Interim Results
Anite Group PLC
12 December 2006
For immediate release Tuesday, 12 December 2006
ANITE GROUP PLC
Interim results for the six months ended 31 October 2006
Anite Group plc ('Anite' or 'the Group'), the worldwide IT solutions and
services company, today announces its interim results for the six months ended
31 October 2006.
Financial highlights:
• Orders up 7.7% at £75.8m (2005: £70.4m), following a strong
performance by Travel and Wireless (formerly Telecoms)
• Revenues £78.0m (2005: £82.2m) primarily due to lower revenues in
Public Sector - 2005 included higher third party revenues (£2.2m) and State of
Victoria (SoV) revenues (£1.3m)
• Profit before tax £10.3m (2005: £10.1m)
• Net cash of £22.7m (2005: £25.6m) after payment of £11.3m in respect
of SoV and £2.2m settlement of onerous property lease
• Operating margins up to 12.9% (2005: 11.8%)
• Group profit after tax including discontinued operations £8.3m (2005:£9.2m)
• Basic and diluted earnings per share from continuing operations 2.2p
(2005: 2.2p), 2.4p including discontinued operations (2005: 2.6p)
Operating highlights:
• Results are in line with expectations, following another strong
performance by Wireless and good performance in the other businesses
• Successful settlement of SoV contract in July
• Considerable progress with Pericles
• Strong operating cash flow
• Recommended interim dividend of 0.25 pence per share - first interim
dividend since 2001
• Acquisition of Nemo completed on 30 November 2006 for an initial
consideration of £57m (€85m)
Commenting on today's results, Steve Rowley, Anite's Chief Executive, stated:
'Anite is currently transforming from a UK-centric, public sector and IT
consulting and services business into a leading global software business with a
stronger focus on wireless telecoms.
'The recent acquisition of Nemo, together with the impact of the continued
strong growth in profits of our existing Wireless business, has put wireless
telecoms firmly at the heart of the business, in line with our stated strategy.
'Overall, we are cautiously optimistic about Anite's prospects for the remainder
of the current financial year with the Group's trading, as in previous years,
being weighted towards the second half.'
For further information, please contact: www.anite.com
Anite Group plc 01753 804000
Steve Rowley, Chief Executive
Geoff Bicknell, Interim Group Finance Director
Smithfield 020 7360 4900
Reg Hoare/Sara Musgrave
An analysts' meeting will be held today at 11.00 for 11.15 a.m. at the offices
of Smithfield, 10 Aldersgate, EC1
Print resolution images are available for the media to view and download from
www.vismedia.co.uk
Notes to editors
Anite is an international IT solutions and services company whose primary
business is the provision of business critical solutions based on its deep
sector knowledge of the wireless telecoms, public sector, and travel markets.
These solutions almost always include at their core the supply of Anite-owned
software products. The Group offers a comprehensive service to its customers,
including implementation, systems integration, maintenance and managed services,
enabling it to maximise customer satisfaction and financial returns.
Headquartered in the UK, the Group now employs around 1,300 staff in 12
countries across Europe, America, and Asia Pacific. Anite solutions are
recognised as market leaders in their fields:
• all the leading global mobile phone manufacturers use Anite software
• 3 out of 4 UK Local Authorities use Anite applications
• around 40% of UK package holiday bookings were made using Anite software
and managed services in 2005
Wireless (formerly Telecoms)
Anite provides specialist systems and software for mobile phone network
simulation and handset testing, and following the recent acquisition of Nemo,
testing solutions for measurement and analysis of air interface between mobile
terminals and radio access network around the globe, for leading mobile phone
manufacturers, operators, component manufacturers and test houses.
Public Sector
Anite is a market leader in software and solutions to key parts of local
government, such as local tax collection, benefits payments, housing management
and social care solutions - as well as an important supplier of secure
information solutions to the law enforcement markets.
Travel
Anite is the UK's leading travel technology solution providers for tour
operators, air fare consolidators, and cruise, ferry, motor and rail inclusive
operators.
Anite Deutschland (formerly International)
Anite's German consultancy business focuses on IT consultancy and systems
integration in a range of vertical markets including finance, telecoms and
public sector.
Interim results for the six months ended 31 October 2006
Chairman's Statement
Introduction
I am pleased to report further progress in the six months ended 31 October 2006.
The Group performed well during this period with a strong performance by
Wireless (formerly Telecoms), a good achievement by Public Sector despite
slowing market conditions, and solid results from Travel, which reported a
record half year order book.
The last three years have been transformational for Anite, and the current
management team are delivering increased strategic momentum. Progress has been
enhanced by their being able to focus wholly on Anite's core businesses and
growth strategy following the successful settlement of the troubled State of
Victoria (SoV) contract.
We continue to evolve from a UK-centric, public sector and IT consulting and
services business into a leading global software business with a stronger focus
on the highly attractive wireless telecoms industry. Over the last three years,
Anite has streamlined its core activities (including the disposal of seven
non-core businesses), reducing its headcount from approximately 2,000 to 1,300
and strengthened its balance sheet.
Acquisitions and disposals
The next phase of Anite's transformation and future growth commenced following
the half year end with the acquisition of Nemo Technologies Limited, a leading,
Finnish based, global provider of specialist systems and software for mobile
phone network testing, for an initial consideration of £57m.
