Final Results

Anite Group PLC 9 July 2002 For immediate release Tuesday, 9 July 2002 ANITE GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2002 Anite Group plc ('Anite' or 'Group'), the European IT consultancy and services company, today announces its preliminary results for the year ended 30 April 2002. Highlights • Turnover of continuing businesses up 29% to £199.8m (2001: £155.4m) • Profit before tax* up 41.5% to £28.3m (2001: £20.0m), including property provision release of £1.1m (2001: charge £1.8m) • Earnings per share* up 31% to 7.2p (2001: 5.5p) • Operating margin* 14.7% (2001: 13.7%) • Group order book increased by 37% to £74m (2001: £54m) • Organic Group sales and profits growth of 10.7% and 10.7%, respectively o Solutions: strong organic sales and profits growth of 25% and 37% (22% profits growth after adjusting for property release/charge), respectively o Consultancy: declines in organic sales and profits of 9% and 35% (51% profits decline after adjusting for property release/charge), respectively • Strong group cash management and working capital controls: operating cash flow before tax £26.6m, 94% of profit • Strong balance sheet with year-end cash balance of £3.9m (2001: £13.6m) • Acquisitions successfully rebranded and integrated *Continuing business before exceptional items and goodwill amortisation Commenting on the results John Hawkins, Chief Executive, said: 'Overall, in a challenging market environment, we believe that the Group and its businesses have delivered a highly creditable performance which demonstrates the value of our clear focus on building strong market positions in our chosen sectors. 'For Solutions, in the year ahead, we expect to see continued strong growth in Travel and Public Sector with a flat performance from Telecoms, reflecting the continuing uncertainty around the timing of 3G. In Consultancy, we expect our business to continue to operate in tough marketplaces, but with the benefit of recent acquisitions overall performance should be broadly similar to last year. 'During the first half of the current financial year, we will be making a significant increase in research and development within Telecoms and Public Sector to ensure our solutions remain at the forefront of market developments. As a result of this, and the second half bias in the delivery patterns of the strongly growing Public Sector business, we expect a more pronounced division between first and second half Group profits, such that profits in the first half of 2002/3 could be lower than the corresponding period in 2001/2. 'We remain confident in our strategy and the positioning of the Group in what could be a tough year ahead and believe that we will continue to benefit from our business and geographical diversification.' For further information, please contact: www.anite.com Anite Group plc John Hawkins, Chief Executive On the day: 020 7950 2800 Simon Hunt, Finance Director Thereafter: 0118 945 0129 Weber Shandwick Square Mile Reg Hoare/Laurence Read 020 7950 2800 Chairman's Statement Introduction & Strategy I am pleased to report that 2001/2 was another year of outstanding progress and financial performance for Anite continuing the exceptional track record we have achieved over the last five years. Good organic growth in three out of four divisions, based on strong order intake together with strong contributions from recent acquisitions, produced growth in basic earnings per share (before amortisation of goodwill and exceptional items) of 31% and an operating margin from continuing businesses of 14.7% (2001: 13.7%). Strong performances from Anite Public Sector, Anite Telecoms and Anite Travel provided the principal momentum behind progress during the year, whilst Anite Consultancy performed successfully although experiencing tougher market conditions, especially towards the latter half of the year. Our successful strategy to grow Anite by organic investment and acquisitions has positioned the Group and its businesses to be able to deliver strong growth in the future albeit in the toughest markets for IT services and solutions experienced for a decade. It is the Group's mix and geographical diversification that has helped make this achievable and that we believe will continue to ensure that we are capable of making progress even in these tough market conditions. Against a weak equity market, particularly for technology companies, we remain wholly committed to our strategy which we believe will deliver value to shareholders. Acquisition Strategy During the year, we made nine acquisitions, of which three have developed significantly our position within the travel market with five building