Final Results

Anite Group PLC 10 July 2007 For immediate release Tuesday, 10 July 2007 Anite Group plc Preliminary results for the year ended 30 April 2007 Anite Group plc ('Anite' or 'the Group'), the international IT solutions and services company, today announces its preliminary results for the year ended 30 April 2007. Underlying results*: â€¢ Profit before tax: Â£27.9m (2006: Â£25.8m) included the impact of: - Â£2.0m profit from Nemo (after Â£0.5m one off integration costs) - currency movements reduced profit by Â£2.0m - total development spending Â£18.0m (2006: Â£14.5m) of which Â£15.0m (2006: Â£12.4m) expensed in the period â€¢ Revenues of Â£171.7m (2006: Â£166.2m) included the impact of: - Â£6.9m revenue from Nemo and Â£1.0m from Invenova - significantly lower third party hardware revenues (down by Â£14.9m) - currency movements reduced revenues by Â£2.6m â€¢ Operating margins up to 16.7% (2006: 15.2%) â€¢ Basic earnings per share 5.8p (2006: 5.3p); diluted earnings per share 5.7p (2006: 5.3p) Statutory results: â€¢ Revenue from continuing operations Â£173.2m (2006: Â£164.7m) â€¢ Group profit before tax from continuing operations: Â£24.0m (2006: Â£10.4m) â€¢ Group profit after tax from discontinued operations Â£3.3m (2006: Â£5.3m) â€¢ Group profit after tax for the year Â£20.3m (2006: Â£8.9m) â€¢ Basic earnings per share 5.8p (2006: 2.5p); diluted earnings per share 5.7p (2006: 2.5p) â€¢ Recommended final dividend of 0.55p per share, making a total of 0.80p per share (2006: 0.5p) Operational highlights: â€¢ Orders up 6.4% at Â£184.9m (2006: Â£173.7m) including a record year for Travel and Wireless â€¢ Software licences and recurring revenues up to 60.4% of total revenues (2006: 52.7%) â€¢ Strong operating cash flow during the year â€¢ Net debt of Â£22.5m (2006: net cash Â£35.8m) after: - payment of Â£11.4m in respect of State of Victoria (SoV) settlement and closure costs - Â£2.2m settlement of onerous property lease - total initial consideration and costs in relation to Nemo of Â£60.5m and Invenova of Â£3.2m â€¢ Acquisitions during the year of Nemo and Invenova - initial integration substantially completed â€¢ Signficant progress with Pericles â€¢ Disposal of Anite Deutschland completed on 9 July for total consideration of Â£8.0m *continuing operations before disposed businesses and SoV (Â£0.4m), share based payments (Â£1.8m) and amortisation of acquired intangible assets (Â£1.3m). See attached income statement and notes for details. For a reconciliation of underlying results highlights to reported statutory results see note 2.5 on page 24. Commenting on today's results, Steve Rowley, Anite's Chief Executive, stated: 'Anite's ambition is to be the leading supplier of industry-specific IT solutions in the sectors in which it operates. During the past year, we made significant progress in implementing our strategy to achieve this objective, through a combination of investment in our products, acquisitions to strengthen our position and disposals to sharpen our focus. 'Notwithstanding our customary seasonality, we have had a satisfactory start to the financial year, and are cautiously optimistic about Anite's progress and prospects.' - Ends - For further information: Anite Group plc www.anite.com Steve Rowley, Chief Executive 01753 804000 Christopher Humphrey, Group Finance Director Smithfield 020 7360 4900 Reg Hoare/Tania Wild An analysts meeting will be held at the offices of Smithfield, at 9:15 for 9:30 a.m. this morning Print resolution images are available for the media to view and download from www.vismedia.co.uk Notes to editors Anite is an international software and solutions company whose primary business is the provision of industry-specific 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 across Europe, America, and Asia Pacific. Anite solutions are recognised as market leaders in their fields: â€¢ all the leading global mobile phone manufacturers use Anite software; â€¢ more than 400 public sector organisations, including all UK police forces and 75% of local authorities use our solutions; and â€¢ around 40% of UK package holiday bookings were made using Anite software and managed services. Wireless (formerly Telecoms) Anite provides specialist systems and software for testing mobile phone handsets and networks. Our customers are global technology developers, mobile phone manufacturers, test houses and mobile phone operators. 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 criminal justice 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 in the UK and Europe. Chairman's Statement Introduction I am pleased to report a strong performance by Anite in the year under review, with good results from our Wireless and Travel businesses and an improved overall result from Public Sector. The last three financial years have been transformational for Anite with the current management team delivering increased strategic momentum, enhanced by their being able to focus wholly on Anite's core businesses and growth strategy following the resolution of various historic issues which had affected the Group. Two acquisitions and three disposals, one since the year end, were further milestones in Anite's continuing transformation into a leading global software business with a stronger focus on wireless telecoms, from a UK-centric, public sector and IT consulting and services business. Acquisitions and disposals In the second half of the financial year we made two important acquisitions, our first for some years. The first and larger of the two was Nemo Technologies Limited, a leading Finland-based, global provider of specialist systems and software for mobile phone network testing. The second acquisition was of Invenova Corp, a California-based provider of software and systems for WiMAX (wireless broadband) device testing. These acquisitions represent important further steps in the development of Anite's Wireless business, which we have put firmly at the heart of the Group. Both acquisitions were in line with our strategy of entering adjacent telecoms markets through either internal investment or acquisition, whilst enhancing customer penetration and global presence. Following these acquisitions, our Wireless businesses as a whole now represent around 40% of Group revenues and 65% of Group underlying operating profit on an annualised basis. We also successfully disposed of two small non-core businesses, respectively based in Germany (GMO Management Consulting) and Italy (Anite Opentur). Since the year end we have also disposed of our remaining German IT Services business, Anite Deutschland Management GmbH. 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 critical mass in the short to medium term. Our overriding objective in all cases is to create shareholder value. Divisional overview We made good progress in all our businesses during the year. A full account of the Group's activities is included later on in this report, but I set out some highlights of the year below. Wireless, which holds many leading global positions in its chosen fields, had another successful year, continuing to invest in research and development whilst maintaining its leading market position. The acquisitions of Nemo and Invenova, which operate in adjacent and complementary areas of the wireless telecoms markets, add new products to our existing portfolio, deepen our customer relationships and broaden our geographical reach. Our market leading Travel division had an excellent year. We invested further in its exciting new reservation system, @comRes, which is at the forefront of helping its tour operator customers meet the challenges of internet-based competition. It has a record order book boosted by significant international growth. Our Public Sector division, which is a market leader in a number of its key activities, reported improved overall results. A good performance by Secure Information Solutions (SIS) and a reduction in Pericles' losses helped counterbalance the continued softness in the Local Government market. Group results Underlying profit before tax from continuing operations was Â£27.9m (2006: Â£25.8m), giving basic earnings per share of 5.8p (2006: 5.3p). Underlying Group revenues amounted to Â£171.7m (2006: Â£166.2m). Nemo contributed Â£6.9m of revenues and Â£2.0m of underlying profit. Revenues and profits were also impacted by significantly lower third party hardware revenues (down Â£14.9m), and the weakness of the US dollar. The currency impact affected Wireless in particular, and reduced revenues by Â£2.6m and profits by Â£2.0m on a constant currency basis. Group development spending in the period rose to Â£18.0m (2006: Â£14.5m), of which increase Â£2.8m was in the Wireless division; net capitalised development was Â£3.0m (2006: Â£2.1m). Good cost control and a better mix benefited underlying operating margins, which were 16.7% (2006: 15.2%) in the period. Unallocated Group corporate costs increased by Â£1.1m, including Â£0.5m of additional share based payments, additional professional fees, interim Finance Director costs and the impact of having established a central project management resource overseeing major contract bids and project governance. Group profit after tax including discontinued operations was Â£20.3m (2006: Â£8.9m), with basic earnings per share of 5.8p (2006: 2.5p), and diluted earnings per share of 5.7p (2006: 2.5p). Pericles losses reduced substantially during the period and there has been no addition to the related contract provisions. All outstanding customer disputes have now been either agreed or settled within the provision. Dividend and share buyback Following the resumption of dividend payments last year with the first dividend since 2000, the Board adopted a progressive dividend policy with an intended split of approximately one third at the half year and two thirds at the full year. For 2007 the Board is recommending a final dividend of 0.55 pence per share (2006: 0.5p), which together with the interim dividend paid of 0.25 pence per share, makes a total dividend payable for the year of 0.80p (2006: 0.5p). The final dividend will be payable on 16 November 2007 to shareholders on the register on 19 October 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 year 0.8m shares were bought back for cancellation at a cost of Â£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. In conjunction with the acquisition financing in relation to Nemo and Invenova and other opportunities, our existing banking facilities were renegotiated and increased during the period. Year end net debt was Â£22.5m (2006: net cash Â£35.8m) after payment of Â£11.4m in respect of the SoV settlement and closure costs in July 2006, Â£2.2m in relation to the settlement of an onerous property lease, and the cash costs of the acquisitions of Nemo (Â£60.5m) and Invenova (Â£3.2m). People We were pleased to welcome Christopher Humphrey, our Group Finance Director, back to the business in January, having taken a leave of absence on health grounds. We thank Geoff Bicknell who stood in as Interim Group Finance Director in Chris's absence. On behalf of the Board, I would like to thank all