
77,950 |
|
Equity |
|
|
|
|
Issued share capital |
15 |
33,680 |
33,652 |
|
Share premium account |
|
25,560 |
25,500 |
|
Own shares |
|
(9,229) |
(3,895) |
|
Merger reserve |
|
722 |
722 |
|
Capital redemption reserve |
|
2,741 |
2,741 |
|
Other reserves |
|
(4,829) |
(6,748) |
|
Retained earnings |
|
33,055 |
25,978 |
|
Total equity |
|
81,700 |
77,950 |
The financial statements of Anite plc (Company no. 01798114) were approved by the Board on 28 June 2011 and signed on its behalf by
Christopher Humphrey
Richard Amos
Consolidated cash flow statement
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
|
|
|
|
|
Profit/(loss) for the year |
|
|
|
|
Continuing operations |
|
8,951 |
(4,427) |
|
Discontinued operations |
|
484 |
1,000 |
|
|
|
9,435 |
(3,427) |
|
Adjustments for: |
|
|
|
|
Tax charge/(credit) - continuing and discontinued |
7 |
2,786 |
(564) |
|
Other (gains) and losses |
4 |
(19) |
(473) |
|
Net finance charges |
5 |
1,758 |
2,621 |
|
Depreciation and impairment of property, plant and equipment |
|
2,722 |
3,170 |
|
Amortisation of intangible assets |
|
1,796 |
2,623 |
|
Amortisation of acquired intangible assets |
|
3,582 |
4,231 |
|
Loss on disposal of property, plant and equipment |
|
- |
31 |
|
Impairment of goodwill |
|
- |
5,092 |
|
Impairment of acquired intangible assets |
|
- |
1,080 |
|
Impairment of intangible assets |
|
- |
403 |
|
Share-based payments |
6 |
(126) |
2,436 |
|
Decrease in provisions |
|
(1,458) |
(1,490) |
|
Operating cash flows before movements in working capital |
|
20,476 |
15,733 |
|
Increase in inventories |
|
(115) |
(2,163) |
|
Increase in receivables |
|
(7,260) |
(220) |
|
Increase in payables |
|
4,071 |
809 |
|
Increase in working capital |
|
(3,304) |
(1,574) |
|
Cash generated from operations |
|
17,172 |
14,159 |
|
Interest received |
|
190 |
259 |
|
Interest paid |
|
(1,899) |
(1,695) |
|
Income taxes paid |
|
(2,012) |
(1,720) |
|
Net cash generated from operating activities |
|
13,451 |
11,003 |
|
Cash flow from investing activities |
|
|
|
|
Purchase of product line |
9 |
(1,263) |
- |
|
Deferred consideration paid |
|
- |
(364) |
|
Purchase of foreign exchange options |
|
- |
(1,000) |
|
Purchase of property, plant and equipment |
|
(2,836) |
(2,159) |
|
Purchase of software licences |
|
(631) |
(387) |
|
Expenditure on capitalised product development |
|
(2,657) |
(1,319) |
|
Net cash used in investing activities |
|
(7,387) |
(5,229) |
|
Cash flow from financing activities |
|
|
|
|
Issue of ordinary share capital |
|
88 |
23 |
|
Purchase of own shares into employee benefit trust |
|
(5,351) |
(209) |
|
Proceeds from sale of own shares from employee benefit trust |
|
5 |
3 |
|
Dividend paid to Company's shareholders |
16 |
(2,826) |
(2,795) |
|
Decrease in bank loans |
|
(5,000) |
(5,000) |
|
Net cash used in financing activities |
|
(13,084) |
(7,978) |
|
Net decrease in cash and cash equivalents |
13 |
(7,020) |
(2,204) |
|
Effect of exchange rate changes |
|
(116) |
(170) |
|
Cash and cash equivalents at 1 May |
|
44,803 |
47,177 |
|
Cash and cash equivalents at 30 April |
13 |
37,667 |
44,803 |
1 Statement of accounting policies
a) Basis of preparation
The preliminary results have been prepared under the historical cost convention and in accordance with current International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations. However, this announcement does not contain sufficient information to comply with all the disclosure requirements of IFRS.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions in certain areas that affect the reported amounts in the financial statements. Although these estimates and assumptions are based on management's best knowledge, the actual results ultimately may differ from those estimates.
The statutory accounts for 2011 have been prepared following accounting policies consistent with those for the year ended 30 April 2010. These can be found on our website www.anite.com. The financial statements are presented in Pounds Sterling because that is the currency of the primary economic environment in which the Group operates.