Following this acquisition, our Wireless businesses as a whole are expected to
represent around 40% of revenues and 70% of operating profit before intangible
amortisation.
After the period end we also successfully disposed of one small non-core
business, GMO MC, the smaller of Anite's two IT consultancy businesses based in
Germany.
We will continue to review selective acquisition opportunities that would help
achieve our aim of being number one or two in our chosen markets and to dispose
of businesses for which we see little prospect of achieving leadership in the
short to medium term. Our overriding objective in all cases is to create
shareholder value.
Divisional overview
The half year has seen good progress in all our businesses. A full account of
the Group's activities is included in the Chief Executive's section of this
report, but I highlight some significant aspects of our business below.
Our existing Wireless business, which holds a leading global position in its
chosen field, had another successful trading period and continues to invest in
research and development whilst maintaining our top tier position. The
acquisition of Nemo, which operates in an adjacent and complementary area of the
wireless telecoms market to our existing business, adds new products to our
portfolio, deepens our customer relationships and considerably strengthens our
geographical reach.
Our market leading Travel division had a solid first half during a period of
investment in its exciting new reservation system, @com, which is at the
forefront of helping its tour operator customers meet the challenges of internet
based competition. Its order book has seen significant growth in the year to
date and now stands at record levels.
Despite anticipated softness in Local Government revenues, our Public Sector
division, which is a market leader in a number of its key activities, reported a
double digit operating margin. Erosion of legacy product income and increased
development spending was in part offset by a good performance by Secure
Information Solutions (SIS) and a reduction in Pericles losses.
Group results
Profit before tax from continuing operations was £10.3m (2005: £10.1m), giving
basic and diluted earnings per share of 2.2p (2005: 2.2p). Group revenues
amounted to £78.0m (2005: £82.2m) - noting that 2005 included higher third party
hardware revenues (£2.2m) and SoV revenues (£1.3m). Good cost control and a
better mix benefited operating margins, which were 12.9% (2005: 11.8%) in the
period. Unallocated Group central costs increased by £0.6m, including £0.2m of
additional share based payment costs and the impact of having established a
central project management resource.
Group profit after tax including discontinued operations was £8.3m (2005:
£9.2m), with basic and diluted earnings per share including discontinued
operations of 2.4p (2005: 2.6p) after an exceptional tax credit of £0.7m in
respect of prior year discontinued activities.
As announced on 10 July 2006, we agreed a full and final settlement to release
the Group from its liabilities and obligations relating to the SoV contract. The
costs of this were expensed in the last financial year, although the cash
payment is included in today's results. Pericles losses reduced substantially
during the period and there has been no addition to the related contract
provisions. Group development spending in the period rose to £8.3m (2005: £6.7m)
including net capitalised development of £2.0m (2005: £0.8m).
Dividend and share buyback
Dividend payments were resumed with the payment in November 2006 of Anite's
first dividend since 2001. The Board has indicated its intention to adopt a
progressive dividend policy with an intended split of approximately one third at
the half year and two thirds at the full year. Accordingly, the Board is now
recommending an interim dividend of 0.25 pence per share. This dividend will be
payable on 16 May 2007 to shareholders on the register on 20 April 2007.
A resolution to renew the authority to buy back shares was approved at the
Group's AGM held on 3 October 2006. During the period 0.8m shares were bought
back at a cost of £0.6m and an average price of 71.5p per share.
Balance sheet and cash
The Group generated strong operating cash flow during the period. Despite
payment of £11.3m to settle and close down the SoV contract and £2.2m in
settlement of an onerous property lease, net cash only fell slightly to £22.7m
(2005: £25.6m).
In conjunction with the acquisition financing in relation to Nemo and other
opportunities, our existing banking facilities were renegotiated and increased
during the period.
People
In September, our Group Finance Director, Christopher Humphrey, took a leave of
absence on health grounds. We are anticipating that Chris will return to the
business in the New Year. We thank Geoff Bicknell, who has stood in as Interim
Group Finance Director during this period.
On behalf of the Board, I would like to thank all employees for their
contribution, hard work and support during the period.
Conclusion
In recent months we have continued to make good progress against our objectives,
invested in growth opportunities as planned and continued to strengthen Anite's
financial and market positions, as well as continuing the transformation of the
Company through acquisitions and disposals.
The Board is cautiously optimistic about Anite's prospects for the remainder of
the current financial year.
Clay Brendish
Chairman
Chief Executive's Operating Review
Introduction
Anite's performance in the first half of this financial year has been in line
with our expectations. We have grown profits in Wireless, maintained margins in
Public Sector, increased investment in the development of our products (to a
total spend of £8.3m in the first half), and grown our order book, especially in
Travel, where the order book is currently at record levels.
Compared to three years ago, the Group now has a strong balance sheet and high
quality earnings and margins, derived from strong and growing licence revenues
in Wireless and increasing recurring revenues.
This progress has enabled management to focus wholly on Anite's core business
and growth strategy, resulting in our first major acquisition for a number of
years, Nemo. Together with other exciting opportunities within the existing
businesses, we are now focused on maximising the benefits of this acquisition,
whilst exploring further avenues for future growth.
