Interim Results
Anite Group PLC
4 December 2001
ANITE GROUP PLC ('ANITE')
Interim results for the six months ended 31 October 2001
Anite Group plc, the European IT consultancy and solutions business, announces
its interim results today for the six months ended 31 October 2001. The
highlights are:
Highlights:
* Profit before tax* up 54% to £13.1m (2000: £8.5m), including strong
organic profits growth of 39%
* Earnings per share* up 52% to 3.5p (2000: 2.3p)
* Continuing businesses operating margins improve to 16.0% from 13.0%
* Turnover in core businesses up 41% to £92.6m (2000: £65.5m), with
strong organic sales growth of 23% driven by major contract successes
* Operating profits for continuing businesses rose 74% to £14.8m (2000:
£8.5m), comprised as follows:
Public Sector turnover up 76% to £23.7m, operating profits up 765% to £2.2m
Telecoms turnover up 74% to £18.0m, operating profits up 78% to £4.8m
Travel turnover up 24% to £11.8m, operating profits up 59% to £1.8m
Consultancy turnover up 22% to £39.1m, operating profits up 36% to £6.0m
* The sale of the majority of the IT Personnel business during the
period marked the final stage of the disposal of non-core businesses
* All acquisitions made in 2001 have contributed positively to profits
*Before goodwill amortisation and exceptional items and after net interest
Operating profits referred to within this announcement exclude goodwill
amortisation
Commenting on the results John Hawkins, Chief Executive, said:
'Strong organic growth has been achieved in the first half driven by major
contract successes. Our current phase of growth is being built on the strong
platform we have created in each of our four sectors through both organic
growth and selective acquisitions.
'Our core markets continue to perform strongly and our business is well
balanced and geographically diversified and I am therefore confident that we
will continue to outperform our sector in the coming year.'
For further information please contact:
Anite Group plc 0118 945 0121
John Hawkins, Chief Executive www.anite.com
Simon Hunt, Finance Director
Golin/Harris Ludgate 020 7324 8888
Reg Hoare/Laurence Read
An Analysts' meeting will take place at the offices of Golin/Harris Ludgate,
111 Charterhouse Street, London, EC1M 6AW at 9.30am on 4 December 2001.
Chairman's Statement
Introduction
I am pleased to report an excellent first half performance with profits before
tax (before amortisation of goodwill and exceptional items) of £13.1m, 54%
ahead of last year's figure of £8.5m. Basic earnings per share (before
amortisation of goodwill and exceptional items) grew by 52%. The operating
margin (before interest) from continuing businesses grew to 16% from 13% last
year, based on operating profits, before goodwill, for continuing businesses
of £14.8m (2000: £8.5m).
Strong organic growth of 23% in sales and 39% in operating profits has been
achieved in the first half, driven by major contract successes (organic growth
is defined as excluding the effect of those acquisitions completed since 1 May
2000).
The overall growth has been led by our public sector business, with operating
profits up 765% to £2.2m. Our telecoms business has grown overall profits by
78%, and those of its core testing solutions business by 26%, with 3G
deliveries being made for the first time in the half year. Our travel
business' profits grew by 59%, with future growth being underpinned by the 10
year commitment won from Airtours and its £23.0m order book. Consultancy
profits grew by 36% with further organic growth achieved. There has been no
significant impact on the business overall as a result of the events of 11
September.
Annualised recurring revenues increased during the period to £35m from £25m at
the year end, whilst the Group's total order book now stands in excess of £
70m.
During the period the Group completed four acquisitions at a total cost of £
30m, Parsec, a fast growing UK based consultancy business, Didgicom and Rox,
two small travel software businesses and Braid Hill, which supplies court and
fines solutions. All these acquisitions and those made in 2001 have made
positive profit contributions during the period. Since the half year end we
have also acquired FSS. The acquisition of FSS makes us one of the largest
suppliers of Travel based solutions. In June we disposed of the majority of
our IT personnel business.
Cash remains strong with half year cash balances of £8.9m.