our solution and consulting capabilities in Public Sector where we believe we now have one of the leading offerings in the UK. These acquisitions to date have cost £20m; with the balance that may become payable (up to a further £42m) contingent in large part on future performance and these are detailed in the Chief Executive's Review of Operations. The acquisition of these businesses, which have been delivering on the expectations we set for them and have been fully integrated within the Anite Group, was wholly consistent with our strategy. We expect these businesses to be strong growth drivers going forward. We have continued to make acquisitions in order to build up our chosen sectors through the addition of products, people and clients in order to achieve rapid market leadership. This in turn delivers strong margins and the potential to grow the order book more quickly. Each acquisition has added to the strength and scope of our business, in particular in Anite Public Sector and Anite Travel. The nascent state of the markets on which we chose to focus has necessitated making a number of acquisitions of small private companies. These acquisitions tend to be made at more realistic valuations and have greater potential for growth. During the course of this year, any acquisitions made will most likely be within the public sector. These acquisitions will address perceived gaps in the provision of a comprehensive offering to our Public Sector clients and are likely to be modest in size. Accordingly, the focus for this year will be further demonstration of the innate value of the Group that we have built over the last 5 years. People We welcome the employees who have joined the Group during the year. We now have more than 2,409 staff in 10 countries; on behalf of the Board, I thank team members for their valuable contributions and hard work. Proposals to increase option scheme headroom were approved at the AGM on 4 September 2001 in addition to a new Inland Revenue approved option scheme. In addition, the Group is launching with immediate effect the Anite Group Share Incentive Plan. This is a tax-advantaged plan that will allow employees in the UK to invest in Anite shares using funds direct from their gross salary. The Board It has been the Board's stated intention to appoint an additional non-executive director and I am pleased that David Thorpe has accepted an invitation to join the Board with effect from 26 June 2002. David will chair the Audit Committee for the Group. This fulfils our commitment to compliance with the Combined Code on Corporate Governance. Mr Thorpe is currently Corporate Vice President, Executive Operations responsible for the operation of EDS's global outsourcing business in IT and process and before joining EDS, he was at Bull Information Systems, where he was a member of the UK board and managing director of Bull's largest operating unit, Systems Integration and Services. He has an extensive knowledge of the public sector market having trained as a Public Finance Accountant, spent 17 years in local government, and worked as a managing director of Bull's Public Sector operations. Dividend policy The Board continues to believe, as it has consistently stated, that rather than pay dividends, its free cash flow should be reinvested in the business to deliver the Group's core strategy. We believe better shareholder returns can thus be earned over the long term without exposing the Group to higher gearing. Group Outlook Overall, in a challenging market environment, we believe that the Group and its businesses have delivered a highly creditable performance which demonstrates the value of our clear focus on building strong market positions in our chosen sectors. For Solutions, in the year ahead, we expect to see continued strong growth in Travel and Public Sector with a flat performance from Telecoms, reflecting the continuing uncertainty around the timing of 3G. In Consultancy, we expect our business to continue to operate in tough marketplaces, but with the benefit of recent acquisitions overall performance should be broadly similar to last year. During the first half of the current financial year, we will be making a significant increase in research and development within Telecoms and Public Sector to ensure our solutions remain at the forefront of market developments. As a result of this, and the second half bias in the delivery patterns of the strongly growing Public Sector business, we expect a more pronounced division between first and second half profits, such that profits in the first half of 2002/3 could be lower than the corresponding period in 2001/2. We remain confident