The financial information set out in this announcement does not constitute statutory accounts within the meaning of Sections 434 to 436 of the Companies Act 2006 and is an abridged version of the Group's financial statements for the year ended 30 April 2011 which were approved by the directors on 28 June 2011. Statutory accounts for the year ended 2010 have been delivered to the Registrar of Companies, the auditors have reported on those accounts, their report was unqualified and did not contain statements under Section 498 of the Companies Act 2006. Statutory accounts for the period ended 30 April 2011 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts, their reports were unqualified and did not contain statements under Section 498 of the Companies Act 2006.
The preliminary announcement for the year ended 30 April 2011 was approved by the Board of Directors on 28 June 2011.
2 Revenue and segmental information
2.1 Revenue from operations
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
|
|
|
|
|
Own product software licences |
|
39,198 |
30,716 |
|
Bespoke services, systems integration and implementation of software products |
|
7,720 |
7,389 |
|
Managed services |
|
4,467 |
5,284 |
|
Software maintenance and support |
|
22,572 |
21,158 |
|
Sale of third-party products and services |
|
18,779 |
13,458 |
|
Other |
|
958 |
765 |
|
Revenue from operations |
2.2 |
93,694 |
78,770 |
|
Finance income |
5 |
484 |
222 |
|
Total revenue |
|
94,178 |
78,992 |
2.2 Operating segments - primary basis
The Group is organised into four operating segments: Handset Testing, Network Testing, Travel and Group. With the exception of Group, which performs the head office function, each operating segment derives its revenue from the development, installation and support of software products relating to its relevant industry sector.
Operating segment information under the primary reporting format is as disclosed in the tables below:
|
|
Handset Testing |
Network Testing |
Total Wireless |
Travel |
Group |
Total |
|
Year ended 30 April 2011 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
External revenue |
49,543 |
24,148 |
73,691 |
20,003 |
- |
93,694 |
|
Internal revenue |
- |
- |
- |
- |
1,370 |
1,370 |
|
Total revenue |
49,543 |
24,148 |
73,691 |
20,003 |
1,370 |
95,064 |
|
Segment adjusted1 profit/(loss) before tax |
10,003 |
6,420 |
16,423 |
4,206 |
(4,594) |
16,035 |
|
Net finance charges before recycled hedge loss |
- |
- |
- |
- |
1,625 |
1,625 |
|
Segment adjusted1 operating profit/(loss) |
10,003 |
6,420 |
16,423 |
4,206 |
(2,969) |
17,660 |
|
Share-based payments |
314 |
(112) |
202 |
28 |
(104) |
126 |
|
Amortisation of acquired intangible assets |
- |
(3,582) |
(3,582) |
_ |
_ |
(3,582) |
|
Restructuring costs |
- |
(281) |
(281) |
- |
37 |
(244) |
|
Segment operating profit/(loss) |
10,317 |
2,445 |
12,762 |
4,234 |
(3,036) |
13,960 |
|
Other gains and losses |
- |
- |
- |
- |
19 |
19 |
|
Finance income |
- |
- |
- |
- |
484 |
484 |
|
Finance charges |
- |
- |
- |
- |
(2,242) |
(2,242) |
|
Profit/(loss) from continuing operations before tax |
10,317 |
2,445 |
12,762 |
4,234 |
(4,775) |
12,221 |
|
Tax expense |
- |
- |
- |
- |
(3,270) |
(3,270) |
|
Profit/(loss) from continuing operations |
10,317 |
2,445 |
12,762 |
4,234 |
(8,045) |
8,951 |
|
Profit from discontinued operations |
- |
- |
- |
- |
484 |
484 |
|
Profit/(loss) for the period |
10,317 |
2,445 |
12,762 |
4,234 |
(7,561) |
9,435 |
|
|
|
|
|
|
|
|
|
|
Handset Testing |
Network Testing |
Total Wireless |
Travel |
Group |
Total |
|
Year ended 30 April 2010 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