employees for their contribution, hard work and support during the year. Change of name In order to recognise the changing nature of the Group and to enable simplified marketing, shareholders will be asked to approve a recommendation to change the name of the Company to 'Anite plc' at the Annual General Meeting to be held on 3 October 2007. Conclusion Over the course of the last year the transformation of the Group through investment, acquisitions and disposals has continued. The Board is cautiously optimistic about Anite's prospects and progress for the current financial year. Clay Brendish Chairman Chief Executive's review Strategy Our aim is to be the leading supplier of industry-specific IT solutions in the sectors in which we operate. During the past year, we made significant progress in implementing our strategy to achieve this objective through a combination of investment in our products, acquisitions to strengthen our position and disposals to sharpen our focus. We intend to continue with the transformation of Anite into a software-based company. As part of that, we will maintain our focus on our existing markets, while expanding the range of products and services we offer our customers. In addition we will also seek to grow our geographic footprint and customer base. Group objectives The key elements of Anite Group's business strategy to delivery long term shareholder value are to: â€¢ realign Anite to put the Wireless business at the heart of the Group; â€¢ deliver organic growth across all of the our operations; â€¢ continue our operational focus on revenue and earnings growth, maintaining and improving margins and maintaining strong operational cash flow; â€¢ improve the quality of our business by increasing the proportion of long term recurring revenue; and â€¢ continue to look to acquire businesses in our core markets to enhance geographical coverage, product breadth and technological offerings. Strategic progress The two acquisitions in our Wireless division are the first Anite has made for many years. They are an indication of how central the Wireless business is to the company as a whole, and of our determination to continue to be a market leader in this sector. In November 2006, we bought Nemo, a Finland-based company which provides specialist systems and software for testing mobile phone networks. Nemo originated within Nokia in the 1990s. Nokia continues to be a key partner for both technology and sales and marketing. By adding network testing to our existing handset testing capability, we were able to enter an adjacent market that is complementary to our existing wireless business. Where we had previously sold our technology to mobile phone manufacturers and their suppliers, enabling them to test the viability of new products, we now also sell a range of solutions to the world's leading mobile phone operators. With the introduction of new technologies there is growing complexity in the way mobile phones communicate with cellular base stations - we are now able to supply the software which enables operators to measure and analyse the quality of the interface between the mobile devices they are developing and the radio access infrastructure. In January 2007, we made an additional positive step in our wireless business when we acquired Invenova. This small, but fast-growing, company was chosen by the WiMAX Forum - the industry body which promotes and certifies mobile equipment for this wireless broadband technology - as the first certified protocol conformance test provider for the new mobile WiMAX standard. The acquisition of Invenova created the opportunity to establish Anite in the wireless broadband test systems market, to diversify its product portfolio across a range of wireless technologies, and to add all the major WiMAX developers to its customer base. We believe that there will be further opportunities to acquire businesses that will strengthen our wireless test business to the benefit of our customers and shareholders. Continuing the transformation of the Group during the year and since the year end, we have sold several small, non-strategic businesses. This completes the programme of disposals of international IT services businesses, none of which had Anite-owned software at their core. International expansion Our strategy is to continue our international expansion, reflecting the nature of our core markets and our customers. In line with this, our Wireless business has, for many years, had a growing international presence and reach, but our Travel business has been predominantly UK based. For the past three years we have been developing a new travel reservation system in internet-based technologies and have created a product that can be sold internationally. We can now offer the global tour operator industry a full enterprise solution, from booking the hotel and airline, to posting the booked holiday to the sales ledger. As a result, our Travel division has not only had a record year for orders having won very large international clients, but is also confident that it will be the market leader for the future. For Travel, the larger opportunities are outside the UK. Travel's strategy is to grow its international sales similarly to Wireless, which now earns 90% of its revenues from outside the UK. Divisional markets and performance Wireless Anite provides specialist systems and software for testing mobile phone handsets and networks. Over the past three years, we have increased our share of the wireless testing market. This market is expected to grow at 12% a year according to industry analysts. There are several drivers for this growth: â€¢ constant innovation; â€¢ multitude of wireless standards and incorporation into a single device; â€¢ frequent change of devices by mobile users; and â€¢ the effect of developing markets on the industry as a whole. The pressure on manufacturers to bring devices to market faster and cheaper, and for network operators to retain the loyalty of their subscribers provides further growth opportunities. Our key customers are: â€¢ mobile technology developers who use our systems to test new chipsets and protocol software at a pre- and post-silicon stage of their development process; â€¢ mobile phone manufacturers who use our systems to test newly-developed handsets before they go into production; â€¢ test houses who carry out formal 'type approval' tests on phones and devices that have similar technology; and â€¢ mobile phone operators who are concerned about validating new technologies, such as HSDPA and who use our air interface testing solutions. Our Wireless business is affected by the following factors in what is a fast-evolving industry: â€¢ continuing growth in worldwide mobile telephone sales; â€¢ improved geographical coverage of our sales operations; â€¢ roll-out of new technologies, such as 3G, HSPA, WiMAX and the long-term evolution of 3G; â€¢ continuing development spend to stay at the forefront of changes in technology; â€¢ increased proliferation of wireless devices; and â€¢ increased demand from operators to improve quality and efficiency of the network. Wireless KPIs 2007 2006 Orders Â£68.4m Â£55.6m Revenue Â£64.7m Â£57.0m Underlying operating profit* Â£18.5m Â£16.2m Operating margin** 28.6% 28.4% R&D total spend Â£11.1m Â£8.3m Headcount 283 173 * continuing operations before disposed businesses, share based payments and amortisation of acquired intangible assets. ** operating margin represents underlying operating profit divided by revenue. Highlights Wireless reported good results, continuing its strong progress of recent years with orders, revenues and profits up and increasing software licences and recurring revenues, now representing 80% (2006: 69%) of divisional revenues. This has been driven by a reduced proportion of hardware platform sales this year. This performance included a five month trading contribution from Nemo (acquired 30 November 2006) and three months from Invenova (acquired 29 January 2007). Nemo contributed Â£6.9m in revenues and Â£2.0m in operating profit after one off integration costs of Â£0.5m. Negative currency movements, principally in the US dollar, impacted revenue by Â£2.6m and profits by Â£2.0m on a constant currency basis (2007 results restated at 2006 exchange rates). There was an excellent performance in the Americas, Europe & India, with tougher conditions in the Far East. The division also increased its total development spending as anticipated by Â£2.8m. This continuing investment in product development helps maintain market and technology leadership in our core segments, enabling us to be first to market with evolving technologies, whilst reducing hardware costs. To further boost our leadership, we have commenced plans to increase our investment in our offshore development capabilities in India. Market developments during the year included continued global growth in mobile handset sales; the ongoing adoption of 3G; and the proliferation of new wireless devices, services and standards. 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. Travel Anite is a leading travel technology solution provider for tour operators, air fare consolidators, and cruise, ferry, motor and rail inclusive operators in the UK and Europe. The internet is having an increasing effect on our customers' markets and we are developing our products to help them adapt their market offers. We enable our customers to license our products and operate the system themselves or to purchase a complete managed service package under which we run the service, including looking after hardware and software, at one of our data centres. Depending on the size of the customers' operations, we can tailor our service to meet their specific needs - for example, our flexible pricing model enables smaller customers to pay on a per-transaction basis. The travel market has changed dramatically in recent years. The majority of the growth is now in short breaks and specialist holidays, with consumers constructing their own package of flights, hotels and car hire online. Consolidation in the UK market has led to the top four tour operating groups to merge into two large competing forces. Four principal factors affect the development of the business: â€¢ market consolidation in the UK â€¢ increasing demand for short-break and additional specialist holidays is increasing the size of the market; â€¢ the internet provides a do-it-yourself approach and the changing nature of holiday booking has resulted in an increased demand for tailor-made travel booked over the internet. Our @comRes solution is browser-based, and combines content management, reservations and customer relationship management systems for direct online bookings, call centre reservations, fast-search facilities, and enhanced marketing activity - which can all be supported by a 24x7 managed service; and â€¢ recent world events such as unrest in the Middle East, avian flu and terrorism, have affected the pattern of customer demand for holidays. Travel KPIs 2007 2006 -------------------------------------------------------------------------------- Orders Â£46.0m Â£30.5m Revenue Â£29.1m Â£26.3m Underlying operating profit Â£6.8m Â£6.0m Operating margin 23.4% 22.8% R&D total spend Â£0.5m Â£0.1m Headcount 240 227 -------------------------------------------------------------------------------- Highlights Travel had an excellent year, ahead of our original expectations. It reported revenue and profits growth, strong orders and good overseas growth. Margins improved as a result and due to the sale of the lower margin Opentur business. Once again, the division delivered substantial recurring software and managed services revenues from its installed customer base representing over 46% (2006: 47%) of divisional revenues. As expected, the year was a transitional one for the business as it steadily increased development spending on @comRes, with Â£0.5m (2006: Â£0.1m) invested in the year. Critical to its customer standing, @comRes's scalability was also successfully tested and proved with a benchmark test. @comRes opens the door to a migration path for legacy product users whilst boosting Anite's international sales push and helping us maintain our market leading position. During the year, major UK and international orders were received from Condor Ferries, Finnair, First Choice, TUI (UK and Germany), and XL Leisure Group, and a managed service order from Norwich Union, a non-travel customer. As a result, the divisional order book now stands at record levels. These new orders combine an attractive mix of software licence, implementation and long term managed services and demonstrate the successful introduction of @comRes to the market. 