Strategy
Anite's primary business is the provision of business critical solutions based
on its deep sector knowledge of the wireless telecoms, public sector, and travel
markets. These solutions almost always include at their core the supply of
Anite-owned software products.
Our strategy is to be number one or two in each of these markets as we believe
that businesses with strong market positions have demonstrably superior returns.
Following the acquisition of Nemo, our Wireless division is now firmly
established at the heart of our business.
Divisional performance
Divisional performance* was as follows:
£m Revenue Operating Share Operating
prof based profit
pre SBP payments
Wireless 26.4 7.3 (0.1) 7.2
Public Sector 28.5 3.1 (0.1) 3.0
Pericles 2.5 (1.9) - (1.9)
Total Public Sector 31.0 1.2 (0.1) 1.1
Travel 14.6 3.0 (0.1) 2.9
International 6.0 0.5 - 0.5
78.0 12.0 (0.3) 11.7
*results are for continuing operations excluding SoV and unallocated central
costs.
Divisional order book performance was as follows:
£m 2006 2005 Inc/(dec)
Order intake Order intake
Wireless 24.3 19.5 4.8
Public Sector 25.6 33.5 (7.9)
Travel 22.5 13.7 8.8
International 3.4 3.7 (0.3)
Total operating companies 75.8 70.4 5.4
Wireless
Anite provides specialist systems and software for mobile phone network
simulation and handset testing, and, following the recent acquisition of Nemo,
testing solutions for measurement and analysis of air interface between mobile
terminals and radio access network. Going forward the two businesses will report
their results as one within the Wireless sector.
Existing Wireless (formerly Telecoms)
The existing Wireless business had another very successful trading period
increasing orders, revenues and operating profits, building market share in its
core areas. This result included the impact of capitalised development spend.
Our Anite Baseband Processor, which was successfully introduced last year and is
now an essential component of our 3G and future solutions, has continued to be
well received by our customers worldwide. Our continuing investment in product
development enables us to be first to market with evolving technologies, an
important hallmark of our technology leadership.
Our export sales, representing approximately 90% of divisional sales, are
evidence that our recent investment in overseas expansion continues to be
successful. Recurring maintenance revenues also continue to grow, representing
26% of divisional revenues in the period.
The first half was characterised by a number of market developments: positives
included continued strong global growth in mobile handset sales; the ongoing
adoption of 3G; and the proliferation of new wireless devices. These were partly
balanced by the continuing decline of demand for older 2G technologies, the
impact of consolidation amongst customers and more aggressive pricing tactics by
competitors. To protect against the latter, we continue to focus on reducing our
hardware costs. Overall we remain confident about prospects for this business.
Nemo
Nemo, which was acquired after the half year end, has more than doubled its
sales and operating profits over the last three years and has strong margins.
Our immediate focus is on integrating the business with the Group and beginning
to take advantage of the benefits that we believe the acquisition will bring to
our wireless telecoms offering. These include:
• extended product offering, adding network testing to Anite's current
focus on handset testing;
• attractive portfolio of proven revenue-generating products together
with exciting new developments in the pipeline;
• greater access to a large and expanding market driven by rollout
of new wireless technologies including 3G and its evolutions;
• further investment in our most successful market;
• valuable complementary relationships with key wireless
operators and extended geographical coverage; and
• R&D benefits to arise through shared knowledge and
customer/supplier relationships.
Public Sector
Anite is a market leader in software and solutions to key parts of local
government, such as local tax collection, benefits payments, housing management
and social care solutions - as well as an important supplier of secure
information solutions (SIS) to the law enforcement markets.
Public Sector (excluding Pericles) achieved a creditable double digit operating
margin despite higher development spending and the expected erosion of income
from our legacy Council Tax and Benefits product (VME). Revenues fell as a
result of the anticipated slowdown in demand ahead of the Local Government White
Paper/Lyons Review, especially notable in Social Care markets. Additionally,
lower third party hardware revenues and the inclusion of SoV revenues totalling
£1.3m in the same period last year further impact comparisons. Public Sector
markets generally continue to see a shift in business mix to more long term
contracts and less software licences.
SIS continued to perform well reflecting its strong market position and we
continue to expand this part of the division for which we see growth
opportunities.
Overall we continue to manage divisional costs to ensure that these are in line
with anticipated revenues and that a good level of profitability is therefore
sustained.
Pericles
Pericles losses fell by £0.8m during the period, in line with our expectations.
We are currently working through the few remaining implementations, and now have
just four outstanding out of a total of 88, all to be completed by our financial
year end. A further software release during the period was also well received,
with another due by the financial year end.
The provision carried forward continues to be adequate but is under continual
review. As previously indicated a small number of customers may require
settlements. Overall, a successful completion of Pericles' implementations is a
major achievement compared to three years ago.
Travel
Anite is the UK's leading travel technology solution providers for tour
operators, air fare consolidators, and cruise, ferry, motor and rail inclusive
operators.
Travel had a good half year, continuing to sustain profitability as it benefits
from repeat demand and strong recurring revenues from its installed customer
base (over 40% of revenues). As expected, this year is a transitional one for
the business as it steadily increases development spending on @com, our new
reservation system, with £0.3m (2005: nil) invested in the first half. This
investment is helping to fund the remaining development work on, and ensure
completion of, @com in the current financial year. This is a timely investment
as our customers continue to focus on their internet strategies; this is
resulting in many UK and international growth opportunities for Anite.