External revenue |
35,753 |
20,026 |
55,779 |
22,991 |
- |
78,770 |
|
Internal revenue |
- |
- |
- |
- |
1,387 |
1,387 |
|
Total revenue |
35,753 |
20,026 |
55,779 |
22,991 |
1,387 |
80,157 |
|
Segment adjusted1 profit/(loss) before tax |
3,460 |
4,569 |
8,029 |
5,575 |
(3,714) |
9,890 |
|
Net finance charges before recycled hedge loss |
- |
- |
- |
- |
1,966 |
1,966 |
|
Segment adjusted1 operating profit/(loss) |
3,460 |
4,569 |
8,029 |
5,575 |
(1,748) |
11,856 |
|
Share-based payments |
(1,019) |
(219) |
(1,238) |
(331) |
(867) |
(2,436) |
|
Amortisation of acquired intangible assets |
(625) |
(3,606) |
(4,231) |
- |
- |
(4,231) |
|
Impairment of goodwill and acquired intangible assets |
(6,172) |
- |
(6,172) |
- |
- |
(6,172) |
|
Restructuring costs |
(860) |
- |
(860) |
- |
- |
(860) |
|
Segment operating (loss)/profit |
(5,216) |
744 |
(4,472) |
5,244 |
(2,615) |
(1,843) |
|
Other gains and losses |
- |
- |
- |
- |
473 |
473 |
|
Finance income |
- |
- |
- |
- |
222 |
222 |
|
Finance charges |
- |
- |
- |
- |
(2,843) |
(2,843) |
|
(Loss)/profit from continuing operations before tax |
(5,216) |
744 |
(4,472) |
5,244 |
(4,763) |
(3,991) |
|
Tax expense |
- |
- |
- |
- |
(436) |
(436) |
|
(Loss)/profit from continuing operations |
(5,216) |
744 |
(4,472) |
5,244 |
(5,199) |
(4,427) |
|
Profit from discontinued operations |
- |
- |
- |
- |
1,000 |
1,000 |
|
(Loss)/profit for the period |
(5,216) |
744 |
(4,472) |
5,244 |
(4,199) |
(3,427) |
|
|
|
|
|
|
|
|
1 Segment adjusted operating profits are stated prior to the adjusting items of share-based payments, amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets and restructuring costs.
2.3 Other information
|
Year ended 30 April 2011 |
Handset Testing |
Network Testing |
Total Wireless |
Travel |
Group |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
Total Assets |
29,811 |
65,794 |
95,605 |
12,161 |
56,933 |
164,699 |
|
Including: |
|
|
|
|
|
|
|
Capital additions in the year |
4,578 |
1,113 |
5,691 |
114 |
131 |
5,936 |
|
Capital acquired in the year |
- |
1,792 |
1,792 |
- |
- |
1,792 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Calculation |
|
|
|
|
|
|
|
Segment adjusted operating profit / (loss) |
10,003 |
6,420 |
16,423 |
4,206 |
(2,969) |
17,660 |
|
Depreciation |
1,466 |
138 |
1,604 |
606 |
512 |
2,722 |
|
Amortisation of intangible assets |
1,367 |
200 |
1,567 |
189 |
39 |
1,795 |
|
Adjusted EBITDA |
12,836 |
6,758 |
19,594 |
5,001 |
(2,418) |
22,177 |
|
|
|
|
|
|
|
|
|
Year ended 30 April 2010 |
Handset Testing |
Network Testing |
Total Wireless |
Travel |
Group |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
Total Assets |
36,517 |
60,173 |
96,690 |
10,478 |
56,666 |
163,834 |
|
Including: |
|
|
|
|
|
|
|
Capital additions in the year |
3,300 |
374 |
3,674 |
326 |
58 |
4,058 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Calculation |
|
|
|
|
|
|
|
Segment adjusted operating profit / (loss) |
3,460 |
4,569 |
8,029 |
5,575 |
(1,748) |
11,856 |
|
Depreciation |
1,776 |
147 |
1,923 |
777 |
470 |
3,170 |
|
Amortisation of intangible assets |
2,047 |
213 |
2,260 |
328 |
35 |
2,623 |
|
Adjusted EBITDA |
7,283 |
4,929 |
12,212 |
6,680 |
(1,243) |
17,649 |
|
|
|
|
|
|
|
|
2.4 Geographical segment - secondary basis
The operating segments operate in four principal geographical areas, as set out below.
The following analysis of the Group's revenue is based on the geographical location of customers irrespective of the origin of the goods or services. The corresponding segment assets are based on the geographical location of the assets.