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 criminal justice markets. More than 400 public sector organisations, including all UK police forces and 75% of local authorities use our solutions. Our customers are split into 2 principal categories: â€¢ Local Authorities who use our workflow, document management, tax, social care, benefits and housing solutions â€¢ Central Government and Criminal Justice Agencies who use our surveillance, intelligence gathering, recognition, biometric, security and fraud solutions Anite's public sector customers are affected by a number of imperatives: â€¢ the need to improve efficiency and effectiveness - Legislative and political drivers continue to put pressure on public sector organisations to make cost savings year-on-year and to improve return on investment; â€¢ the call for increased accessibility and transparency - Government is focused on transforming citizen services and improving corporate performance; and â€¢ the ability to share information - Working together to protect vulnerable people and provide cleaner, safer streets is an important Government policy. Public Sector KPIs 2007 2006 -------------------------------------------------------------------------------- Orders Â£58.8m Â£75.1m Revenue Â£66.2m Â£70.8m Underlying operating profit Â£5.1m Â£3.7m Operating margin 7.7% 5.2% R&D total spend Â£6.4m Â£6.1m Headcount 653 733 -------------------------------------------------------------------------------- Highlights Public Sector's overall performance improved markedly despite a widely diverging performance across the constituent businesses: a strong performance by SIS and a significant reduction in Pericles losses but there was also a fall in revenue and profit in the remainder of the local government business Overall, divisional software licences and recurring revenues increased to 49% of divisional revenues (2006: 42%) and there was a substantial reduction in third party revenues. We entered the year anticipating that we would experience a significant slow down in the demand for our local government software applications. Despite a fall in orders and revenues we were able to increase the profitability of our local government business overall. This was achieved through cost reductions and tight operational management. In relation to the multi-year programme of work on the Pericles product and the associated legacy customer contracts we are delighted to report that all of our Pericles customers are now successfully using the software in live operation. Furthermore, all contracted customer implementations for all Pericles modules are now complete. We are therefore in a position to confidently bid for new contracts and to focus on making our Revenue & Benefits product business, of which Pericles is a key component, profitable as soon as possible. During the year we invested in a number of new product developments: in document management; in our integrated children's and adults' systems and in addressing the changing housing market. These new offerings will all make contributions to our business in the current year. Whilst we believe this market will continue to be tough we anticipate further improvement in our operating margins. Our SIS business, which primarily addresses the UK police and criminal justice market, made progress with good growth in its software and services revenue, focused on margin enhancement and a reduction in lower margin hardware sales. As a result we saw profitability of this unit grow. Our strong customer relationships have enabled us to progress against the backdrop of tight budgets across the sector. International International solely comprised Anite's German consultancy business and was disposed of after the year end. Prior to disposal International had a profitable year. Our Employees The financial year has been one during which our employees have worked particularly hard, as they have responded to the demands of the business. I take this opportunity to thank them for all their loyalty, hard work and dedication. Outlook We will continue to focus our investment on our growth markets reflecting customer demand and opportunities from advances in technology. This will be reflected in a further increase in our development spending this year, principally in Wireless. Within Wireless, which will be reported as a combined business in 2008, we will benefit from the first full year's contribution from Nemo and Invenova. Overall, the business will continue to take advantage of growth in its underlying markets, in emerging regions and new technologies. The increased development spending is expected to temper the rate of growth despite rising revenues. Travel is expected to benefit from delivering its significant order book. It will continue to invest in the transition to @comRes and in international opportunities. As the leading UK supplier, we will endeavour to take advantage of the rapidly consolidating UK tour operating market. Public Sector's markets will be adjusting to the recent changes within Government, at a time of generally tight control of public spending and strong competition between suppliers. Demand in Local Government has stabilised and there are good sales opportunities in some of the niche markets that we address. In addition, the business now operates from a much lower cost base. We continue to see good opportunities in SIS. Although public spending pressures continue, we are well placed to capitalise on the opening up of new markets for the services that SIS offers. In summary, notwithstanding our customary seasonality, we have had a satisfactory start to the financial year with continuing momentum in our Travel order book, and are cautiously optimistic about Anite's progress and prospects. Steve Rowley Chief Executive Financial review The Group's financial performance continued the improvement of recent years. Anite is now a business with a strong balance sheet and three businesses with high underlying margins. Furthermore, the Group's strong financial position has enabled it to withstand the costs relating to Pericles and SoV whilst still investing in growth opportunities. Group Trading Summary - Continuing operations Outlined below are the operating results of the Group's continuing operations for the group as a whole and by division. The financial information identifies key accounting adjustments such as share based payments, intangible asset amortisation (resulting from recent acquisitions) and non-operational property costs. Group Results - continuing operations 2007 2006 ---------------------------------------------------------------- Before Disposed Total Before disposed and SoV continuing disposed Disposed Total and SoV and SoV and SoV continuing Â£m Â£m Â£m Â£m Â£m Â£m ---------------------------------------------------------------- Revenue 171.7 1.5 173.2 166.2 (1.5) 164.7 ---------------------------------------------------------------- Operating profit/(loss) before exceptional items and amortisation and share based payments 28.7 0.3 29.0 25.2 (14.2) 11.0 Share based payments (1.8) - (1.8) (1.2) - (1.2) Amortisation of acquired intangible assets (1.3) - (1.3) - - - Operating profit/(loss) 25.6 0.3 25.9 24.0 (14.2) 9.8 ---------------------------------------------------------------- Other gains and losses - (1.1) (1.1) - - - Net finance (charges)/income (0.8) - (0.8) 0.6 - 0.6 ---------------------------------------------------------------- Profit/(loss) from continuing operations before tax 24.8 (0.8) 24.0 24.6 (14.2) 10.4 ---------------------------------------------------------------- Divisional results 2007 2006 -------------------------------------------------------------------------------- Â£m Revenue* Profit SBP (i) Profit* Revenue* Profit SBP(i) Profit* pre SBP /AAIA (ii) pre SBP /AAIA(ii) /AAIA /AAIA -------------------------------------------------------------------------------- Wireless - Telecoms 57.8 16.5 (0.4) 16.1 57.0 16.2 (0.2) 16.0 Wireless - Nemo 6.9 2.0 (1.3)(iii) 0.7 - - - - -------------------------------------------------------------------------------- Total Wireless 64.7 18.5 (1.7) 16.8 57.0 16.2 (0.2) 16.0 -------------------------------------------------------------------------------- Secure Information Systems 21.0 3.1 - 3.1 20.6 2.0 - 2.0 Local Government 39.9 4.7 (0.2) 4.5 46.5 6.6 (0.2) 6.4 Pericles 5.3 (2.7) - (2.7) 3.7 (4.9) - (4.9) -------------------------------------------------------------------------------- Total Public Sector 66.2 5.1 (0.2) 4.9 70.8 3.7 (0.2) 3.5 -------------------------------------------------------------------------------- Travel 29.1 6.8 (0.3) 6.5 26.3 6.0 (0.3) 5.7 International 11.7 0.6 - 0.6 12.1 1.0 (0.1) 0.9 -------------------------------------------------------------------------------- 171.7 31.0 (2.2) 28.8 166.2 26.9 (0.8) 26.1 Unallocated corporate costs (1.9) (0.9) (2.8) (1.3) (0.4) (1.7) Property costs (0.4) - (0.4) (0.4) - (0.4) -------------------------------------------------------------------------------- Operating profit 28.7 (3.1) 25.6 25.2 (1.2) 24.0 Interest (0.8) - (0.8) 0.6 - 0.6 -------------------------------------------------------------------------------- Profit before tax 27.9 (3.1) 24.8 25.8 (1.2) 24.6 -------------------------------------------------------------------------------- Basic EPS 5.8p (0.5)p 5.3p 5.3p (0.2)p 5.1p -------------------------------------------------------------------------------- * continuing operations excluding disposed businesses and SoV (i) SBP = Share based payment (ii) AAIA = Amortisation of acquired intangible assets (iii) AAIA only Orders Orders for continuing businesses (excluding disposed businesses and SoV) increased by 6.4% and are analysed by division as follows: Orders 2007 2007 2007 2006 2006 2006 -------------------------------------------------------------------------------- Order intake Revenue Order Order Revenue Order * intake intake intake Â£m Â£m as a % Â£m Â£m as a % of revenue of revenue -------------------------------------------------------------------------------- Wireless 68.4 64.7 106% 55.6 57.0 97% Public Sector 58.8 66.2 89% 75.1 70.8 106% Travel 46.0 29.1 158% 30.5 26.3 116% International 11.7 11.7 100% 12.5 12.1 103% -------------------------------------------------------------------------------- Total 184.9 171.7 108% 173.7 166.2 104% -------------------------------------------------------------------------------- * Wireless included Â£6.9m orders for Nemo in the period Revenue Revenue for continuing businesses, excluding disposed businesses and SoV, increased by 3.3% to Â£171.7m and is analysed by type in the table below. One of the financial objectives of the Group is to improve the quality of Group's earnings by increasing the proportion of revenue that comes from recurring business, such as managed services and software maintenance, both of which are longer-term in nature, together with software licence revenue which is derived from the Group's internally developed IPR and know-how. Revenue Analysis 2007 % 2006 % Â£m Â£m Managed services 21.2 12.3 21.6 13.0 Software maintenance 36.5 21.3 29.6 17.8 Recurring revenues 57.7 33.6 51.2 30.8 Software licences 46.0 26.8 36.3 21.9 Total software and recurring 103.7 60.4 87.5 52.7 Bespoke & SI 39.1 22.8 37.3 22.4 IT Consultancy 4.6 2.7 2.2 1.3 Third party 24.3 14.1 39.2 23.6 Total 171.7 100.0 166.2 100.0 Overhead Costs Divisional performances are stated before unallocated Group corporate costs. Unallocated Group corporate costs include head office staff costs, Directors' remuneration, professional and office costs, and non-operational costs. During the period unallocated Group corporate costs totalled Â£1.9m (2006: Â£1.3m). Unallocated share-based payments totalled Â£0.9m (2006: Â£0.4m). Group corporate costs have increased due to the appointment of an interim finance director and professional advisory fees, some of which are one off in nature. Non-operational property costs in the period were Â£0.4m (2006: Â£0.4m), principally arising from the settlement of an onerous long-term lease. We continue to manage an orderly and low-risk run-down of this portfolio which comprises legacy properties previously occupied by Group businesses. The contract provisions utilised during the year were Â£11.4m in respect of SoV and Â£0.4m in respect of Pericles making a total of Â£11.8m (2006: Â£5.5m); provisions carried forward into the current financial year total Â£1.9m, including Â£0.1m for residual SoV closure costs and Â£1.8m for Pericles. Overall costs of the continuing operations of group are analysed below: Continuing operations costs 2007 Nemo 2007 2006 Pre Nemo Costs Total Â£m Â£m Â£m Â£m -------------------------------------------------------------------------------- Distribution costs 11.5 0.9 12.4 10.9 Administrative expenses 44.6 3.2* 47.8 42.1 ----------------------------------- Total overhead costs 56.1 4.1 60.2 53.0 Less: share-based payments (1.8) - (1.8) (1.2) development costs (14.3) (0.7) (15.0) (12.4) amortisation of acquired intangible assets - (1.3) (1.3) - ----------------------------------- Adjusted overhead costs 40.0 2.1 42.1 39.4 ----------------------------------- % Continuing revenue 24.3% 30.4% 24.5% 23.7% -------------------------------------------------------------------------------- * Nemo administrative costs include one off integration costs of Â£0.5m. Costs related to Nemo are for five months only. The above analysis does not separate out Invenova, as it was fully integrated into the Wireless business in the period. Nemo administrative costs also include one-off integration costs of Â£0.5m. Total development spending increased to Â£18.0m (2006: Â£14.5m), of which Â£15.0m (2006: Â£12.4m) was expensed in the year, including amortisation of Â£3.0m (2006: Â£1.5m). Development spending largely focused on Wireless and Public Sector. The level of total development spending is expected to increase by approximately 10% again in the current year, with a first half to second half split of roughly 50: 50 and over 70% of the spending continuing to be focused on Wireless. Development spending by division during the year was as follows: 2007 2006 ------------------------------------------------------------------------------------ Capitalised in year Capitalised in year --------------------------------------------------------------------------- P&L Gross Amort'n Net Total P&L Gross Amort'n Net Total Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m --------------------------------------------------------------------------- Wireless 9.6 3.5 (2.0) 1.5 11.1 7.9 1.8 (1.4) 0.4 8.3 Local Govt 4.9 2.5 (1.0) 1.5 6.4 4.4 1.8 (0.1) 1.7 6.1 Travel 0.5 - - - 0.5 0.1 - - - 0.1 ------------------------------------------------------------------------------------ Total 15.0 6.0 (3.0) 3.0 18.0 12.4 3.6 (1.5) 2.1 14.5 ------------------------------------------------------------------------------------ Wireless includes Nemo development costs of Â£0.7m this year. Group KPIs The Group uses a variety of key performance indicators (KPIs) across its various businesses and at a group level. The most important of these KPIs, at a Group level for continuing operations (excluding disposed businesses and SoV businesses), are as follows: -------------------------------------------------------------------------------- Group KPIs 2007 2006 -------------------------------------------------------------------------------- Order intake Â£184.9m Â£173.7m Revenue Â£171.7m Â£166.2m Underlying operating profit(i) Â£28.7m Â£25.2m Operating margin 16.7% 15.2% Free cash(ii) (excluding exceptional SoV and lease Â£20.4m Â£5.5m settlement) R&D Spend Â£18.0m Â£14.5m Headcount 1,311 1,247 -------------------------------------------------------------------------------- (i) before share based payments and amortisation of acquired intangible assets (ii) free cash represents net cash from operating activities less capital expenditure and capitalised development costs. There are other non financial KPIs used by the board, including major project performance and the sales prospect pipeline which are not quantitative in nature. Group finance costs Following the acquisition of Nemo and Invenova the Group had a net debt position on 30 April 2007 of Â£22.5m. As a result net finance costs of Â£0.8m were incurred in the year compared to net finance income of Â£0.6m in the previous year. Full details are given in Note 4 to the accounts. Taxation The tax rate for continuing operations for the year was 28.2% (2006: 27.8%). The charge for the year amounted to Â£7.0m (2006: Â£6.9m). The cash payment for the year amounted to Â£2.5m (2006: Â£4.9m). The tax rate as expected increased due to the increase in profits from countries where tax rates are higher than the UK, principally in Anite Wireless' US operation. As Wireless continues to widen its geographical spread of profits in higher tax regimes, the Group tax rate is expected to continue to rise modestly, excluding the benefit of de-risking. Further progress was made during the year with respect of de-risking the Group's tax provision and this has led to a Â£3.8m exceptional tax credit (2006: Â£3.2m) arising from the reassessment of provisions established in the past for taxation attributable to discontinued activities. Shareholder returns and dividends â€¢ Underlying basic earnings per share increased to 5.8p. â€¢ Board has proposed a final dividend of 0.55p per share (2006: 0.55p) making a total for the year of 0.80p (2006: 0.5p) - covered seven times by underlying earnings. â€¢ Retained earnings for the year to equity holders increased to Â£20.3m (2006: Â£8.9m). Shares in issue at 30 April 2007 352.7m Share awards/options â€¢ vested but not yet exercised 10.6m â€¢ issued not yet vested 8.8m The number of shares in issue increased, in the period under review to 352.75m at 30 April 2007 from 351.36m at 30 April 2006. In total 0.86m shares were bought back and cancelled at an average price of 71.5p per share and at a total cost of Â£0.6m. 2.25m new shares were issued to settle SAYE and option maturities. The weighted average number of shares in issue used to calculate basic earnings per share was thus 350.16m (30 April 2006: 349.48m). This does not include the dilutive effect of share option and SAYE schemes. Disposals The disposals of GMO Management Consulting GmbH (part of the International division) for a gross consideration of Â£0.1m and Anite Opentur Srl (part of the Travel Division) for gross consideration of Â£0.1m were completed within the financial year. Since the year end we have also disposed of our remaining German IT Services business, Anite Deutschland Management GmbH. Cash management As expected the conversion of operating profits to cash during the year improved from the previous year despite payments at the start of the year to settle the SoV contract (Â£11.4m) and payment to settle the outstanding lease on the Group's non-operating property provision (Â£2.2m) due to a number of anticipated factors including: â€¢ continued losses in Pericles contracts; â€¢ lower income taxes paid; â€¢ improved management of working capital; and â€¢ reduced capital expenditure. Other factors that influenced cash flow during the year were: â€¢ aquisition of Nemo and Invenova; â€¢ purchase of own shares; and â€¢ first dividend payment since the year 2000. Capital expenditure totalled Â£3.7m (2006: Â£6.3m) and fell due to the non-recurrence of significant expenditures incurred last year on Wireless development and demonstration equipment spending. Analysis of net (debt)/cash 2007 2006 Â£m Â£m -------------------------------------------------------------------------------- Net cash 18.7 36.3 Escrow deposit re Nemo earnout 8.2 - Bank borrowings (50.0) - Unamortised facility issue costs 0.5 - Interest rate swaps 0.1 - Loan notes - (0.5) -------------------------- Net (debt)/funds (22.5) 35.8 -------------------------------------------------------------------------------- The Group's balance sheet remains strong with net debt of Â£22.5m (2006 net cash: Â£35.8m). The Group's syndicated banking facility has recently been renegotiated to a total facility of Â£90m. and is not due to be reviewed again until 30 November 2011. In addition, the Group retains a Â£10m overdraft facility, renewable annually. We believe these facilities are appropriate for the Group's expected future requirements. Post Balance Sheet Events On 9 July 2007, the Group disposed of Anite Deutschland Management GmbH ('Anite Deutschland') and its subsidiaries to Vega Group plc for a total consideration of Â£8.0 million payable in cash on completion. At 30 April 2007, the Directors considered that the sale was not highly probable and therefore did not qualify as a held for sale