in our strategy and the positioning of the Group in what could be a tough year ahead and believe that we will continue to benefit from our business and geographical diversification. Alec Daly Chairman 9 July 2002 Chief Executive's Review of Operations Anite, a FTSE 250 and techMark 100 company, provides a range of services from IT consultancy and software products, to systems integration, solutions delivery and managed services, providing design, build and run solutions in four principal markets: telecoms, travel, public sector and finance. The Group employs 2,409 staff in 10 countries. This year our public sector and travel businesses were the star performers, evidence of the benefits of our well balanced and geographically diversified business as well as of the strength that they have built in their core markets (last year Telecoms and Travel were the stars). The growth in our operating profits in the year was very strong at 38%. Stripping out acquisitions, the Software Solutions businesses grew profits by 37%, but Consultancy declined in a tough market by 35%. Consultancy The Group's 1,100 consultants deliver pan-European IT consultancy services. They provide specialised industry knowledge to the banking, public sector, travel and telecoms markets as well as specialised IT skills in Oracle, SAP, Enterprise Resource Planning ('ERP'), security, data warehousing and supply-chain management. In the past three and a half years, we have grown the revenue of our consultancy business from nil to £78.1m, and this year have £10.1m operating profit before tax with a margin of 12.9%. We won significant new projects during 2001/2, for example with Landesbank Hessen (Eur 8.9m) and The European Space Agency (Eur 6.2m), and expanded our geographic presence. Our consultancy practice covers the main European IT markets of France, Germany, Benelux and the UK. Our recently acquired businesses Datavance and Parsec performed strongly in the French and UK markets respectively. However, our Germany and Benelux businesses suffered from pricing pressure in their markets, although utilisation remained high. Solutions We balance our consultancy business with repeatable software solutions, which are focused on the wireless telecoms, travel and public sector markets. These businesses have grown through a combination of organic investment and by acquisition. Public Sector Our public sector business, Anite Public Sector, offers services which cover social services, revenue, benefits and housing applications, principally in the UK. Major government initiatives for 'joined-up' local and central government and e-government have given us leadership in the local government market. Anite Public Sector has grown its sales from £15.6m two years ago, to £54.9m this year and generated operating profits before tax of £4.6m with a margin of 8.4%. We have successfully integrated all of the acquisitions we have made in this sector. We have continued our strategy of bolt on acquisitions, providing new solutions in court applications, mobile solutions, cash receipts portal and government consultancy. Telecoms The telecoms group, which provides solutions to mobile phone manufacturers and network operators, has continued to make strong progress despite toughening markets during the year. It employs 230 people and has bases in Fleet (UK), Chicago (USA) and Tokyo (Japan), and will soon open an office in China. Anite Telecoms has grown its sales from £16.0m two years ago, to £37.0m this year and generated operating profits before tax of £9.6m with a margin of 25.9%. Anite Telecoms, which works with hardware partners such as Ubinetics, Racal and Spirent, effectively simulates, in software, the wireless networks and technologies of Global System for Mobile Communications (GSM), General Packet Radio Services (GPRS) and third generation (3G) networks. The software, which enables wireless device manufacturers to bring new products to market much more quickly and reliably, is considered to be critical to the mobile phone industry. Travel We are an established leader in the provision of global solutions to the travel market and have proprietary software in the reservation, ferry and cruise markets. Anite Travel has grown its sales from £15.2m two years ago, to £29.8m this year and generated operating profits before tax of £5.1m with a margin of 17.1%. The acquisition of FSS has given us significant coverage in tour operators and a global reach with offices in US and Australia. We successfully integrated the acquisition within 60 days of completion. Management philosophy Our philosophy is to encourage strong decentralised management and to create businesses