Telecoms
Our telecoms business has continued to grow, by maintaining its strong order
intake despite a far tougher market than last year. Sales were 74% up at £
18.0m (2000: £10.3m) and profits 78% up at £4.8m (2000: £2.7m). The telecoms
testing business grew its sales by 42% and profits by 26%. Demand for GSM/
GPRS systems has been strong from customers in the Far East and from
significant new customers in the USA, where this technology is replacing
earlier systems. We completed development of our first phase 3G systems in
the half year, and successfully delivered these to support strong customer
demand, particularly in Europe. Our annual R & D spend is expected to be £5m
this year compared with £4m in 2000-1.
Calculus, our telecoms billing company acquired in December 2000, achieved a
strong profit performance in the half year. Although orders from new
customers have been affected by weak trading conditions in the sector, order
intake recovered in the second quarter.
We reduced the scale of our investment in the Network operator sector during
the half year, and the residual products and distribution capability have been
transferred into Calculus.
Travel
Our travel business has continued to perform strongly and its half year
profits were 59% up at £1.8m (2000: £1.1m) on sales 24% higher at £11.8m
(2000: £9.6m).
Travel's strategic focus is to provide managed services and solutions to tour
operators in Europe. Its market position and contracted revenues were greatly
strengthened by winning the Airtours contract in August 2001. This 10 year
contract, with committed revenues over the first 3 years of £15m, together
with Travel's order book which stood at £23m at the half year, will underpin
our performance in the second half.
Travel acquisition - FSS
We have further strengthened our travel business with the acquisition,
announced today, of FSS, Anite Travel's main competitor. We will integrate
FSS's reservation products and tour operator/travel agent customer base into
our Slough based travel operations. Travellog, FSS's ferry subsidiary, will
be merged with our Carus business based in Finland, enabling the supply
through the Travellog channel of Carus' state of the art ferry solutions.
In its year ended 31 March 2001, FSS made a pre-tax loss before goodwill
amortisation and exceptional items of £0.8m on sales of £9.6m. The purchase
price is £8.3m, plus deferred consideration and earnout of £1.7m.
Consultancy
The Group's consultancy division increased its operating profits by 36% to £6m
(2000: £4.4m).
Our banking consultancy (Anite Deutschland) has performed well and increased
its trading profits. It has borne an investment arising from its expansion
into providing consultancy services to German insurance companies and early
indications in this market are promising. This business typically benefits
from 12 month contracts with its customers.
Our ERP consultancy and management consultancy (Anite/GMO) traded profitably
during the half year and our strategy is to refocus the business in higher
margin consultancy areas.
Sales in France (Datavance) increased to £10.6m (2000, 4 months: £6.0m) and
profits increased to £2.2m (2000, 4 months: £0.9m). The company continues to
make good progress, although growth is lower than last year due to weaker
market conditions.
Anite Benelux grew its operating profits by 19% in a difficult market.
Contracted revenue provides 40% of the turnover of this business, arising from
the provision of infrastructure services.
Consultancy acquisition - Parsec
Parsec, acquired in August 2001, is a strongly growing UK based consultancy
with customers in the finance and insurance sector. It has grown to 67
consultants and produced a £0.7m profit contribution following acquisition.
The price paid was £7m, plus an earnout of up to £20m over 3 years based on a
multiple of profits before tax of 4.5 to 1.
Public Sector
Our public sector business grew strongly following its establishment as a
fully integrated and homogenous business during the last financial year.
Sales were up 76%, with profits 765% higher at £2.2m. We have established a
leadership position in the local authorities' market, with 72% penetration
based on our very strong range of applications and substantial customer base.
We are strongly placed to benefit from the government's budgeted spending, by
2005 of £2bn on e-government solutions to local authorities. At October 2001
our order books totalled £29m.
Public Sector acquisitions - ICL and Braid Hill
The ICL acquisition in March 2001 has provided a strong contribution
underpinned by its contracted revenue of c.£5m pa. Sales of the Pericles
products, which had been developed pre-acquisition at a cost of £8m, have been
strong, and all of the Pericles products are expected to be completed and
shipped in the second half.