Major orders received from Condor Ferries and Finnair have resulted in a 60%
increase in Travel's order book to record levels. Following the half year end,
we subsequently received a large order from XL Leisure Group. We are making
significant inroads into international markets with @com.
Anite Deutschland (formerly International)
Anite's Deutschland, which focuses on IT consultancy and systems integration in
finance and public sector, made a profitable contribution to the first half and
continues to perform satisfactorily. Following the disposal of GMO MC, this is
Anite's remaining business within the division formerly known as International.
Outlook
Following a good first half performance, we will continue to invest in growth
opportunities during the second half.
The existing Wireless business is expected to continue to perform well in a
growing market.
Following the completion of the acquisition of Nemo on 30 November 2006, we have
already begun work to integrate this business and to maximise the benefits that
we expect to accrue in future years. Although Nemo will contribute just five
months' trading in the current financial year, we expect it to materially
enhance Anite's adjusted earnings per share (before amortisation of intangible
assets and exceptional items) in the first full year of ownership.
Public Sector is expected to continue to report mixed results, with continuing
success in SIS and reduction in Pericles losses being counter balanced by the
current softness in Local Government, ongoing erosion of VME income and higher
development spending. To protect profitability we continue to manage the cost
base in this division with the aim of maintaining margins, concentrating our
recruitment in SIS where the opportunities for growth are more evident.
In Travel, development spend on completing @com will hold back profits this year
as expected, although the full benefits of its rapidly rising order book and
growing international momentum will be seen in future years.
Overall, we are cautiously optimistic about Anite's prospects for the remainder
of the current financial year with the Group's trading, as in previous years,
being weighted towards the second half.
Steve Rowley
Chief Executive
Condensed consolidated income statement
Six months ended 31 October 2006
Notes 6 months 6 months Year
ended 31 ended 31 ended 30
October October April
2006 2005 2006
(unaudited) (unaudited) (audited)
£000 £000 £000
____________________________________________________________________________________________________________
Continuing operations
Revenue 2 78,042 82,167 164,667
Cost of sales (41,437) (46,622) (101,704)
____________________________________________________________________________________________________________
Gross profit 36,605 35,545 62,963
Distribution costs (5,227) (5,198) (10,956)
Administrative expenses (21,319) (20,688) (42,142)
____________________________________________________________________________________________________________
Net operating costs (26,546) (25,886) (53,098)
____________________________________________________________________________________________________________
Operating profit from continuing operations 2 10,059 9,659 9,865
Finance income 430 450 939
Finance charges (227) - (355)
Profit on ordinary activities before taxation 10,262 10,109 10,449
Income tax expense 4 (2,560) (2,374) (6,879)
____________________________________________________________________________________________________________
Profit for the period from continuing operations 7,702 7,735 3,570
Discontinued operations
Profit for the period from discontinued operations 3(a) 628 1,447 5,299
____________________________________________________________________________________________________________
Profit for the period 8,330 9,182 8,869
Profit attributable to equity holders of the parent 8,330 9,182 8,869
____________________________________________________________________________________________________________
Continuing and discontinued operations
Earnings per share
- basic 5 2.4p 2.6p 2.5p
- diluted 2.4p 2.6p 2.5p
Continuing operations
Earnings per share
- basic 5 2.2p 2.2p 1.0p
- diluted 2.2p 2.2p 1.0p
____________________________________________________________________________________________________________
Condensed consolidated balance sheet
30 October 2006
The accompanying notes are an integral part of this consolidated balance sheet.
Notes 31 31 30
October October April
2006 2005 2006
(unaudited) (unaudited) (audited)
£000 £000 £000
________________________________________________________________________________________________
Non-current assets
Goodwill 34,119 34,619 34,119
Other intangible assets 6,900 3,427 4,751
________________________________________________________________________________________________
Intangible assets 41,019 38,046 38,870
Property, plant and equipment 12,751 12,363 12,936
Deferred tax assets 2,183 2,489 2,438
________________________________________________________________________________________________
55,953 52,898 54,244
________________________________________________________________________________________________
Current assets
Inventories 6 2,926 4,043 2,920
Trade and other receivables 7 46,195 50,031 55,376
Current tax assets 2,058 331 334
Cash and cash equivalents 22,747 25,598 36,263
________________________________________________________________________________________________
73,926 80,003 94,893
Assets classified as held for sale 3(b) 327 - 473
________________________________________________________________________________________________
74,253 80,003 95,366
________________________________________________________________________________________________
Total assets 130,206 132,901 149,610
Current liabilities
Trade and other payables 8 (51,943) (57,998) (66,623)
Current tax payable (13,981) (15,003) (12,974)
Obligations under finance leases - (50) -
Provisions (2,502) (4,246) (14,649)
________________________________________________________________________________________________
(68,426) (77,297) (94,246)
Liabilities directly associated with 3(b) (455) - (519)
assets classified as held for sale
________________________________________________________________________________________________
(68,881) (77,297) (94,765)
________________________________________________________________________________________________
Non-current liabilities
Other payables (38) (148) (150)
Provisions (8,563) (12,840) (10,730)
________________________________________________________________________________________________
(8,601) (12,988) (10,880)
________________________________________________________________________________________________
Total liabilities (77,482) (90,285) (105,645)
________________________________________________________________________________________________
Net assets 52,724 42,616 43,965
________________________________________________________________________________________________
Equity
Issued share capital 9 35,186 34,773 35,186
Share premium account 24,496 23,611 24,303
Own shares (898) (569) (715)
Merger reserve 6,538 6,538 6,538
Capital redemption reserve 859 773 773
Retained earnings (13,457) (22,510) (22,120)
________________________________________________________________________________________________
Total equity 52,724 42,616 43,965