disposal group nor as a discontinued operation. The results of Anite Deutschland were the only results in the International Consulting segment. The results will be presented as a discontinued operation in the 2008 Financial Statements. Christopher Humphrey Group Finance Director CONSOLIDATED INCOME STATEMENT for the year ended 30 April 2007 Note 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Continuing operations Revenue 2.2 173,177 164,667 Cost of sales 2.2 (87,060) (101,704) -------------------------------------------------------------------------------- Gross profit 86,117 62,963 Distribution costs (12,414) (10,956) Administrative expenses (47,770) (42,142) -------------------------------------------------------------------------------- Operating profit before 26,925 24,143 exceptional items and amortisation of acquired intangible assets State of Victoria('SoV') contract 2.2 285 (14,278) Amortisation of acquired intangible assets (1,277) - -------------------------------------------------------------------------------- Operating profit 2.3 25,933 9,865 Other gains and losses 3(a) (1,136) - Finance income 4 1,336 939 Finance charges 4 (2,087) (355) -------------------------------------------------------------------------------- Profit from continuing 24,046 10,449 operations before tax Tax expense 5 (7,039) (6,879) -------------------------------------------------------------------------------- Profit from continuing 17,007 3,570 operations Profit from discontinued 3(b) 3,264 5,299 operations -------------------------------------------------------------------------------- Profit for the year 20,271 8,869 -------------------------------------------------------------------------------- Profit attributable to equity holders of the 20,271 8,869 parent Continuing and discontinued operations Earnings per share - basic 6 5.8p 2.5p - diluted 5.7p 2.5p Continuing operations Earnings per share from continuing operations - basic 6 4.9p 1.0p - diluted 4.8p 1.0p CONSOLIDATED BALANCE SHEET as at 30 April 2007 2007 2006 Note Â£000 Â£000 -------------------------------------------------------------------------------- Non-current assets Goodwill 83,233 34,119 Other intangible assets 32,431 4,751 Property, plant and equipment 12,754 12,936 Deferred tax assets 1,895 2,438 Derivative financial assets 121 - Trade and other receivables 9 934 - -------------------------------------------------------------------------------- 131,368 54,244 -------------------------------------------------------------------------------- Current assets Inventories 8 4,509 2,920 Trade and other receivables 9 58,327 55,376 Current tax assets 195 334 Cash deposit held in escrow 8,197 - Cash and cash equivalents 18,665 36,263 -------------------------------------------------------------------------------- 89,893 94,893 Assets held for sale 3(c) - 473 -------------------------------------------------------------------------------- 89,893 95,366 -------------------------------------------------------------------------------- Total assets 221,261 149,610 -------------------------------------------------------------------------------- Current liabilities Trade and other payables 10 (65,996) (66,623) Bank borrowings 11 (4,829) - Current tax payable (12,354) (12,974) Provisions 13 (14,443) (14,649) -------------------------------------------------------------------------------- (97,622) (94,246) Liabilities directly associated with assets classified as held for sale 3(c) - (519) -------------------------------------------------------------------------------- (97,622) (94,765) -------------------------------------------------------------------------------- Non current liabilities Bank borrowings 11 (44,610) - Other payables - (150) Deferred tax liabilities (6,481) - Derivative financial liabilities (1,722) - Provisions 13 (5,884) (10,730) -------------------------------------------------------------------------------- (58,697) (10,880) -------------------------------------------------------------------------------- Total liabilities (156,319) (105,645) -------------------------------------------------------------------------------- Net assets 64,942 43,965 -------------------------------------------------------------------------------- Equity Share capital - issued 35,325 35,186 Share premium account 25,010 24,303 Own shares (1,019) (715) Merger reserve 6,538 6,538 Capital redemption reserve 859 773 Other reserves (7) 129 Retained earnings (1,764) (22,249) -------------------------------------------------------------------------------- Total Equity 64,942 43,965 -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 April 2007 Share Share Own Merger Capital Other Retained Total capital premium shares reserve redemption reserves earnings issued account reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ---------------------------------------------------------------------------------------------------- Balance at 1 May 2005 35,446 23,390 - 6,538 - 37 (27,290) 38,121 Changes in equity for the year to 30 April 2006 ---------------------------------------------------------------------------------------------------- Exchange differences arising on translation of foreign operations - - - - - 92 - 92 ---------------------------------------------------------------------------------------------------- Net income recognised directly in equity - - - - - 92 - 92 Profit for the year - - - - - - 8,869 8,869 ---------------------------------------------------------------------------------------------------- Total recognised income and expense for the year - - - - - 92 8,869 8,961 Issue of share capital 513 913 - - - - - 1,426 Purchase of own shares into treasury - - (715) - - - - (715) Dividend not collected by shareholders - - - - - - 12 12 Share buy back and cancellation (773) - - - 773 - (5,037) (5,037) Recognition of share-based payments (before tax) - - - - - - 1,208 1,208 Deferred tax related to share-based payments - - - - - - (11) (11) ---------------------------------------------------------------------------------------------------- Balance at 30 April 2006 35,186 24,303 (715) 6,538 773 129 (22,249) 43,965 Changes in equity for the year to 30 April 2007 Exchange differences arising on translation of foreign operations - - - - - 136 - 136 Cash flow hedges taken to equity - - - - - 117 - 117 Fair value losses on net investment hedges (net of foreign exchange and tax) - - - - - (389) - (389) ---------------------------------------------------------------------------------------------------- Net income recognised directly in equity - - - - - (136) - (136) Profit for the year - - - - - - 20,271 20,271 ---------------------------------------------------------------------------------------------------- Total recognised income and expense for the year - - - - - (136) 20,271 20,135 Issue of share capital 225 707 - - - - - 932 Purchase of own shares in treasury - - (304) - - - - (304) Dividend paid - - - - - - (1,753) (1,753) Share buy back and cancellation (86) - - - 86 - (613) (613) Recognition of share-based payments (before tax) - - - - - - 1,916 1,916 Deferred tax related to share-based payments - - - - - - 664 664 ---------------------------------------------------------------------------------------------------- Balance at 30 April 2007 35,325 25,010 (1,019) 6,538 859 (7) (1,764) 64,942 ---------------------------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 April 2007 2007 2006 Note Â£000 Â£000 -------------------------------------------------------------------------------- Profit for the year Continuing 17,007 3,570 Discontinued 3,264 5,299 -------------------------------------------------------------------------------- 20,271 8,869 Adjustments for: Tax expense 5 3,237 3,628 Loss/ (profit) on disposal of discontinued operations before tax 3(b) 467 (2,383) Loss before tax on disposal of disposed businesses 3(a) 1,136 - Finance charges/(income) 4 745 (604) Depreciation of property, plant and equipment 4,604 5,212 Amortisation of intangibles assets 4,790 2,124 Goodwill impairment - 500 Loss on disposal of property, plant and equipment 74 112 Share-based payments 1,916 1,208 (Decrease)/ increase in provisions (14,709) 5,587 -------------------------------------------------------------------------------- Operating cash flows before movements in working capital 22,531 24,253 -------------------------------------------------------------------------------- (Increase)/ decrease in inventories (1,424) 959 Decrease/ (increase) in receivables 118 (6,253) Decrease in payables (1,392) (3,235) -------------------------------------------------------------------------------- Movements in working capital (2,698) (8,529) -------------------------------------------------------------------------------- Cash generated from operations before exceptional cash payments 33,456 15,724 Cash payments - for SoV contract and onerous property lease (note 1) (13,623) - -------------------------------------------------------------------------------- Cash generated from operations 19,833 15,724 Interest received 1,591 781 Interest paid (2,362) - Interest element of finance lease rental payments - (8) Income taxes paid (2,510) (4,916) -------------------------------------------------------------------------------- Net cash from operating activities 16,552 11,581 -------------------------------------------------------------------------------- Cash flow from investing activities Purchase of subsidiary undertakings 7 (63,738) - Net bank balance acquired with subsidiary undertakings 7 717 - Proceeds from disposal of subsidiary undertakings 76 2,349 Net bank balance disposed with subsidiary undertakings (372) (981) Increase in cash held in escrow related to acquisitions 12 (8,097) - Proceeds from previously closed businesses - 430 Purchase of property, plant and equipment (3,007) (5,667) Proceeds on disposal of property, plant and equipment 32 (17) Purchase of software licences (687) (600) Expenditure on capitalised product development (6,077) (3,621) -------------------------------------------------------------------------------- Net cash used in investing activities (81,153) (8,107) -------------------------------------------------------------------------------- Cash flow from financing activities Issue of ordinary share capital 932 1,426 Share buy back for cancellation (613) (5,018) Purchase of own shares into treasury (304) (715) Dividend paid to Company's shareholders (1,753) - Increase in bank loans 49,439 - Capital element of finance lease rental payments - (155) Redemption of vendor loan note instruments (478) (482) -------------------------------------------------------------------------------- Net cash generated from/(used in) financing activities 47,223 (4,944) -------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (17,378) (1,470) Effect of exchange rate changes (220) 290 Cash and cash equivalents at 1 May 36,263 37,443 -------------------------------------------------------------------------------- Cash and cash equivalents at 30 April 12 18,665 36,263 -------------------------------------------------------------------------------- Note 1: The