The Braid Hill acquisition in October 2001 (cost £0.3m) will enable us to
supply courts and fines solutions to Scottish and English local authorities.
Cash
Cash remains strong, with half year cash balances of £8.9m. In the second
half, we expect to spend £13.8m on earnouts and deferred payments for
acquisitions. The cash cost of the FSS acquisition in December 2001 was £
4.8m.
Outlook
In the solutions area, our Telecoms testing business continues to trade
strongly, including strong 3G deliveries.
Our creation of a Public Sector business over a 3 year period, which is the
market leader within the local authority sector has resulted in very strong
sales and profits growth, with improved margins. The outlook for this
business, with a £29m order book in a market benefiting from the anticipated
strong government spending on e-commerce solutions, is very good.
The Travel division order book of £23m underpins its current business and
profits and the integration of the FSS acquisition will reinforce our customer
base and market strength.
Our Consultancy business continues to grow strongly and we continue to find
sensibly valued acquisitions to enhance our position.
Our current phase of growth is being built on the strong platform we have
created in each of our four sectors through both organic growth and selective
acquisitions. Our core markets continue to perform strongly and our business
is well balanced and geographically diversified. I am therefore confident
that we will continue to outperform our sector in the coming year.
Alec Daly
Chairman
4 December 2001
Group Profit and Loss Account
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 Oct 2001 31 Oct 2000 30 April 2001
(Restated) (Restated)
---------------- ---------------- ----------------
Notes £'000 £'000 £'000
---------------- ---------------- ----------------
Turnover
Existing operations 90,723 65,528 158,754
Acquisitions 2 1,915 - -
---------------- ---------------- ----------------
Continuing operations 92,638 65,528 158,754
Discontinued 2,582 20,137 33,664
---------------- ---------------- ----------------
95,220 85,665 192,418
---------------- ---------------- ----------------
Operating profit
Existing operations 14,063 8,508 21,118
Acquisitions 2 801 - -
Amortisation of (11,080) (5,843) (14,161)
goodwill
---------------- ---------------- ----------------
Total continuing 3,784 2,665 6,957
operations
Discontinued (1,135) 630 926
operations
---------------- ---------------- ----------------
Operating profit 2,649 3,295 7,883
Share of associate's (77) - (201)
operating loss
(Loss)/profit on sale/
closure of
discontinued (83) 352 (9,535)
operations
Profit on sale of - - 10,123
tangible fixed
assets - - 10,123
---------------- ---------------- ----------------
Profit on ordinary
activities before
finance charges 2,489 3,647 8,270
Finance charges - net (525) (606) (1,174)
---------------- ---------------- ----------------
Profit on ordinary
activities before
tax 1,964 3,041 7,096
Tax on profits on 3 (3,224) (2,407) (5,746)
ordinary activities
---------------- ---------------- ----------------
(Loss)/profit on (1,260) 634 1,350
ordinary activities
after tax (1,260) 634 1,350
Minority interest (113) - (262)
---------------- ---------------- ----------------
(Loss)/profit for the (1,373) 634 1,088
period
Dividend 5 - (48) (49)
---------------- ---------------- ----------------
Retained (loss)/profit (1,373) 586 1,039
for the period
---------------- ---------------- ----------------
(Loss)/earnings per 8
share (FRS 19
adjusted)
- basic (0.5p) 0.2p 0.4p
---------------- ---------------- ----------------
- diluted (0.5p) 0.2p 0.4p
---------------- ---------------- ----------------
Earnings per share
before
amortisation of
goodwill and
exceptionals (FRS 19
adjusted)
---------------- ---------------- ----------------
- basic 4 3.5p 2.3p 5.5p
---------------- ---------------- ----------------
- diluted 3.4p 2.3p 5.3p
---------------- ---------------- ----------------
Consolidated Statement of Total Recognised Gains and Losses for the six months
ended 31 October 2001
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 Oct 2001 31 Oct 2000 30 April 2001
(Restated) (Restated)
---------------- ---------------- ----------------
£'000 £'000 £'000
---------------- ---------------- ----------------
(Loss)/profit for the (1,296) 634 1,289