that are dedicated to their target markets. These businesses develop applications and maximise the sales of repeatable solutions on a global basis. We also sell applications, where appropriate to do so, through our consultancy and services business, which has bases in Benelux, France, Germany, Italy and the UK. Across all of our businesses, we have made dramatic progress by focusing individual business managers on achieving enterprise value growth and profit growth in their respective businesses. Since we believe that share ownership is a key motivator for staff, we have introduced SAYE schemes in Benelux, France, Germany and Italy, to mirror those already in place in the UK, and plan to make similar arrangements for Japan and the USA. We believe that our above average performance is therefore the result of: • a clear and consistent strategy; • focus on a combination of organic growth and successful earnings-enhancing acquisitions; • sound operational disciplines; • a strong decentralised management team; and • excellent people. All of our major acquisitions, other than Datavance and Parsec, have now been branded Anite. Research & Development Group R&D expenditure will be £9.7m in 2002/3 compared with £6.2m in 2001/2. The increase in expenditure mostly relates to Public Sector. Offshore Development In line with our stated strategy, we have recently entered into an important strategic alliance with European IT software developers, Dati Group, in a move to gain access to off-shore development resources and to broaden access to European markets. This includes a call option to acquire the business at a multiple of five times profit before tax (maximum £15m), with the consideration to be payable in Anite shares. The Dati Group was formed in 1995 as a combination of several information technology companies in Latvia. It provides a range of software and network services to Public and Private Sector organisations. Dati has taken charge of several complex, long-term projects for clients in the Public Sector, including Latvia's State Revenue Service, Latvia Post and Latvia's Administration of Local Government Affairs, having also carried out large-scale projects in Germany, Switzerland, Austria, Finland, and Hungary. Dati Group currently supplies IT software and solutions to Riga City Council and other Latvian Municipalities. In 2001 the company had a turnover of Lats 6.5m (£7.3m) and it is profitable. Anite will use the alliance to support initiatives in its finance, travel, telecoms and public sector businesses. They provide us with an offshore development resource that is attractive from a cost view point but of high quality and within easy reach and therefore will be a valuable resource for the entire Group. Anite and Dati have already worked together on demonstrator and product development projects. Anite will also work with Dati to develop the group's presence in mainland Europe. Strategy Our strategic objective, which has remained constant for the past five years, is to establish a consultancy and services group which is centred on the telecoms, finance, public sector and travel markets and to establish global repeatable software solutions in two of these areas: telecoms and travel. We will achieve this by a combination of organic investment in our people and products and selective acquisitions of businesses that broaden our product portfolio, client and geographical reach. This strategy helps to create a balance between long-term recurring revenues from managed services' and maintenance of solutions and shorter-term revenues from an order book generated by our consultancy activities. Unlike a pure consultancy business, our strategy has enabled us to increase our revenues and profits without necessarily increasing the number of people we engage. By focusing on, and creating value in, our core markets, we have been able to perform strongly in these sectors and to develop long-term, and profitable, relationships with our clients. Our ability to retain customers has resulted in approximately 30% of our revenues coming from annuity business. This, combined with our determination to withdraw from low-margin hardware sales and non-core businesses, has enabled us to improve our operating margins from 1.3% to 14.7% in the last four years. Over the four years ending 30 April 2002, we have also made 33 acquisitions at a total cost of £264m, having disposed of 6 businesses for a total of £15.4m. During this time, we have increased profits before tax from £8.8m to £28.3m (before exceptionals and goodwill amortisation) and reported compound earnings per share growth in excess of 41% per annum (on a 19.5% increase