exceptional cash payments of Â£13.6m relate to closure of SoV contract (Â£11.4m) and settlement of an onerous property lease contract (Â£2.2m). Discontinued operations include GMO Management Consulting which generated net operating cash outflows of Â£538,000 (2006:Â£329,000), paid Â£142,000 (2006: Â£345,000) in respect of net returns on investment and servicing of financing and paid Â£5,000 (2006:Â£10,000) for capital expenditure. NOTES TO THE ACCOUNTS 1 Basis of preparation The preliminary results have been prepared under the historical cost convention and in accordance with current International Financial Reporting Standards (IFRS). However, this announcement does not contain sufficient information to comply with all the disclosure requirements of IFRS. The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions in certain areas that affect the reported amounts in the financial statements. Although these estimates and assumptions are based on management's best knowledge, the actual results ultimately may differ from those estimates. The statutory accounts for 2007 have been prepared following accounting policies consistent with those for the year ended 30 April 2006. These can be found on our website www.anite.com. The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. The financial information set out above does not constitute the company's statutory accounts for the year ended 30 April 2007, but is derived from those accounts. Statutory accounts for 2007 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237 (2) or (3) Companies Act 1985. The preliminary announcement for the year ended 30 April 2007 was approved by the Board of Directors on 9 July 2007. 2. Revenue and segmental information 2.1 Revenue from continuing and discontinued operations 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- IT Consultancy 4,617 2,204 Bespoke services, systems integration & implementation of software products 39,096 37,261 Own product software licences 46,015 36,298 Software maintenance and support 36,493 29,599 Managed services 21,195 21,639 Originating from third party 24,328 39,209 -------------------------------------------------------------------------------- Continuing businesses excluding disposed businesses 171,744 166,210 Disposed businesses and SoV 1,433 (1,543) -------------------------------------------------------------------------------- Revenue from continuing operations 173,177 164,667 Finance income (note 4) 1,336 939 -------------------------------------------------------------------------------- Total revenue from continuing operations 174,513 165,606 Discontinued operations Revenue 685 2,204 Finance income 6 20 -------------------------------------------------------------------------------- Total revenue 175,204 167,830 -------------------------------------------------------------------------------- 2.2 Settlement of State Of Victoria contract (SoV) 2007 2006 -------------------------------------------------------------------------------- Continuing State of Continuing Continuing State of Continuing operations Victoria operations operations Victoria operations (excluding ('SoV') (excluding ('SoV') SoV ) SoV) Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 -------------------------------------------------------------------------------- Revenue 173,177 - 173,177 168,010 (3,343) 164,667 Cost of sales (87,345) 285 (87,060) (90,769) (10,935) (101,704) -------------------------------------------------------------------------------- Gross profit profit 85,832 285 86,117 77,241 (14,278) 62,963 -------------------------------------------------------------------------------- A provision of Â£12m for this closure and settlement of the SoV contract was made at 30 April 2006. On 30 June 2006, the Group signed a settlement and release agreement and made a one-time payment of Â£10.5m (A$26.0m including GST) in full and final settlement of all the Group's obligations to the Department of Human Services of the State of Victoria. During the year to 30 April 2007 Â£11.6m (including exchange loss) of the provision was utilised (including the one-time payment), Â£0.3m released unused and Â£0.1m carried forward to cover residual closure costs. 2.3 Business segments - primary basis Wireless Public Sector Travel International Total Consultancy 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 ----------------------------------------------------------------------------------------------------------------------- Revenue - continuing businesses1 64,728 57,008 66,236 70,984 29,606 27,072 11,699 12,114 172,269 167,178 - inter-segment revenue2 - - (55) (227) (470) (741) - - (525) (968) ----------------------------------------------------------------------------------------------------------------------- 64,728 57,008 66,181 70,757 29,136 26,331 11,699 12,114 171,744 166,210 - disposed businesses/SoV3 - - - (3,343) 1,433 1,800 - - 1,433 (1,543) ----------------------------------------------------------------------------------------------------------------------- Revenue - continuing operations 64,728 57,008 66,181 67,414 30,569 28,131 11,699 12,114 173,177 164,667 - discontinued operations - - - - - - 685 2,204 685 2,204 ----------------------------------------------------------------------------------------------------------------------- Total revenue 64,728 57,008 66,181 67,414 30,569 28,131 12,384 14,318 173,862 166,871 ----------------------------------------------------------------------------------------------------------------------- Continuing operations Segment profit/ (loss) - continuing businesses1 18,100 15,989 4,881 3,536 6,432 5,731 632 912 30,045 26,168 - disposed businesses/SoV3 - - 285 (14,278) 92 159 - - 377 (14,119) ----------------------------------------------------------------------------------------------------------------------- - continuing operations 18,100 15,989 5,166 (10,742) 6,524 5,890 632 912 30,422 12,049 Unallocated corporate costs (after recharges) (3,212) (2,184) ----------------------------------------------------------------------------------------------------------------------- Operating profit for continuing operations before amortisation and other gains and losses 27,210 9,865 Amortisation of acquired intangible assets (1,277) - - - - - - - (1,277) - ----------------------------------------------------------------------------------------------------------------------- Segment operating profit/(loss) 16,823 15,989 5,166 (10,742) 6,524 5,890 632 912 Operating profit 25,933 9,865 Other gains and losses (note 3(a)) - - - - (1,136) - - - (1,136) - Finance (charges)/inco me (note 4) (751) 584 ----------------------------------------------------------------------------------------------------------------------- Profit from continuing operations before tax 24,046 10,449 Tax expense (7,039) (6,879) ----------------------------------------------------------------------------------------------------------------------- Profit from continuing operations 17,007 3,570 ----------------------------------------------------------------------------------------------------------------------- Discontinued operations Operating loss from discontinued operations (note 3b) (Loss)/profit (77) (355) (77) (355) on disposal of businesses (467) 2,383 (467) 2,383 Finance income (note 4) 6 20 6 20 ----------------------------------------------------------------------------------------------------------------------- (Loss)/profit from discontinued operations (538) 2,048 (538) 2,048 Tax credit 3,802 3,251 3,802 3,251 ----------------------------------------------------------------------------------------------------------------------- Profit from discontinued operations 3,264 5,299 3,264 5,299 ----------------------------------------------------------------------------------------------------------------------- Profit for the year 20,271 8,869 ----------------------------------------------------------------------------------------------------------------------- 1 Continuing businesses comprise operating results of continuing operations before the operating results of disposed businesses and SoV. The impact of the acquired businesses on the Group's results is disclosed in note 7. 2 inter-segment revenues are charged at prevailing market rates. 3 Disposed businesses and SoV comprise the operating results of continuing operations which have ceased during the year and which do not meet the definition of discontinued operations under IFRS 5 (note 3a). Discontinued operations are all within the International Consultancy business segment. The disposal of Anite Deutschland was announced on 9 July 2007, the Group's last remaining international consultancy operation. This is presented within continuing operations as it does not meet the criteria for discontinued operations under IFRS5. Further details of the disposal are set out in note 14. 2.4 Continuing businesses before disposed businesses and SoV Wireless Public Sector Travel International Total Consultancy --------------------------------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 -------------------------------------------------------------------------------------------------------------------- Revenue - continuing before disposed businesses and SoV 64,728 57,008 66,181 70,757 29,136 26,331 11,699 12,114 171,744 166,210 Operating profit before share based payments and amortisation of acquired intangible assets 18,530 16,246 5,104 3,752 6,757 5,994 639 960 31,030 26,952 -------------------------------------------------------------------------------------------------------------------- Unallocated corporate costs (2,364) (1,760) -------------------------------------------------------------------------------------------------------------------- Underlying operating profit 28,666 25,192 Finance (charges)/income (751) 584 -------------------------------------------------------------------------------------------------------------------- Underlying profit before tax 27,915 25,776 Share-based payments - corporate charge (848) (424) - business segment (430) (257) (223) (216) (325) (263) (7) (48) (985) (784) --------------- ------ ------ ----- ------ ------ ------- ------- ------ Segment 16,823 15,989 4,881 3,536 6,432 5,731 632 912 operating profit --------------------------------------------------------------------------------------------------------------------- Profit before tax 24,805 24,568 --------------------------------------------------------------------------------------------------------------------- This additional information has been disclosed to give a clearer understanding of the results of the core continuing businesses before disposed businesses and SoV. The disposal of Anite Deutschland was announced on 9 July 2007, the Group's last remaining international consultancy operation. This is presented within continuing operations as it does not meet the criteria for discontinued operations under IFRS5. Further details of the disposal are set out in note 14. 