________________________________________________________________________________________________
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2006
Share Share Own Merger Capital Retained Total
capital premium shares reserve redemp- earnings
account tion
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
___________________________________________________________________________________________________________________
Balance at 1 May 2005 35,446 23,390 - 6,538 - (27,253) 38,121
Changes in equity for the period to 31 October 2005
___________________________________________________________________________________________________________________
Exchange differences arising on translation of - - - - - 72 72
foreign operations
___________________________________________________________________________________________________________________
Net income recognised directly in equity - - - - - 72 72
Profit for the period 9,182 9,182
___________________________________________________________________________________________________________________
Total recognised income and expense for the - - - - - 9,254 9,254
period
Issue of share capital 100 221 - - - - 321
Purchase of own shares - - (569) - - - (569)
Share buy back (773) - - - 773 (5,026) (5,026)
Recognition of share-based - - - - - 515 515
payments
___________________________________________________________________________________________________________________
Balance at 31 October 2005 34,773 23,611 (569) 6,538 773 (22,510) 42,616
___________________________________________________________________________________________________________________
Balance at 1 May 2006 35,186 24,303 (715) 6,538 773 (22,120) 43,965
Changes in equity for the period to 31 October 2006
___________________________________________________________________________________________________________________
Exchange differences arising on translation of - - - - - 164 164
foreign operations
___________________________________________________________________________________________________________________
Net income recognised directly in equity - - - - - 164 164
Profit for the period 8,330 8,330
___________________________________________________________________________________________________________________
Total recognised income and expense for the - - - - - 8,494 8,494
period
Issue of share capital 86 193 - - - - 279
Purchase of own shares - - (183) - - - (183)
Share buy back (86) - - - 86 (613) (613)
Recognition of share-based - - - - - 782 782
payments
___________________________________________________________________________________________________________________
Balance at 31 October 2006 35,186 24,496 (898) 6,538 859 (13,457) 52,724
___________________________________________________________________________________________________________________
Condensed Consolidated cash flow statement
For the six months ended 31 October 2006
6 months ended 31 6 months ended 31 Year ended 30
October October April
2006 2005 2006
£000 £000 £000
_____________________________________________________________________________________________________________________
Profit for the period
Continuing 7,702 7,735 3,570
Discontinued 628 1,447 5,299
8,330 9,182 8,869
_____________________________________________________________________________________________________________________
Adjustments for:
Income tax expense 1,827 2,374 3,628
Loss/(profit) on disposal of discontinued operations 100 (1,490) (2,383)
Finance income (209) (457) (604)
Depreciation of property, plant and equipment 2,223 2,354 5,212
Amortisation of intangible assets 151 222 556
Amortisation of internally generated assets 1,197 675 1,568
Goodwill impairment - - 500
Loss/(profit) on disposal of property, plant and equipment 170 (91) 112
Share-based payments 693 596 1,208
(Decrease)/increase in provisions (14,523) (3,093) 5,587
_____________________________________________________________________________________________________________________
Operating cash flows before movements in working capital (41) 10,272 24,253
(Increase)/decrease in inventories (110) (164) 959
Decrease/(increase) in receivables 9,322 (409) (6,253)
Decrease in payables (13,991) (13,345) (3,235)
_____________________________________________________________________________________________________________________
Movements in working capital (4,779) (13,918) (8,529)
_____________________________________________________________________________________________________________________
Cash generated from operations before exceptional cash 8,637 (3,646) 15,724
payments
Cash payments - SoV contract and onerous property lease (13,457) - -
(note 1)
_____________________________________________________________________________________________________________________
Cash (used in)/generated from operations (4,820) (3,646) 15,724
Interest received 437 381 781
Interest paid (117) - -
Interest element of finance lease rental payments - (7) (8)
Income taxes paid (2,219) (1,777) (4,916)
_____________________________________________________________________________________________________________________
Net cash (used in)/generated from operating activities (6,719) (5,049) 11,581
_____________________________________________________________________________________________________________________
Cash flow from investing activities
Proceeds from disposal of subsidiary undertakings (net of - 1,381 1,368
cash disposed)
Proceeds from previously closed businesses - 31 430
Purchase of property, plant and equipment (2,129) (2,020) (5,667)
Proceeds on disposal of property, plant and equipment - 87 (17)
Purchase of software licences (311) (200) (600)
Expenditure on capitalised product development (3,187) (1,469) (3,621)
_____________________________________________________________________________________________________________________
Net cash used in investing activities (5,627) (2,190) (8,107)
_____________________________________________________________________________________________________________________
Cash flow from financing activities
Issue of ordinary share capital 279 321 1,426
Share buyback (606) (5,019) (5,018)
Purchase of own shares (183) - (715)
Capital element of finance lease rental payments - (105) (155)
Redemption of vendor loan note instruments (478) (28) (482)
_____________________________________________________________________________________________________________________
Net cash used in financing activities (988) (4,831) (4,944)
_____________________________________________________________________________________________________________________
Net decrease in cash and cash equivalents (13,334) (12,070) (1,470)
Effect of exchange rate changes (182) 225 290
Cash and cash equivalents at 1 May 36,263 37,443 37,443
_____________________________________________________________________________________________________________________
Cash and cash equivalents at 31 October and 30 April 22,747 25,598 36,263
_____________________________________________________________________________________________________________________
Note 1:
The exceptional cash payments of £13.5m relate to closure of SOV contract
(£11.3m) and settlement of an onerous property lease contract (£2.2m). The
cashflow above includes GMO Management consulting, which is held for sale at 31
October 2006. This business generated net cash outflow from operating activities
of £0.7m and has cash and cash equivalents balance of £0.2m.