in our share capital, based on the average number of shares in issue during the year). John Hawkins Chief Executive Finance Director's Review Introduction Strong profits growth in all our core businesses resulted in Group continuing profits before goodwill amortisation and tax, of £28.3m, 41.5% up on last year. This includes the benefit of a release of £1.1m (2001: charge £1.8m) from the Group property provision. Group net assets at 30 April 2001 were £181m, including net cash balances of £3.9m. We acquired 9 new businesses during the year. Anite.Net On 30 April 2002 we acquired the remaining 53.17% of Anite.Net's share capital not already owned by Anite; 100% of its losses for the year (£0.4m) were consolidated within these results. Trading Sales of continuing businesses in the financial year were £199.8m (2000/1: £155.3m). Operating profits before goodwill amortisation and exceptional items of the continuing businesses were £29.4m (2000/01: £21.3m). Software Solutions Profits grew 54% to £19.3m in 2001/02 from £12.5m in the previous year. Telecoms' profits grew 23% to £9.6m on sales 36% higher at £37.0m. Sales of 2G and 2.5G solutions continued to be strong and organic profits growth was 17% (7% after adjusting for property provision release/charge). Profits were achieved after deducting £5.7m R&D expenditure, which is written off when incurred. Third-generation ('3G') mobile phone technology solutions accounted for £3m of sales and around 75% of current R&D expenditure is incurred on these systems. Order intake in the testing business in the second half was £19.4m, 26% up on the first half. Profits at Anite Travel increased to £5.1m from £3.2m in the previous year and organic profits growth was 35% (20% after adjusting for property provision release/charge). Sales of £29.8m (2001: £20.6m) have been strongly boosted by deliveries under the 10 year MyTravel (previously Airtours) development and managed services contract which was signed in August 2001. New marketing activity continued to be focused on e-commerce and managed service solutions, which now represent 40% of UK sales. We acquired FSS, our major UK competitor, in December 2001 for £9.1m plus £0.9m earnout. We have successfully implemented a 60 day plan to merge the two businesses. Our UK based public sector business grew dramatically, both organically and by acquisition. Sales grew by 59.3% to £54.9m, with a profit of £4.6m (2001: £1.5m). Margins grew to 8.4% (2001: 4.4%). Organic profit growth was 173% (107% after adjusting for property provision release/charge). We have continued to make 'bolt on' acquisitions in this sector to provide additional solutions to our customers: Maximum cost Acquisition Products including earnout £m 4.8 Lorien Consulting Consultancy in government 8.0 Micro Surveys Property Systems Mobile working applications in housing and social services 5.0 Ideal Technology Services Cash receipts portal 4.5 Anite.Net (aquired 53.17% not Consultancy and system owned) integration for 'e-government' solutions 0.3 Braid Hill Court systems Public Sector sales in the second half were £31.1m, compared with £23.8m in the first half (an increase of 31%). Consultancy Operating profits grew by 14.8% in the year, to £10.1m from £8.8m a year earlier. This growth was driven by acquisitions, mainly Datavance and Parsec; however, underlying organic profits fell 35% (51% after adjusting for property provision release/charge). Parsec made a strong contribution of £2.3m operating profits in the eight months following its acquisition in September 2001. Datavance achieved strong profits growth in a difficult trading climate in the French market. In our Dutch business trading was satisfactory in a weak local market. GMO's high level consultancy and Austrian business traded strongly. The ERP business continues to suffer from competitive pressures and our cost reduction programme is ongoing. Anite Germany, formerly BIV, experienced pricing pressure from its German banking customers, and second half profits were lower than the first half. Utilisation remains strong due to the business model of employing contractors ' back to back' against a 12 month customer contract. Acquisitions During the year, we continued our active programme of acquisitions as detailed above and in the Chief Executive's review. Cash Net cash balances were £3.9m at 30 April 2002. We have maintained strong working capital control during the year. Year end cash was boosted following strong management focus on working capital by an estimated £9m (2000: £8m). Debtors at 30 April 2002 were 51 days compared with 53 days last year. Stock and work in progress was £9.8m (2001 £5.3m). Telecoms carried exceptional stocks of 3G systems £2.5m which are expected to be delivered in the first half of 2002/3. During the year we have disposed of 80.1% of our IT Personnel business for £8.3m in cash of which £2m is payable over five years. Receipts under this agreement have commenced in accordance with the contract. In 2002/3, cash earnouts, payable by the Group will be approximately £3.2m and deferred purchase consideration will be £24.1m. Interest Interest cost of £1.1m comprises: 2001/2 2000/1 Net bank interest 0.3 0.6 Loan notes 0.7 - Property interest 0.1 0.5 1.1 1.1 Taxation The Group tax rate in 2001/2 was 25% (2000/1: 25%). The rate is reduced below the standard rate due to tax efficient financial structures in Germany, France, Luxembourg and Switzerland. Pension Schemes For the Cray Electronics Group Retirement and Death Benefits Plan, an actuarial valuation was carried out on 5 April 2001. This valuation was carried out on a minimum funding rate (MFR) basis. At that date the scheme had assets with a market value of £13.8m and an MFR funding level of 103%. A further actuarial calculation was carried out at 13 August 2001, which determined that there were no additional contributions due from the company. By 30 April 2002 the winding up had been largely completed and the plan had assets remaining of £620,000. For the Cray Electronics Group Pension Scheme an actuarial valuation was carried out at 21 November 2001. At that date the scheme had assets with a market value of £551,000 and MFR funding level of 182%. The accounts reflect sufficient provisions to satisfy any liability that may result from the closure of these schemes. There are no other final salary schemes. Earnouts and deferred consideration The anticipated liability for these payments is summarised as follows: 2002/3 2003/4 2004/5 Maximum earnout after '000 '000 '000 April 2002 Cash Shares Cash Shares Cash Shares Cash Shares Earnouts Calculus 20.0 31.0 Parsec 5.2 10.0 7.7 Dati** 5.0 5.0 0.5 14.5 Other 3.2 6.6 4.0 7.0 1.5 2.3 8.2 20.7 3.2 31.8 4.0 12.0 1.5 7.3 18.7 73.9 Deferred consideration 12.4 Loan notes 11.7 Estimated average no. of shares in issue in full year* 334m 366m 380m *Assuming earnout shares issued at 80p. **Call option at the Group's discretion Earnings per share The number of shares in issue increased from 279,286,545 to 306,810,769. Goodwill Goodwill is capitalised based on the maximum potential cost including earnout and is written off over a maximum of 10 years. If earnouts below the maximum provided in the relevant acquisition agreement are paid, the difference is credited against goodwill. Following a review of the current trading and future prospects of businesses acquired, we do not consider that there has been any significant goodwill impairment. Exceptional items We wrote back £2.0m of warranty provisions no longer required, and £0.9m of other provisions. Simon Hunt Group Finance Director Anite Group plc Consolidated Profit and Loss Account for the year ended 30 April 2002 2002 2001 Restated £'000 £'000 ----------- ----------- Turnover Existing operations 185,579 155,359 Acquisitions 14,203 - ----------- ----------- Continuing operations 199,782 155,359 Discontinued 2,728 37,059 ----------- ----------- Total Turnover 202,510 192,418 Cost of sales (111,123) (116,740) ----------- ----------- Gross profit 91,387 75,678 Net operating expenses (87,432) (67,795) ----------- ----------- Operating expenses before goodwill amortisation 63,167 53,634 Goodwill amortisation 24,265 14,161 ----------- ----------- Operating profit - Existing operations (including goodwill amortisation of £20,893 (2001: £14,161)) 5,166 7,172 - Acquisitions (including goodwill amortisation of £3,372) 32 - ----------- ----------- Continuing operations 5,198 7,172 Discontinued operations (1,243) 711 ----------- ----------- 3,955 7,883 Share of associate's operating loss (31) (201) Profit/(loss) on sale/closure of discontinued operations 2,955 (9,535) (Loss)/profit on sale of tangible fixed assets (4) 10,123 ----------- ----------- Profit on ordinary activities before finance charges 6,875 8,270 Finance charges - net (1,111) (1,174) ----------- ----------- Profit on ordinary activities before tax 5,764 7,096 Tax on profits on ordinary activities (7,344) (5,021) ----------- ----------- (Loss)/profit on ordinary activities after tax (1,580) 2,075 Minority interests (82) (262) ----------- ----------- (Loss)/profit for the financial year (1,662) 1,813 Dividends paid - (49) ----------- ----------- Retained (loss)/ profit for the year (1,662) 1,764 ----------- ----------- Earnings per share - Basic (0.6)p 0.7p - Diluted (0.6)p 0.7p