2.5 Reconciliation of profit from continuing operations before tax to underlying profit before tax 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Profit from continuing operations before tax 24,046 10,449 Adjusted for: Disposed businesses and SoV (377) 14,119 Share-based payments 1,833 1,208 Amortisation of acquired intangible assets 1,277 - Other gains and losses 1,136 - -------------------------------------------------------------------------------- Underlying profit before tax 27,915 25,776 -------------------------------------------------------------------------------- 2.6 Public Sector continuing businesses before SoV Local Government Pericles Subtotal Local Secure Total Public development Government Information Sector Solutions ------------------------------------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 ------------------------------------------------------------------------------------------------------- Revenue on continuing businesses1 39,905 46,463 5,313 3,745 45,218 50,208 20,963 20,549 66,181 70,757 ------------------------------------------------------------------------------------------------------- Operating profit/(loss) - before share-based payments 4,749 6,658 (2,738) (4,904) 2,011 1,754 3,093 1,998 5,104 3,752 - share based payments (176) (189) - - (176) (189) (47) (27) (223) (216) ------------------------------------------------------------------------------------------------------- Operating profit/(loss) 4,573 6,469 (4,904) 1,835 1,565 3,046 1,971 4,881 3,536 ------------------------------------------------------------------------------------------------------- 1 Continuing businesses comprise the revenue and operating results of continuing operations before the revenue and operating results of SoV. This additional information has been disclosed to give a clearer understanding of the results of the Public Sector continuing businesses. 2.7 Geographical segment - secondary basis The four business segments operate in four principal geographical areas, as set out below. The following analysis of the Group's revenue is based on the geographical location of the customers, irrespective of the origin of the goods or services. Revenue Revenue Revenue Continuing Discontinued Total operations operations ----------------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 Â£000 Â£'000 Â£000 Â£000 Â£000 Â£000 ----------------------------------------------------------------------------------- Europe - United Kingdom 94,617 96,844 - - 94,617 96,844 Europe - other 33,596 34,403 685 2,204 34,281 36,607 North America 25,015 20,054 - - 25,015 20,054 Rest of the World 19,949 13,366 - - 19,949 13,366 ----------------------------------------------------------------------------------- 173,177 164,667 685 2,204 173,862 166,871 ----------------------------------------------------------------------------------- 3. Disposed businesses/discontinued operations 2007 2006 a) Other gains and losses: Â£000 Â£000 ----------------------------------------------------------------------------------- Loss on sale of business and assets of: Anite Opentur S.r.l (1,136) - ----------------------------------------------------------------------------------- (1,136) - ----------------------------------------------------------------------------------- In the opinion of the Directors, the disposed business of Anite Opentur S.r.l, based in Italy, on 29 March 2007 did not meet the criteria to be classified as discontinued operations under IFRS 5 ' Non - current assets held for sale and discontinued operations' as it did not represent a separate major line of business or withdrawal from a major geographical market within the Group. The operating profit before interest up to the date of disposal was Â£92,000 (2006:Â£159,000). 3. Disposed businesses/discontinued operations continued b) Discontinued operations The directors are continuing to dispose of some of the non-core businesses within the International Consultancy Division. The results of these businesses that meet the criteria at the balance sheet date as discontinued operations under IFRS 5, are included in the International Consultancy division as discontinued operations for segment reporting purposes (see note 2.3). 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Loss after tax for the year from discontinued operations Revenue 685 2,204 Cost of sales (461) (1,385) -------------------------------------------------------------------------------- Gross profit 224 819 Goodwill impairment - (500) Operating expenses (301) (674) -------------------------------------------------------------------------------- Operating loss before interest (77) (355) Finance income 6 20 -------------------------------------------------------------------------------- Loss before tax (71) (335) Tax credit 2 41 -------------------------------------------------------------------------------- Loss after tax (69) (294) -------------------------------------------------------------------------------- (Loss)/profit on sale of discontinued operations (Loss)/profit on disposal of previously disposed businesses1 (417) 2,383 Loss on disposal of GMO MC (note 3(c)) (50) - -------------------------------------------------------------------------------- Net (loss)/profit before tax on sale of discontinued operations (467) 2,383 Tax credit relating to activities discontinued in prior years 3,800 3,210 -------------------------------------------------------------------------------- Net profit after tax on sale of discontinued operations 3,333 5,593 -------------------------------------------------------------------------------- Total 3,264 5,299 -------------------------------------------------------------------------------- 1 the loss in 2007 relates to warranty provision movements of previously disposed businesses (note 13). c) Sale of businesses On 6 November 2006 the Group sold its 100% interest in the ordinary share capital of GMO Management Consulting GmbH('GMO MC') in Germany. The operating loss up to the date of disposal was Â£12,000 (2006: profit Â£71,000). The results of this business are included in the International Consultancy division as discontinued operations for segment reporting purposes (see note 2.3). In 2006, this business was reported as assets held for sale in the accounts. In 2006 the Group also sold its 100% interest in the ordinary share capital of Anite Consulting GmbH (Austria). 4. Net finance (charge)/income Continuing Discontinued Total operations operations ------------------------------------------------------------------------------------------------------------ 2007 2006 2007 2006 2007 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 ------------------------------------------------------------------------------------------------------------ Finance income Interest receivable and similar income 703 939 6 20 709 959 Interest on short tem deposits 114 - - - 114 - Gains on financial instruments in a hedging relationship: - Interest rate swaps and caps - cash flow hedges 3 - - - 3 - - Cross currency swaps - net investment hedge 516 - - - 516 - ------------------------------------------------------------------------------------------------------------ 1,336 939 6 20 1,342 959 ------------------------------------------------------------------------------------------------------------ Finance charges Bank loans and overdrafts (1,764) - - - (1,764) - Other loans (97) (78) - - (97) (78) Vendor loan notes (2) (30) - - (2) (30) Finance leases and hire purchase contracts - (8) - - - (8) Unwinding of discount on provisions (note 13) (224) (239) - - (224) (239) ------------------------------------------------------------------------------------------------------------ (2,087) (355) - - (2,087) (355) ------------------------------------------------------------------------------------------------------------ (751) 584 6 20 (745) 604 ------------------------------------------------------------------------------------------------------------ Finance charges on bank loans and overdrafts include amortisation of issue costs of Â£150,000 (2006: Â£nil). 5 Tax expense Continuing Discontinued Total operations operations -------------------------------------------------------------------------------- 2007 2006 2007 2006 2007 2006 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 -------------------------------------------------------------------------------- Current tax UK corporation tax 5,528 5,120 (2) (41) 5,526 5,079 Foreign tax 1,621 1,453 - - 1,621 1,453 -------------------------------------------------------------------------------- 7,149 6,573 (2) (41) 7,147 6,532 -------------------------------------------------------------------------------- Adjustments in respect of prior years UK corporation tax (307) (301) (3,800) (3,210) (4,107) (3,511) Foreign tax (154) 68 - - (154) 68 -------------------------------------------------------------------------------- (461) (233) (3,800) (3,210) (4,261) (3,443) -------------------------------------------------------------------------------- Total current tax charge/(credit) 6,688 6,340 (3,802) (3,251) 2,886 3,089 -------------------------------------------------------------------------------- Deferred tax UK 785 455 - - 785 455 Foreign (434) 84 - - (434) 84 -------------------------------------------------------------------------------- Total deferred tax charge 351 539 - - 351 539 -------------------------------------------------------------------------------- Total income tax charge/(credit) 7,039 6,879 (3,802) (3,251) 3,237 3,628 -------------------------------------------------------------------------------- No tax arose on the profit on sale of discontinued operations for current and preceding years. The tax credit of Â£3.8m (2006: Â£3.2m) arose from the reassessment of provisions established in the past for taxation attributable to discontinued activities. Corporation tax is calculated at 30% (2006: 30%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. 