|
|
Total Revenue |
|
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
United Kingdom |
15,242 |
15,362 |
|
EMEA - excluding United Kingdom |
29,674 |
28,061 |
|
The Americas |
25,126 |
19,545 |
|
Rest of the World |
23,652 |
15,802 |
|
|
93,694 |
78,770 |
|
|
Non-current assets |
|
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
United Kingdom |
19,441 |
12,194 |
|
EMEA - excluding United Kingdom |
68,967 |
68,572 |
|
The Americas |
1,172 |
8,031 |
|
Rest of the World |
81 |
141 |
|
|
89,661 |
88,938 |
2.5 Operating expenses
|
|
|
|
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Distribution costs |
|
|
|
- amortisation of acquired intangible assets |
2,211 |
2,345 |
|
- other underlying operating expenses |
9,147 |
8,363 |
|
|
11,358 |
10,708 |
|
Research and development |
|
|
|
- amortisation of internally generated assets |
1,230 |
1,940 |
|
- other underlying operating expenses |
10,237 |
11,252 |
|
|
11,467 |
13,192 |
|
- amortisation of acquired intangible assets |
1,371 |
1,886 |
|
- restructuring costs |
- |
588 |
|
|
12,838 |
15,666 |
|
Administrative expenses |
|
|
|
- share-based payments |
(126) |
2,436 |
|
- impairment of goodwill |
- |
5,092 |
|
- impairment of acquired intangible assets |
- |
1,080 |
|
- restructuring costs |
244 |
272 |
|
- other underlying operating expenses |
17,236 |
15,649 |
|
|
17,354 |
24,529 |
|
Total operating expenses |
41,550 |
50,903 |
|
|
|
|
|
Analysed as: |
|
|
|
- amortisation of acquired intangible assets |
3,582 |
4,231 |
|
- impairment of goodwill |
- |
5,092 |
|
- impairment of acquired intangible assets |
- |
1,080 |
|
- restructuring costs (note 3) |
244 |
860 |
|
- share-based payments (note 6) |
(126) |
2,436 |
|
One-off and non-trading operating expenses excluded from Adjusted profit |
3,700 |
13,699 |
|
- amortisation of internally generated assets |
1,230 |
1,940 |
|
- other underlying operating expenses |
36,620 |
35,264 |
|
Total operating expenses |
41,550 |
50,903 |
3 RESTRUCTURING COSTS
Restructuring costs incurred in the year relate to the acquisition costs for the purchase of the Invex product line (note 9). In addition there is a credit relating to the net impact on the property provision as a result of a provision release that was originally charged within restructuring costs, offset by a one-off charge relating to a property guarantee given in respect of previously disposed operations.
The restructuring costs incurred in the prior period relate to the closure of the WiMAX line of business within the Wireless division. These costs include the impact of asset write-downs of the development costs and equipment and other costs of restructuring and redundancy. The related costs of impairing the goodwill and acquired intangible assets are disclosed separately within administrative expenses (note 2.5).
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Costs incurred on acquisition of product line |
281 |
- |
|
Net property provision released |
(37) |
- |
|
Impairment of capitalised development costs |
- |
403 |
|
Impairment of property, plant and equipment |
- |
110 |
|
Redundancy costs |
- |
75 |
|
Other exit costs |
- |
272 |
|
|
244 |
860 |
4 OTHER GAINS AND LOSSES
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Hedge ineffectiveness on cash flow hedges |
404 |
187 |
|
Hedge ineffectiveness on net investment hedge |
237 |
651 |
|
Change in the fair value of derivative assets outstanding at year end (Options) |
(775) |
(172) |
|
Change in the fair value of derivative liabilities outstanding at year end (Forwards) |
153 |
(170) |
|
Costs arising on liquidation of previously disposed businesses |
- |
(23) |
|
|
19 |
473 |
The gains arising due to hedge ineffectiveness are derived from the differences in the movement in the fair values of both the interest rate and cross currency swaps and the hypothetical derivative that represented the market value of the swap on the date of designation.