Notes To The Accounts(unaudited)
1. Basis of preparation and accounting policies
a) Basis of preparation
The condensed consolidated financial statements for the six months ended 31
October 2006 have been prepared in accordance with the requirements of the
Listing Rules.
The financial information contained in this Interim Report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. No
statutory accounts for the period have been delivered to the Registrar of
Companies. The financial information contained in this Interim Report has been
reviewed by the auditors but not audited.
The figures for the year ended 30 April 2006 are based upon the Group's audited
accounts prepared under IFRS. The statutory accounts for the year ended 30 April
2006 have been delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified and did not contain a statement under Section 237
(2) or 237(3) of the Companies Act 1985.
This Interim Financial Report was approved for issue by the Board of Directors
on 11 December 2006.
b ) Significant accounting policies
The accounting policies adopted in the preparation of the interim consolidated
financial statements are consistent with those followed in preparation of the
Group's annual financial statements for the year ended 30 April 2006.
2. Revenue and segmental information
2.1 Analysis of Group's revenue
2006 2005
£000 £000
_______________________________________________________________________________________________
IT consultancy 1,617 1,778
Own product software licences 16,105 14,839
Bespoke services, systems integration and implementation of software 18,493 21,570
products
Managed services (includes software maintenance and support) 27,910 26,516
Originating from third party 13,917 16,181
_______________________________________________________________________________________________
Revenue from continuing operations (excluding SoV) 78,042 80,884
State of Victoria (SoV) - 1,283
_______________________________________________________________________________________________
Revenue from continuing operations 78,042 82,167
Finance income 430 450
_______________________________________________________________________________________________
78,472 82,617
Revenue from discontinued operations 685 1,399
_______________________________________________________________________________________________
79,157 84,016
2.2 Business segments - primary basis
At 31 October 2006, the Group is organised into four business segments: Public
Sector, Travel, Wireless and International. These four business segments are the
Group's primary reporting format for segment information.
Part of the International operation was sold in the previous year. In the
current year, GMO Management
Consulting, within the International operation, has been classified as held for
sale and its results are included as a discontinued operation. Details are
disclosed in note 3.
Segment information under the primary reporting format is as disclosed in the
table below:
Wireless Public Sector Travel International Total
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
_____________________________________________________________________________________________________________________
Revenue - continuing
operations
Total sales 26,412 24,830 31,085 36,598 14,907 14,980 6,031 6,260 78,435 82,668
Inter-segment sales(1) - - (49) (75) (344) (426) - - (393) (501)
_____________________________________________________________________________________________________________________
26,412 24,830 31,036 36,523 14,563 14,554 6,031 6,260 78,042 82,167
Revenue - - - - - - - 685 1,399 685 1,399
discontinued operations
_____________________________________________________________________________________________________________________
Total revenue 26,412 24,830 31,036 36,523 14,563 14,554 6,716 7,659 78,727 83,566
_____________________________________________________________________________________________________________________
Continuing operations
Operating profit 7,256 6,325 1,209 930 3,008 3,193 458 589 11,931 11,037
before share based
payments
Share based payments (104) (115) (66) (129) (73) (110) 13 (14) (230) (368)
_____________________________________________________________________________________________________________________
Segment profit 7,152 6,210 1,143 801 2,935 3,083 471 575 11,701 10,669
Unallocated corporate (1,642) (1,010)
costs (after recharges)
Operating profit for 10,059 9,659
continuing operations
Finance income (net) 203 450
Profit from continuing 10,262 10,109
operations before tax
Income tax expense (2,560) (2,374)
_____________________________________________________________________________________________________________________
Profit from 7,702 7,735
continuing operations
_____________________________________________________________________________________________________________________
Discontinued operations
Operating loss from discontinued (11) (50) (11) (50)
operations (note 3)
Profit on disposal (100) 1,490 (100) 1,490
of businesses
Finance income 6 7 6 7
Income tax credit 733 - 733 -
_____________________________________________________________________________________________________________________
Profit from discontinued operations 628 1,447 628 1,447
_____________________________________________________________________________________________________________________
Profit for the period 8,330 9,182
_____________________________________________________________________________________________________________________
Profit for the
period is stated
after:
Capitalisation of 1,733 861 1,450 608 - - - - 3,183 1,469
internally
generated
intangible assets
('IGIA')
Amortisation of (825) (669) (372) (6) - - - - (1,197) (675)
IGIA
_____________________________________________________________________________________________________________________
Net capitalisation 908 192 1,078 602 - - - - 1,986 794
of IGIA
_____________________________________________________________________________________________________________________
(1) inter-segment sales are charged at prevailing market rates.