Earnings per share On continuing operations excluding amortisation of goodwill and exceptional items - Basic 7.2p 5.5p - Diluted 6.8p 5.3p ----------- ----------- Consolidated Statement of Total Recognised Gains and Losses for the year ended 30 April 2002 2002 2001 £'000 £'000 --------- --------- (Loss) /profit for the financial year - Group (1,631) 2,014 - Associate (31) (201) --------- --------- (1,662) 1,813 Gain/(loss) on foreign currency translation 1,615 (1,807) --------- --------- Total recognised losses relating to the year (47) 6 --------- Prior year adjustment 2,384 --------- Total recognised gains since last annual report and accounts 2,337 --------- Anite Group plc Balance Sheet as at 30 April 2002 2002 2002 2001 2001 £'000 £'000 Restated Restated £'000 £'000 ---------- ---------- ---------- ---------- Fixed assets Goodwill 225,567 188,217 Intangible assets 2,893 587 ---------- ---------- 228,460 188,804 Tangible assets 12,232 9,107 Associates - 1,016 Other investments 1,145 850 ---------- ---------- 241,837 199,777 Current assets Stocks 9,819 5,286 Debtors 69,464 59,158 Short term deposits 16,026 9,473 Current asset investments - 297 Cash at bank 12,690 16,578 ---------- ---------- 107,999 90,792 Creditors: Amounts falling due within one year (119,274) (90,197) Net current (liabilities)/assets (11,275) 595 ---------- ---------- Total assets less current liabilities 230,562 200,372 Creditors: Amounts falling due after more than one year (6,341) (6,395) Provisions for liabilities and charges (43,203) (41,739) ---------- ---------- Net assets 181,018 152,238 ---------- ---------- Capital and reserves Called-up share capital 30,731 27,979 Share premium account 74,595 44,837 Shares to be issued 59,350 63,158 Other reserves 16,140 15,917 ---------- ---------- Shareholders' funds 180,816 151,891 Minority interests 202 347 ---------- ---------- Total capital employed 181,018 152,238 ---------- ---------- Shareholders' funds may be analysed as: 2002 2001 £'000 £'000 ---------- ---------- Equity interests 180,766 151,841 Non-equity interests 50 50 ---------- ---------- 180,816 151,891 ---------- ---------- Anite Group plc Group Cashflow Statement for the year ended 30 April 2002 2002 2001 £'000 £'000 ------------ ------------ Net cash inflow from operating activities 26,634 32,906 Returns on investments and servicing of finance (786) (1,190) Taxation (7,969) (3,651) Capital expenditure and financial investment (6,221) 8,806 Acquisitions and disposals (20,451) (33,485) Equity dividends paid - (799) ------------ ------------ Cash (outflow) / inflow before management of liquid resources and financing (8,793) 2,587 Management of liquid funds (6,553) (9,473) Financing 11,121 23,571 ------------ ------------ (Decrease) / increase in cash in the year (4,225) 16,685 ------------ ------------ Anite Group plc Notes to the Accounts 1. The financial information set out below does not constitute the Company's statutory accounts within the meaning of S240 of the Companies Act 1985. The statutory accounts for the Company for the year ended 30 April 2001 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statements under Section 237 (2) or (3) of the Companies Act. The auditors have yet to give their opinion on the accounts for the year ended 30 April 2002. These accounts have been prepared using the same accounting policies as in the 30 April 2001 statutory accounts, as adjusted to comply with the requirements of FRS 19, deferred tax, and will be delivered to the Registrar of Companies following the Annual General Meeting on 4 September 2002. 2. Reconciliation of operating profit to net cash inflow from operating activities 2002 2001 Total Total £'000 £'000 --------- -------- Operating profit 3,955 7,883 Depreciation 3,898 3,322 Amortisation of software licences 725 150 Goodwill amortisation 24,265 14,161 (Increase)/decrease in stock (3,351) 1,707 Increase in debtors (17,168) (4,363) Increase in creditors 14,344 10,289 Profit on disposal of fixed assets (34) (243) --------- -------- Net cash inflow from operating activities 26,634 32,906 --------- -------- Analysis of cash flows 2002 2001 £'000 £'000 --------- --------- Returns on investments and servicing of finance Interest received 393 1,389 Interest paid (1,130) (2,548) Interest element of finance lease rental payments (49) (31) --------- --------- Net cash outflow (786) (1,190) --------- --------- Taxation Foreign taxation paid (3,874) (2,197) UK corporation tax paid (4,095) (1,454) --------- --------- Net cash outflow (7,969) (3,651) --------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (5,475) (4,952) Purchase of software licences (1,500) - Purchase