5 Net finance charge
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
|
|
|
|
Finance income |
|
|
|
Interest receivable and similar income |
15 |
25 |
|
Interest on short-term deposits |
412 |
197 |
|
Interest on extended payment terms |
57 |
- |
|
Total finance income |
484 |
222 |
|
|
|
|
|
Finance charges |
|
|
|
Bank loans and overdrafts1 |
(202) |
(325) |
|
Other loans/commitment fees |
(82) |
(118) |
|
Losses on financial instruments in a hedging relationship: |
|
|
|
- Interest rate swaps and caps - cash flow hedges |
(952) |
(928) |
|
- Cross currency swaps - net investment hedge |
(691) |
(617) |
|
Other interest |
(36) |
- |
|
Unwinding of discount on provisions 2 |
(146) |
(200) |
|
|
(2,109) |
(2,188) |
|
Recycling of fair value loss on cash flow hedges 3 |
(133) |
(655) |
|
Total finance charges |
(2,242) |
(2,843) |
|
|
|
|
|
Net finance charge |
(1,758) |
(2,621) |
|
|
|
|
|
Adjusted net finance charge before recycled hedge loss |
(1,625) |
(1,966) |
|
Recycling of fair value loss on cash flow hedges 3 |
(133) |
(655) |
|
Net finance charge |
(1,758) |
(2,621) |
1 Finance charges on bank loans and overdrafts include amortisation of issue costs of £28,000 (2010: £52,000).
2 The unwinding of discount on provisions (note 14) relates to property and deferred consideration provisions.
3 The recycling of fair value loss on cash flow hedges arises due to the repayments of the term loan reducing the interest payments, causing some of the interest cash flows to be classed as no longer probable. In accordance with IAS39, an equivalent proportion of the fair value losses under the interest rate swap arrangement, previously taken to equity, are released to profit or loss.
6 SHARE-BASED PAYMENTS
Equity-settled share-based payment arrangements
The Group operates several share option plans including SAYE and other share-based schemes.
Cash-settled share-based payment arrangements
The Group does not operate separate cash-settled share-based payment arrangements; however, the employers' NIC liability arising on the outstanding awards is treated as such an arrangement for accounting purposes. The employers' NIC liability on the outstanding awards at 30 April 2011 was £483,000 (2010: £304,000) which is fully provided for in the accounts.
The Group recognised the following total (credit) / expense in relation to both equity-settled and cash-settled share-based payment arrangements during the year.
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Equity-settled |
(305) |
2,446 |
|
Cash-settled |
179 |
(10) |
|
|
(126) |
2,436 |
7 Income tax expense
|
|
Continuing operations |
Discontinued operations |
Total |
|||
|
|
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Current tax |
|
|
|
|
|
|
|
UK corporation tax |
922 |
614 |
- |
- |
922 |
614 |
|
Foreign tax |
2,495 |
2,015 |
- |
- |
2,495 |
2,015 |
|
|
3,417 |
2,629 |
- |
- |
3,417 |
2,629 |
|
Adjustments in respect of prior years |
|
|
|
|
|
|
|
UK corporation tax |
(27) |
- |
(484) |
(1,000) |
(511) |
(1,000) |
|
Foreign tax |
83 |
(42) |
- |
- |
83 |
(42) |
|
|
56 |
(42) |
(484) |
(1,000) |
(428) |
(1,042) |
|
Total current tax expense/(credit) |
3,473 |
2,587 |
(484) |
(1,000) |
2,989 |
1,587 |
|
Deferred tax |
|
|
|
|
|
|
|
UK |
700 |
(565) |
- |
- |
700 |
(565) |
|
Foreign |
(903) |
(1,586) |
- |
- |
(903) |
(1,586) |
|
Total deferred tax credit |
(203) |
(2,151) |
- |
- |
(203) |
(2,151) |
|
Total income tax expense/(credit) |
3,270 |
436 |
(484) |
(1,000) |
2,786 |
(564) |
The tax charge on the profit on sale of discontinued operations was £nil (2010: £nil).
UK corporation tax is calculated at 27.84% (2010: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
(Credited)/charged to equity |
|
|
|
Deferred tax relating to share-based payments |
(785) |
(110) |
|
Deferred tax relating to amortisation of acquired intangibles |
75 |
(206) |
|
UK corporation tax relating to discontinued activities |
- |
450 |
|
UK corporation tax relating to foreign exchange |
484 |
- |
|
|
(226) |
134 |
Factors affecting tax charge for the year
The tax assessed on the profit on ordinary activities for the year is different to the standard rate of corporation tax in the UK. The differences are explained below:
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Profit/(loss) before tax |
|
|
|
Continuing operations |
12,221 |
(3,991) |
|
Tax on Group profit at standard UK corporation tax rate of 27.84% (2010: 28%) |
3,402 |
(1,117) |
|
Effects of: |
|
|
|
Impairments |
- |
1,160 |
|
Disallowed expenses and non-taxable income (net) |
(214) |
87 |
|
Change in UK tax rate |
129 |
- |
|
Ineligible depreciation |
111 |
24 |
|
Prior year adjustment in relation to deferred tax |
232 |
347 |
|
Short-term timing differences |
(559) |
112 |
|
Tax losses carried forward |
5 |
77 |
|
Utilisation of tax losses |
(66) |
(54) |
|
Higher tax rates on overseas earnings |
80 |
233 |
|
Deferred tax not provided |
94 |
(391) |
|
Adjustments to current tax charge in respect of previous periods |
56 |
(42) |
|
Income tax expense for year |
3,270 |
436 |
|
Tax rate for continuing operations |
26.8% |
(10.9)% |
The Group earns its profits in the UK and overseas. The tax rate used in this reconciliation for tax on profit on ordinary activities is 27.84% (2010: 28%), being the standard rate for UK corporation tax, as the Group's head office is in the UK.