2.3 Additional analysis of Public Sector continuing operations
Public Sector Pericles Subtotal Public State of Total
(Excluding development Sector Victoria
Pericles and SoV) (Excluding SoV) (SoV)
________________________________________________________________________________________________________________________
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
________________________________________________________________________________________________________________________
Revenue on continuing 28,510 33,822 2,526 1,418 31,036 35,240 - 1,283 31,036 36,523
operations
________________________________________________________________________________________________________________________
Operating profit/(loss)(1) 3,141 3,615 (1,932) (2,685) 1,209 930 - - 1,209 930
- before share based payments
Share based payments (66) (129) - - (66) (129) - - (66) (129)
________________________________________________________________________________________________________________________
Operating profit/(loss)(1) 3,075 3,486 (1,932) (2,685) 1,143 801 - - 1,143 801
________________________________________________________________________________________________________________________
This additional information has been disclosed to give a clearer understanding
of the results of the core Public Sector continuing businesses.
(1) After utilisation of contract provisions made for the Pericles development
and SoV contract.
3. Disposed businesses/discontinued operations
a) Discontinued operations
6 months 6 months Year
ended 31 ended 31 ended 30
October October April
2006 2005 2006
£000 £000 £000
___________________________________________________________________________________________________
Loss after tax for the period from discontinued operations
Revenue 685 1,399 2,204
Cost of sales (460) (861) (1,385)
___________________________________________________________________________________________________
Gross Profit 225 538 819
Goodwill impairment - - (500)
Operating expenses (236) (588) (674)
___________________________________________________________________________________________________
Operating loss before interest (11) (50) (355)
Investment income 6 7 20
___________________________________________________________________________________________________
Loss before tax (5) (43) (335)
Tax credit 2 - 41
___________________________________________________________________________________________________
Loss after tax (3) (43) (294)
___________________________________________________________________________________________________
Profit on sale of discontinued operations
Profit on disposal of previously disposed businesses - - 907
Profit on disposal of Anite Consulting GmbH (Austria) - 1,490 1,409
Net movement in provision in relation to previously disposed (100) - 67
businesses
___________________________________________________________________________________________________
Net profit before tax on sale of discontinued operations (100) 1,490 2,383
Current year tax credit relating to sale of discontinued - - -
activities
Tax credit relating to activities discontinued in prior years 731 - 3,210
___________________________________________________________________________________________________
Net profit after tax on sale of discontinued operations 631 1,490 5,593
___________________________________________________________________________________________________
Total 628 1,447 5,299
___________________________________________________________________________________________________
b) Assets/(liabilities) classified as held for sale
The assets and liabilities of GMO Management Consulting GmbH have been
classified as held for sale and are presented separately in the balance sheet at
31October 2006 and 30 April 2006. This was subsequently sold on 2 November 2006.
The results of this business are included in the International division as a
discontinued operation for segment reporting purposes (see note 2).
The major classes of assets and liabilities of these discontinued businesses
classified as held for sale are as follows:
31 31 30
October October April
2006 2005 2006
£000 £000 £000
___________________________________________________________________________________
Goodwill - - -
Property, plant and equipment 21 - 26
Trade and other receivables 306 - 447
___________________________________________________________________________________
Total assets classified as held for sale 327 - 473
Trade and other payables, and total for liabilities (455) - (519)
associated with assets classified held for sale
___________________________________________________________________________________
Net liabilities (128) - (46)
___________________________________________________________________________________
4. Income tax expense
6 months 6 months Year
ended 31 ended 31 ended 30
October October April
2006 2005 2006
Current tax £000 £000 £000
___________________________________________________________________________________
UK corporation tax 1,944 1,118 5,120
Foreign tax 450 1,021 1,453
___________________________________________________________________________________
2,394 2,139 6,573
___________________________________________________________________________________
Adjustments in respect of prior years
- UK corporation tax (178) (91) (301)
- foreign tax - - 68
___________________________________________________________________________________
(178) (91) (233)
___________________________________________________________________________________
Total current tax expense 2,216 2,048 6,340
___________________________________________________________________________________
Deferred tax
UK 344 326 455
Foreign - - 84
___________________________________________________________________________________
Total deferred tax expense 344 326 539
___________________________________________________________________________________
___________________________________________________________________________________
Total income tax expense 2,560 2,374 6,879
___________________________________________________________________________________
In addition to the income tax expense above, there was a corporation tax credit
of £2,000 (October 2005: £nil; April 2006: £41,000 credit) on the loss for the
period from discontinued operations (see note 3a above).
There was a corporation tax credit of £731,000 (2005: £nil; April 2006:
£3,210,000) relating to activities discontinued in prior years.
Income tax for the interim period is charged at 24.9% (October 2005: 23.6%),
representing the weighted average of the estimated annual effective income tax
rate expected for the full year in each jurisdiction and major category of
income within continuing operations.