of own shares - (850) Purchase of investment (170) (500) Sale of tangible fixed assets 924 15,108 --------- --------- Net cash (outflow)/ inflow (6,221) 8,806 --------- --------- Acquisitions and disposals Purchase of subsidiary undertakings (9,181) (25,615) Net overdrafts acquired with subsidiary undertakings 1,891 4,379 Sale of subsidiary undertakings 5,855 840 Net bank balance of business sold (3,252) - Investments (715) (1,217) Disposal of current asset investment 562 - Deferred consideration paid for current and previous years acquisitions (15,611) (11,872) --------- --------- Net cash outflow (20,451) (33,485) --------- --------- Management of liquid resources Short term deposits (6,553) (9,473) --------- --------- Financing Issue of ordinary share capital 2,244 11,928 Repayment of bank loans (3,380) - Increase in bank loans 12,445 11,729 Capital element of finance lease rental payments (188) (86) --------- --------- Net cash inflow 11,121 23,571 --------- --------- Analysis and reconciliation of net debt 1 May Acquisitions Non Cash Cash 30 April 2001 (exc.cash & Items flow 2002 overdrafts) £'000 £'000 £'000 £'000 £'000 --------- --------- --------- --------- --------- Cash at bank and in hand 16,578 - - (3,888) 12,690 Bank overdrafts (429) - - (337) (766) --------- (4,225) --------- Bank loans - due within one year (6,842) (1,619) - (9,391) (17,852) Bank loans - due after one year (4,999) (185) - 326 (4,858) Finance leases (467) (105) (994) 188 (1,378) --------- (8,877) --------- Short term deposits 9,473 - - 6,553 16,026 Current asset investments 297 - 265 (562) - --------- --------- --------- --------- --------- 13,611 (1,909) (729) (7,111) 3,862 Loan notes due within one year (6,400) - (8,959) - (15,359) --------- --------- --------- --------- --------- 7,211 (1,909) (9,688) (7,111) (11,497) --------- --------- --------- --------- --------- Loan notes represent amounts due to vendors for acquisitions. 2002 2001 £'000 £'000 ------------ ------------ Increase in cash in year (4,225) 16,685 Cash inflow from increase in bank loan and lease financing (8,877) (11,643) Cash outflow from increase in liquid resources 6,553 9,473 Sale of shares (562) - ------------ ------------ Change in net (debt)/funds resulting from cash flows (7,111) 14,515 Loans and finance leases acquired with subsidiary (1,909) (112) Increase in finance lease (994) - Receipt of shares 265 297 Translation difference - 2 Net funds / (debt) at 1 May 2001 (excluding loan notes) 13,611 (1,091) ------------ ------------ Net funds at 30 April 2002 (excluding loan notes) 3,862 13,611 Vendor loan notes (15,359) (6,400) ------------ ------------ Net (debt) funds at 30 April 2002 (11,497) 7,211 ------------ ------------ 3. Earnings per ordinary share The calculations of earnings per share are based on the following profits and number of shares: 2002 2001 £'000 £'000 ---------- ---------- Earnings - (Loss) / profit for the financial year (1,662) 1,813 ---------- ---------- Excludes: - goodwill amortisation 24,265 14,161 - Loss / (profit) on sale of tangible fixed assets 4 (10,123) - (Profit)/loss on sale/ closure of discontinued operations (2,955) 9,535 - Loss/(Profit) on discontinued operations 1,243 (711) ---------- ---------- Adjusted earnings - Profit on continuing operations before goodwill amortisation and exceptional items 20,895 14,675 ---------- ---------- Number of shares ('000) Weighted average number of shares in issue - used to calculate basic earnings per share 289,589 266,012 ---------- ---------- Effect of dilutive ordinary shares - Share options 1,372 1,690 - SAYE scheme 767 2,149 - Contingent consideration 15,760 6,381 ---------- ---------- Number of shares used to calculate diluted earnings per share 307,488 276,232 ---------- ---------- Earnings per share on continuing operations excluding goodwill amortisation and exceptional items has also been included as the directors consider that this figure is helpful for a better understanding of the underlying business. In calculating earnings per share after goodwill amortisation and exceptional items, the dilutive potential ordinary shares of 38,999,000 were excluded from the calculation of total diluted number of shares in the year ended 30 April 2002 as their inclusion would have been anti-dilutive 4. Dividend paid and proposed 2002 2001 £'000 £'000 ---------- ---------- Dividend proposed 2002 of nil (2001: nil) - - ---------- ---------- Underprovision of prior year - 49 ---------- ---------- - 49 ---------- ---------- This information is provided by RNS The company news service from the London Stock Exchange

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