Some components of the Group's overseas profits are likely to be taxed at an effective rate that is higher than the UK rate. Other components, due to the availability of losses brought forward in certain countries, are likely to be taxed at a lower rate.
8 Earnings per share
The calculations of earnings per share are based on the Group profit for the year, adjusted profit1 and weighted average number of shares in issue:
|
|
Basic |
Diluted |
||
|
|
2011 |
2010 |
2011 |
2010 |
|
EPS summary |
|
|
|
|
|
Basic EPS |
3.3p |
(1.2)p |
3.1p |
(1.2)p |
|
Basic EPS for continuing operations |
3.1p |
(1.5)p |
2.9p |
(1.5)p |
|
Adjusted EPS2 |
4.0p |
2.4 p |
3.8p |
2.3 p |
|
|
2011 |
2010 |
2011 |
2010 |
|
|
Pence per share |
Pence per share |
£000 |
£000 |
|
Profit/(loss) for the year |
3.3 |
(1.2) |
9,435 |
(3,427) |
|
Profit from discontinued operations |
(0.2) |
(0.3) |
(484) |
(1,000) |
|
Profit/(loss) for the year on continuing operations |
3.1 |
(1.5) |
8,951 |
(4,427) |
|
Reconciliation to adjusted profit: |
|
|
|
|
|
Other gains and losses (net of tax) |
- |
(0.1) |
(14) |
(341) |
|
Recycled hedge losses3 (net of tax) |
- |
0.2 |
96 |
472 |
|
Amortisation of acquired intangible assets (net of tax) |
0.9 |
1.0 |
2,650 |
2,947 |
|
Share-based payments (net of tax) |
(0.1) |
0.6 |
(337) |
1,822 |
|
Impairment of goodwill and acquired intangible assets (net of tax) |
- |
2.0 |
- |
5,870 |
|
Restructuring costs (net of tax) |
0.1 |
0.2 |
254 |
619 |
|
Adjusted profit1 |
4.0 |
2.4 |
11,600 |
6,962 |
1 Profit from continuing businesses before other gains and losses, recycled hedge losses, amortisation of acquired intangible assets, share-based payments, impairments and restructuring costs.
2 Earnings per share on adjusted profit1 have been included to give a clearer understanding of the results of the continuing businesses.
3 Recycled hedge losses relate to the recycling of fair value losses on cash flow hedges reclassified from equity to profit or loss in the year.
Diluted EPS for discontinued operations is 0.2p (2010: 0.3p).
|
Number of shares ('000) |
2011 |
2010 |
|
Weighted average number of shares in issue - used to calculate basic earnings per share |
289,781 |
292,166 |
|
Effect of dilutive ordinary shares |
|
|
|
- SAYE and share option schemes |
15,351 |
14,100 |
|
Number of shares used to calculate diluted earnings per share |
305,132 |
306,266 |
9 ACQUISITION
On 7 January 2011, Anite acquired the network test and measurement product line (Invex) from Andrew LLC, a subsidiary of CommScope Inc., which provides mobile network performance monitoring products in North America. As a result of the acquisition, Anite expects the Invex product line will significantly broaden Anite's existing Network Testing product range and advance the readiness of its product portfolio for the LTE networks' roll out over the next five years. The product line has been fully integrated into Anite's existing Network Testing division.
No goodwill has been recognised on the acquisition.
Recognised amounts of assets acquired and liabilities assumed:
|
|
Book value £'000 |
Adjustments £'000 |
Fair value £'000 |
|
Intangible assets - acquired IP |
- |
1,728 |
1,728 |
|
Intangible assets - software licences |
- |
49 |
49 |
|
Fixed assets |
27 |
(10) |
17 |
|
Inventory |
155 |
- |
155 |
|
Inventory prepayment |
- |
161 |
161 |
|
Liabilities |
(216) |
- |
(216) |
|
Total |
(34) |
1,928 |
1,894 |
Consideration:
|
|
|
|
Fair value £'000 |
|
Cash |
|
|
1,263 |
|
Contingent consideration |
|
|
631 |
|
Total |
|
|
1,894 |
The contingent consideration arrangement requires Anite to pay the former owner of the Invex product line up to $1,000,000 on achievement of a revenue-related performance criterion. The fair value of the contingent consideration has been estimated at $1,000,000 being the amount that management believe will be payable under the agreement.