financial period - Group
- Associate (77) - (201)
---------------- ---------------- ----------------
(1,373) 634 1,088
Gain/(loss) on foreign 2,017 1,169 (1,807)
currency translation
---------------- ---------------- ----------------
Total recognised gains for 644 1,803 (719)
the period
Prior year adjustment (see 1,277 - -
note 4)
---------------- ---------------- ----------------
Total recognised gains since
last annual
report and accounts 1,921 1,803 (719)
---------------- ---------------- ----------------
Unaudited Unaudited Audited
31 Oct 2001 31 Oct 2000 30 April 2001
(Restated) (Restated)
---------------- ---------------- --------------
£'000 £'000 £'000
---------------- ---------------- --------------
Fixed assets
Intangible 207,512 120,131 188,804
Tangible 9,139 11,760 9,107
Associates 1,667 - 1,016
Investments 850 1,310 850
---------------- ---------------- ----------------
219,168 133,201 199,777
Current assets
Stock and WIP 6,966 7,524 5,286
Debtors 54,416 45,452 56,701
Investments 49 - 297
Short term deposits 7,930 - 9,473
Cash at bank 11,352 5,953 16,578
---------------- ---------------- ----------------
80,713 58,929 88,335
---------------- ---------------- ----------------
Current liabilities
Bank borrowings (7,057) (12,103) (7,271)
Hire purchase (240) (449) (266)
Amounts falling due (79,757) (57,081) (82,660)
within one year
---------------- ---------------- ----------------
(87,054) (69,633) (90,197)
---------------- ---------------- ----------------
Net current liabilities (6,341) (10,704) (1,862)
Creditors: amounts
falling due after one
year
Hire purchase (169) (471) (201)
Other creditors (3,576) (462) (6,194)
Provisions for
liabilities and
charges (43,086) (58,120) (41,114)
---------------- ---------------- ----------------
(46,831) (59,053) (47,509)
---------------- ---------------- ----------------
Net assets 165,996 63,444 150,406
---------------- ---------------- ----------------
Called-up share capital 28,816 26,725 27,979
Share premium account 54,814 28,276 44,837
Shares to be issued 67,177 - 63,158
Reserves 14,729 8,358 14,085
Minority interest 460 85 347
---------------- ---------------- ----------------
Capital employed 165,996 63,444 150,406
---------------- ---------------- ----------------
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 Oct 2001 31 Oct 2000 30 April 2001
£'000 £'000 £'000
-------------- -------------- --------------
Net cash inflow/(outflow) from
operating activities 7,235 8,377 32,906
Returns on investments and
servicing
of finance (331) (273) (1,190)
Taxation (3,770) (1,801) (3,651)
Capital expenditure and
financial
investments (2,854) (2,638) 8,806
Acquisitions and disposals (5,823) (20,775) (33,485)
Equity dividends paid - (798) (799)
--------------- --------------- --------------
Cash (outflow)/inflow before
management of liquid resources
and financing (5,543) (17,908) 2,587
Management of liquid funds 1,791 - (9,473)
Financing (5,039) 22,296 23,571
--------------- --------------- ---------------
(Decrease)/increase in cash in
the period (8,791) 4,388 16,685
--------------- --------------- --------------
Reconciliation of operating profit/to net cash inflow/(outflow) from operating
activities
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 October 2001 31 October 2000 30 April 2001
£'000 £'000 £'000
------------------ -------------------- -----------------
Operating profit 2,572 3,295 7,883
Depreciation 1,886 1,571 3,322
Intangible software 299 - 150
licence
Goodwill amortisation 11,080 5,842 14,161
(Increase)/decrease (1,638) (595) 1,707
in stock
(Increase)/decrease (1,164) 1,896 (4,363)
in debtors
(Decrease)/increase (5,800) (3,120) 10,289
in creditors
Exchange movement - (490) -
Profit on disposal of - (22) (243)
fixed assets
------------- -------------- ------------
Net cash inflow from
operating
activities 7,235 8,377 32,906
------------- -------------- ------------
1. The financial information contained in this document does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985. The accounts have been prepared using accounting policies consistent
with those set out in the most recent audited financial statements as amended
by the compliance with FRS 19 'Deferred Tax' (see note 4). Statutory accounts
for the year to 30 April 2001 have been filed with the registrar of companies.