5. Earnings per share
The calculations of profit and adjusted earnings per share are based on the
following profit and adjusted profit and number of shares:
6 months 6 months Year 6 months 6 months Year ended
ended 31 ended 31 ended 30 ended 31 ended 31 30 April
October October April October October 2006
2006 2005 2006 2006 2005
Pence Pence Pence £000 £000 £000
per per per
share share share
Profit for the period - basic and 2.4 2.6 2.5 8,330 9,182 8,869
diluted
____________________________________________________________________________________________________
Profit for the period from (0.2) (0.4) (1.5) (628) (1,447) (5,299)
discontinued operations
____________________________________________________________________________________________________
Profit for the period on continuing 2.2 2.2 1.0 7,702 7,735 3,570
operations - basic and diluted
____________________________________________________________________________________________________
Reconciliation to profit on ongoing
businesses (excluding SoV):
Loss on SoV - - 4.1 - - 14,278
____________________________________________________________________________________________________
Profit on ongoing businesses
(excluding SoV) 2.2 2.2 5.1 7,702 7,735 17,848
____________________________________________________________________________________________________
Number of shares ('000)
Weighted average number of shares in 350,066 351,768 349,478
issue used to calculate basic
earnings per share
____________________________________________________________________________________________________
Effect of dilutive ordinary shares
- SAYE and share option schemes 4,321 6,115 4,435
____________________________________________________________________________________________________
Number of shares used to calculate
diluted earnings per share 354,387 357,883 353,913
____________________________________________________________________________________________________
Basic and diluted EPS for discontinued operations are both 0.2p per share (2005:
loss 0.4p per share; April 2006: loss 1.5p).
6 Inventories
31 October 31 October 30 April
2006 2005 2006
£000 £000 £000
________________________________________________________________________________
Inventories 2,307 3,038 2,674
Work in progress 391 880 127
Finished goods 228 125 119
________________________________________________________________________________
2,926 4,043 2,920
________________________________________________________________________________
7. Trade and other receivables
31 October 31 October 30 April
2006 2005 2006
£000 £000 £000
________________________________________________________________________________
Trade debtors 33,063 33,118 43,582
Less: Provision for doubtful (1,170) (831) (1,060)
trade receivables
________________________________________________________________________________
Trade debtors 31,893 32,287 42,522
Other debtors 2,113 1,520 1,146
Prepayments 5,017 5,779 5,206
Amount due from construction 353 1,485 383
customers
Accrued income 6,819 8,960 6,119
________________________________________________________________________________
46,195 50,031 55,376
________________________________________________________________________________
8. Trade and other payables
31 October 31 October 30 April
2006 2005 2006
£000 £000 £000
________________________________________________________________________________
Vendor loan notes - 932 478
Trade creditors 8,030 9,597 8,714
Other taxes and social security 3,577 3,180 6,540
Other creditors 1,361 3,170 2,760
Amount due to contract customers - - 81
Payments received on account 5,638 4,769 7,122
Accruals 13,475 18,666 16,419
Deferred income 19,862 17,684 24,509
________________________________________________________________________________
51,943 57,998 66,623
________________________________________________________________________________
9. Share capital Issued
Ordinary Shares Deferred Redeemable Total
of 10p each shares of £1 each
Number £000 Number £000 £000
________________________________________________________________________________
Allotted, issued and
fully paid:
At 1 May 2006 351,361,034 35,136 50,000 50 35,186
Issued during 859,945 86 - - 86
the period
Cancelled during the (857,460) (86) - - (86)
period
________________________________________________________________________________
At 31 October 2006 351,363,519 35,136 50,000 50 35,186
________________________________________________________________________________
The number of shares cancelled during the period was 0.86 million shares at an
average price of 71.5p, as part of the Group's share buy back programme.
10. Contingent liabilities
As reported in Anite's Annual Report and Accounts 2006, Anite is continuing to
progressively minimise the risks associated with Pericles. There are two
customers in discussion with Anite on exiting their contracts, one of whom has
issued formal proceedings. A counter claim is being made and the Directors
believe any financial settlement for these claims will be adequately covered by
the provisions in the accounts.
11. Post balance sheet events
1. On 30 November 2006, the Group completed the acquisition, from Elektrobit
Group plc ('Elektrobit'), of its Nemo Network Testing business, comprising the
entire issued share capital of each of Nemo Technologies Ltd. and Elektrobit
Group Pte. Ltd. and certain other related assets ('Nemo') (the 'Proposed
Acquisition') for €85m plus an additional amount, capped at €12m, is payable in
cash upon achievement of certain financial performance targets.
2. On 6 November 2006, Anite Holding GmbH (an indirect wholly owned subsidiary
of Anite) sold its shareholding in GMO Management Consulting GmbH ('GMO MC'),
the smaller of its two IT consultancy businesses based in Germany, to Dr K.
Spiller, the managing director of GMO MC, for a cash consideration of £0.1m.
Prior to completion the capital reserve of £0.7m was paid to Anite. In the
period ended 31 October 2006, GMO MC reported a loss before tax of £11k. There
will be a small loss on disposal.
3. The proposed dividend of 0.5p per share approved by the Board was paid on 17
November 2006. The cost has not been included as a liability as at 31 October
2006.
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Friday, 31st May 2024
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