The revenue and profit of the product line prior to acquisition has not been disclosed due to the product line not preparing separately identifiable accounts in the period prior to acquisition. In the period 7 January 2011 to 30 April 2011, the product line has generated revenue of £250,000 and has broken even following the capitalisation of £500,000 of development expenditure.
Acquisition costs of £281,000 have been expensed in the consolidated income statement of Anite plc during the period under the heading "restructuring costs". These costs have been excluded in the calculation of adjusted profit.
10 Trade and other receivables
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Current assets |
|
|
|
Trade debtors |
26,590 |
21,353 |
|
Less: provision for impairment of trade receivables |
(1,255) |
(1,000) |
|
Trade debtors net of provision |
25,335 |
20,353 |
|
Other receivables |
1,572 |
1,171 |
|
Prepayments |
2,218 |
1,714 |
|
Amounts due from customers under construction contracts |
450 |
259 |
|
Accrued income |
2,364 |
1,021 |
|
|
31,939 |
24,518 |
11 Trade and other payables
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Trade creditors |
5,134 |
6,721 |
|
Other taxes and social security |
1,385 |
1,232 |
|
Deferred income |
12,349 |
10,490 |
|
Accruals |
11,282 |
6,485 |
|
Other creditors |
388 |
830 |
|
|
30,538 |
25,758 |
12 Bank borrowings
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Current |
|
|
|
Bank loans |
9,995 |
4,988 |
|
Non-current |
|
|
|
Bank loans |
- |
9,979 |
|
|
9,995 |
14,967 |
|
The borrowings are repayable as follows: |
|
|
|
On demand or within one year |
9,995 |
4,988 |
|
In the second year |
- |
9,979 |
|
|
9,995 |
14,967 |
|
Less: amounts due for settlement within 12 months (shown under current liabilities) |
(9,995) |
(4,988) |
|
Amount due for settlement after 12 months |
- |
9,979 |
The current and non-current bank loans comprise a £10m (2010: £15m) fixed term loan less £0.005m (2010: £0.033m) of unamortised issue costs being amortised over the period of the loan.
The loan was taken out on 30 November 2006 under a borrowing facility maturing on 30 November 2011. This loan is secured by a fixed and floating charge on the Group's assets.
13 Net CASH
|
|
|
2011 |
2010 |
|
|
Note |
£000 |
£000 |
|
Cash and cash equivalents |
|
37,667 |
44,803 |
|
Bank borrowings - current |
12 |
(9,995) |
(4,988) |
|
Bank borrowings - non-current |
12 |
- |
(9,979) |
|
Net cash |
|
27,672 |
29,836 |
|
A reconciliation of the movement in net cash/(debt) for the year is as detailed below: |
|
|
|
|
|
|
2011 |
2010 |
|
|
|
£000 |
£000 |
|
Net cash at 1 May |
|
29,836 |
27,262 |
|
Net decrease in cash and cash equivalents |
|
(7,020) |
(2,204) |
|
Unamortised issue costs of bank borrowings |
|
(28) |
(52) |
|
Decrease in bank borrowings |
|
5,000 |
5,000 |
|
Exchange movement |
|
(116) |
(170) |
|
Net cash at 30 April |
|
27,672 |
29,836 |
14 Provisions
|
|
Deferred |
Warranties |
Property |
Other |
Group |
|
|
consideration |
|
provision |
provisions |
total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 1 May 2010 |
- |
3,210 |
6,231 |
272 |
9,713 |
|
Release of provision against fixed assets |
- |
- |
(746) |
- |
(746) |
|
Release of provision credited to income statement |
- |
- |
(817) |
(95) |
(912) |
|
Established during the year |
631 |
- |
1,121 |
- |
1,752 |
|
Utilised during the year - operating expenses |
- |
- |
(1,490) |
(177) |
(1,667) |
|
Unwinding of discount |
- |
- |
146 |
- |
146 |
|
Exchange movement |
(32) |
- |
- |
- |
(32) |
|
At 30 April 2011 |
599 |
3,210 |
4,445 |
- |
8,254 |
|
|
2011 |
2010 |
|
|
£000 |
£000 |
|
Analysed as: |
|
|
|
Current liabilities |
4,794 |
4,611 |
|
Non-current liabilities |
3,460 |
5,102 |
|
|
8,254 |
9,713 |
The deferred consideration provision represents the cash consideration payable following the acquisition of the Invex product line. It is expected to be utilised within two years.
The warranty provision has been made to cover any potential claims made by disposed businesses during the contractual warranty period. It is expected to be utilised in one to six years.