The Auditors have reported on those accounts; their report is unqualified and
did not contain a statement under section 237(2) or (3) of the Companies Act
1985.
2. Acquisitions
Turnover Profit
£'000 £'000
------------- ----------
Parsec Systems Ltd 1,676 764
Didgicom Ltd 239 37
------------- ----------
1,915 801
------------- ----------
3. Taxation
£'000
----------
On the profit on ordinary activities for the period
UK corporation tax 1,872
Overseas taxation 1,584
Deferred tax - foreign (263)
Originating and reversal of timing differences 31
----------
3,224
----------
4. Deferred Tax
The Group has implemented the requirements for accounting for Deferred tax
under FRS 19. The figures in the primary statements have been re-stated to
reflect the new policy. The effect in the change in policy is summarised
below:
October 2001 October 2000 April 2001
£'000 £'000 £'000
------------- ------------- -------------
Profit and loss account
- Tax (charge)/credit (31) - 10
------------- ------------- -------------
(Decrease)/increase in net profit (31) - 10
after tax
------------- ------------- -------------
Balance Sheet
- Debtors 694 765 662
- Provisions 562 512 625
------------- ------------- -------------
Increase in net assets 1,256 1,277 1,287
------------- ------------- -------------
5. Dividends
£'000
---------
Proposed Nil
-------------
6. Reconciliation of net cash flow to movement in net debt
£'000
Decrease in cash in period (8,791)
Cash outflow from decrease in bank loan and financing 5,233
Cash inflow from increase in liquid resources (1,543)
----------
Change in net debt in period (5,101)
Cash acquired with subsidiaries 3,521
Cash sold with disposals (3,252)
Receipt of shares (248)
Net funds at 1 May 2001 13,611
----------
Net funds at 31 October 2001 8,531
----------
7. Analysis of net debt
1 May 2001 Acquisitions Disposals Non Cash Cash Flow 31 Oct 2001
£'000 £'000 £'000 £'000 £'000 £'000
Cash at 16,578 3,521 (3,252) - (5,495) 11,352
bank and
in hand
Bank (429) - - - (3,296) (3,725)
overdrafts
----------
(8791)
----------
Bank loans (4,999) - - - 1,665 (3,334)
due after
one year
Bank loans (6,842) - - - 3,510 (3,332)
due within
one year
Finance (467) - - - 58 (409)
leases
----------
5,233
----------
Short - 9,473 - - - (1,543) 7,930
term
deposits
Current 297 - - (248) - 49
asset
investment ----------- ----------- ---------- -------- ----------- -----------
13,611 3,521 (3,252) (248) (5,101) 8,531
----------- ----------- ---------- -------- ----------- -----------
8. The (loss)/earnings per share has been calculated on the net loss of £
1,373,000 (2000: profit £634,000) and the average number of shares in issue of
282,904,502 (2000: 261,103,833) and the weighted average number of shares
(adjusted for dilution) of 292,648,520 (2000: 265,385,655).
The adjusted earnings per share has been based on the adjusted net
profit (excluding goodwill amortisation and (loss)/profit on sale/closure of
discontinued operations and after net interest) of £9,790,000 (2000: £
6,125,000).
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 October 2001, set out on pages 7 to 13, and we have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies
with the financial information.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 October 2001.
Arthur Andersen
Chartered Accountants
180 Strand
London
WC2R 1BL
4 December 2001