The property provision is in respect of all properties surplus to business requirements and dilapidation provisions for properties currently in use. The provision is calculated in accordance with IAS 37 as disclosed in note 1 to the accounts. It is expected to be utilised in one to eleven years.
15 Called up share capital
|
|
Ordinary shares of 11.25p each |
Deferred redeemable shares of £1 each |
||
|
|
||||
|
|
||||
|
|
Number |
£000 |
Number |
£000 |
|
Authorised: |
|
|
|
|
|
At 30 April 2010 & 2011 |
355,555,556 |
40,000 |
50,000 |
50 |
|
Allotted, issued and fully paid: |
|
|
|
|
|
At 30 April 2010 |
298,683,195 |
33,602 |
50,000 |
50 |
|
Issued during the year |
253,081 |
28 |
- |
- |
|
At 30 April 2011 |
298,936,276 |
33,630 |
50,000 |
50 |
a) Redeemable share capital
These deferred shares of £1 each may be redeemed at any time at the option of the Company at a price of 1p each. They are non-equity shares and have no voting rights.
b) Shares issued during the year
253,081 ordinary shares were issued at prices between 30.5p and 48.5p each in respect of the exercise of options under the Approved Share Option Scheme and Long Term Incentive Plan.
c) Outstanding options
As at 30 April 2011, the following options over the Company's ordinary shares had been granted and were still outstanding:
|
|
Executive |
|
|
|
|
Share Option |
SAYE Option |
|
|
|
Grants/Awards |
Schemes |
Total |
|
Outstanding at 1 May |
14,276,291 |
2,709,523 |
16,985,814 |
|
Granted during the year |
13,289,547 |
- |
13,289,547 |
|
Exercised during the year |
(253,081) |
(29,940) |
(283,021) |
|
Lapsed during the year |
(4,530,285) |
(215,929) |
(4,746,214) |
|
Outstanding at 30 April |
22,782,472 |
2,463,654 |
25,246,126 |
|
Subscription price |
0.0p - 102.0p |
22.5p |
|
|
Dates exercisable |
May 2011 - August 2020 |
September 2012 - August 2017 |
|
|
Weighted average exercise price |
5.0p |
22.5p |
|
d) Own shares reserve
The own shares reserve represents the cost of shares in Anite plc purchased in the market for the following trusts of the Company:
i) Employee Share Ownership Plan (ESOP). The Company's ESOP is used to satisfy some of the PSP and SMP awards, that part of the employers' NIC liability of the Group's share options schemes and all of the MIP awards. All of the shares held at 30 April 2011 will continue to be held until the performance conditions of the relevant share plan awards are fulfilled. Shares sold during the year are to satisfy awards that were vested.
ii) Share Incentive Plan (SIP). The Company's SIP is used to satisfy the awards under the terms of the SIP scheme. These shares will be held until the conditions of the SIP are fulfilled.
The movements in the number and value of shares held under both the ESOP and SIP schemes are as follows:
|
|
ESOP |
SIP |
Total |
|||
|
|
No. |
£'000 |
No. |
£'000 |
No. |
£'000 |
|
Held at 1 May 2010 |
4,471,447 |
2,837 |
2,022,281 |
1,058 |
6,493,728 |
3,895 |
|
Purchased during the year |
8,626,446 |
5,270 |
162,878 |
81 |
8,789,324 |
5,351 |
|
Sold during the year |
(25,274) |
(17) |
- |
- |
(25,274) |
(17) |
|
Held at 30 April 2011 |
13,072,619 |
8,090 |
2,185,159 |
1,139 |
15,257,778 |
9,229 |
16 Dividends
Dividends paid during the year are set out below:
|
|
Payment date |
2011 |
2011 |
2010 |
2010 |
|
|
|
pence |
|
pence |
|
|
|
|
per share |
£000 |
per share |
£000 |
|
For the year ended 30 April 2009 |
|
|
|
|
|
|
Final dividend |
20 October 2009 |
|
|
0.65 |
1,912 |
|
For the year ended 30 April 2010 |
|
|
|
|
|
|
Interim dividend |
20 February 2010 |
|
|
0.30 |
883 |
|
Final dividend |
26 October 2010 |
0.650 |
1,905 |
|
|
|
For the year ended 30 April 2011 |
|
|
|
|
|
|
Interim dividend |
18 February 2011 |
0.315 |
921 |
|
|
|
|
|
|
2,826 |
|
2,795 |
At the AGM on 15 September 2011, a final dividend in respect of the year ended 30 April 2011 of 0.735p per share is to be proposed.
This information is provided by RNS
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