2007 2006 (Credited)/charged to equity Â£000 Â£000 -------------------------------------------------------------------------------- Deferred tax relating to share-based payments (664) 11 UK corporation tax relating to foreign exchange (516) - -------------------------------------------------------------------------------- (1,180) 11 -------------------------------------------------------------------------------- 6. Earnings per share The calculations of earnings per share are based on Group profit for the year, underlying profit1 and weighted average number of shares in issue: EPS summary 2007 2006 -------------------------------------------------------------------------------- Basic EPS 5.8p 2.5p Basic EPS for continuing operations 4.9p 1.0p Underlying EPS1 5.8p 5.3p -------------------------------------------------------------------------------- 2007 2006 2007 2006 Pence Pence per share per share Â£000 Â£000 -------------------------------------------------------------------------------- Profit for the year 5.8 2.5 20,271 8,869 Profit from discontinued operations (0.9) (1.5) (3,264) (5,299) -------------------------------------------------------------------------------- Profit for the year from continuing operations 4.9 1.0 17,007 3,570 -------------------------------------------------------------------------------- Reconciliation to adjusted earnings: Operating (profit)/loss from disposed businesses and SoV (0.1) 4.1 (377) 14,119 Other gains and losses 0.3 - 1,136 - Acquired intangible assets amortisation (net of tax) 0.3 - 894 - Share-based payments (net of tax) 0.4 0.2 1,542 939 -------------------------------------------------------------------------------- Underlying profit1 5.8 5.3 20,202 18,628 -------------------------------------------------------------------------------- Diluted EPS for profit for the year is 5.7 pence per share (2006: 2.5 pence per share) Diluted EPS for profit for the year from continuing operations is 4.8 pence per share (2006: 1.0 pence per share) Both basic and diluted EPS for discontinued operations is 0.9 pence per share (2006: 1.5 pence per share) Number of shares ('000) 2007 2006 -------------------------------------------------------------------------------- Weighted average number of shares in issue - used to calculate basic earnings per share 350,163 349,478 Effect of dilutive ordinary shares - SAYE and share option schemes 4,565 4,435 -------------------------------------------------------------------------------- Number of shares used to calculate diluted earnings per share 354,728 353,913 -------------------------------------------------------------------------------- Earnings per share on underlying profit have been included to give a clearer understanding of the results of the core continuing businesses. 1 Profit on continuing businesses before disposed businesses/SoV, share-based payments and amortisation of acquired intangible assets. 7. Acquisition of businesses During the year the Group acquired the following businesses: % acquired Date -------------------------------------------------------------------------------- Nemo Technologies Ltd Wireless 100 29 November 2006 Invenova Corporation Wireless 100 29 January 2007 -------------------------------------------------------------------------------- The book value and fair value of assets acquired and liabilities assumed were as follows: 2007 2007 -------------------------------------------------------------------------------- Book Fair value value Nemo Invenova Total Nemo Invenova Total Â£'000 Â£'000 -------------------------------------------------------------------------------- Intangible assets 479 - 479 23,016 2,500 25,516 Property, plant and equipment 130 6 136 124 - 124 Current assets 4,985 80 5,065 4,843 80 4,923 Cash and cash equivalents 399 318 717 399 318 717 Creditors (1,472) (529) (2,001) (1,466) (529) (1,995) Deferred tax - - - (5,932) (932) (6,864) liability1 -------------------------------------------------------------------------------- Net assets acquired 4,521 (125) 4,396 20,984 1,437 22,421 Goodwill2 44,984 4,692 49,676 -------------------------------------------------------------------------------- Net consideration 4,521 (125) 4,396 65,968 6,129 72,097 -------------------------------------------------------------------------------- The net consideration (after acquisition expenses) is set out below: Cash consideration 57,863 3,014 60,877 Deferred consideration accrued3 5,317 2,922 8,239 -------------------------------------------------------------------------------- Total consideration 63,180 5,936 69,116 Acquisition expenses accrued 2,788 193 2,981 -------------------------------------------------------------------------------- Net consideration payable 65,968 6,129 72,097 -------------------------------------------------------------------------------- The net cash flows in respect of the acquisition of businesses are as follows: Initial and deferred cash consideration paid 57,863 3,014 60,877 Acquisition expenses paid 2,668 193 2,861 -------------------------------------------------------------------------------- Net consideration paid 60,531 3,207 63,738 Less: cash and cash equivalents acquired (399) (318) (717) -------------------------------------------------------------------------------- Net cash outflow on acquisitions 60,132 2,889 63,021 -------------------------------------------------------------------------------- 1 Deferred tax liability arising as a result of the fair value adjustments. 2 Goodwill arising on the acquisition results from assets and liabilities that cannot be recognised separately and cannot be measured reliably. 3 Deferred consideration accrued is the Company's best estimate of the contingent consideration payable to vendors, which may subject to change as this is dependent on the fulfilment of certain peformance targets of the businesses acquired. There were no acquisitions in 2006. Nemo Technologies Ltd (renamed Anite Finland Ltd) Nemo contributed Â£6.9m (â‚¬10.3m) revenue and Â£2m (â‚¬2.9m) to the Group's profit before tax for the period between 1 December 2006 and the balance sheet date. If the acquisition of Nemo business had been completed on the first day of the financial year, its contribution to revenues and operating profit (excluding amortisation of acquired intangible assets and financing costs) for the period would have been Â£14.5m (â‚¬21.4m) and Â£4.4m (â‚¬6.5m) respectively. Invenova Corporation Invenova contributed Â£1m (US$2m) revenue for the period between 30 January 2007 and the balance sheet date. It is not practical to identify the profit before tax for this business as it was fully integrated within the Wireless businesses from the date of acquisition. 8. Inventories 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Electronic components 4,146 2,674 Work in progress 164 127 Finished goods 199 119 -------------------------------------------------------------------------------- 4,509 2,920 -------------------------------------------------------------------------------- 9. Trade and other receivables 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Current assets Trade debtors 46,249 43,582 Less: Provision for impairment of trade receivables (670) (1,060) -------------------------------------------------------------------------------- Trade debtors net of provision 45,579 42,522 Other receivables 2,082 1,146 Prepayments 4,382 5,206 Amount due from construction customers 353 383 Accrued income 5,931 6,119 -------------------------------------------------------------------------------- 58,327 55,376 -------------------------------------------------------------------------------- Non-current assets Accrued income 934 - -------------------------------------------------------------------------------- 59,261 55,376 -------------------------------------------------------------------------------- 10 Trade and other payables 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Trade creditors 12,017 8,714 Other taxes and social security 6,330 6,540 Amount due to contract customers 475 81 Payments received on account 6,561 7,122 Deferred income 25,174 24,509 Accruals 13,585 16,419 Other creditors 1,854 2,760 Vendor loan notes - 478 -------------------------------------------------------------------------------- 65,996 66,623 -------------------------------------------------------------------------------- 11. Bank borrowings 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Current Bank loans 4,829 - Non current Bank loans 44,610 - -------------------------------------------------------------------------------- 49,439 - -------------------------------------------------------------------------------- The borrowings are repayable as follows: On demand or within one year 4,829 - In the second year 4,854 - In the third to fifth years inclusive 14,785 - After five years 24,971 - -------------------------------------------------------------------------------- 49,439 - Less: amounts due for settlement within 12 months (shown under current liabilities) (4,829) - -------------------------------------------------------------------------------- Amount due for settlement after 12 months 44,610 - -------------------------------------------------------------------------------- The current and non current bank loans comprise a Â£50m (2006:Â£nil) fixed term loan less Â£0.561m of unamortised issue costs being amortised over the period of the loan. The loan was taken out on 30 November 2006 under a borrowing facility. Repayment commences on 30 November 2007 and will continue until 30 November 2011, being the date of maturity. This loan is secured by a fixed and floating charge on the Group's assets. This loan carries a weighted average floating interest rate of 6.2% and exposes the Group to cash flow interest rate risk. This interest rate risk was partly hedged by the Group using derivative financial instruments. The bank loans are initially measured at fair value and, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The average effective interest rate for this loan was 6.71%. 12. Net (debt)/cash 2007 2006 Note Â£000 Â£000 -------------------------------------------------------------------------------- Cash deposit held in escrow 8,197 - Cash and cash equivalents 18,665 36,263 Bank borrowings - current 11 (4,829) - Bank borrowings - non current 11 (44,610) - Interest rate swaps and caps (excluding accrued interest) 121 - Vendor loan notes 10 - (478) -------------------------------------------------------------------------------- (22,456) 35,785 -------------------------------------------------------------------------------- A reconciliation of the movement in net debt for the year is as detailed below: 2007 2006 Â£000 Â£000 ----------------------------------------------------------------------------------- Net cash at 1 May 35,785 37,215 Increase in cash deposit held in escrow 8,097 - Net decrease in cash and cash equivalent (17,378) (1,470) Unamortised issue costs of bank borrowings 561 - Increase in bank borrowings (50,000) - Fair value adjustments on the interest rate swaps and caps 121 - Decrease/(increase) in loan notes 478 (401) Decrease in finance leases - 151 Exchange movement (120) 290 ----------------------------------------------------------------------------------- Net (debt)/cash at 30 April (22,456) 35,785 ----------------------------------------------------------------------------------- 13. Provisions Deferred Warranties Property Onerous Other Group consideration provision contract provisions total provisions Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 ------------------------------------------------------------------------------------- At 1 May 2006 - 5,062 5,452 14,236 629 25,379 Reclassification from trade and other payables - - 134 - 40 174 Release of provision credited to profit and loss - (1,100) (534) (285) (64) (1,983) Established during the year - 1,460 1,657 16 67 3,200 Acquisition of subsidiaries 8,359 - - - - 8,359 Disposal of subsidiaries - - - - (305) (305) Utilised during the year - (230) (2,411) (11,790) (24) (14,455) Unwinding of discount 72 - 152 - - 224 Exchange movement 9 (7) - (260) (8) (266) ------------------------------------------------------------------------------------- At 30 April 2007 8,440 5,185 4,450 1,917 335 20,327 ------------------------------------------------------------------------------------- 2007 2006 Â£000 Â£000 -------------------------------------------------------------------------------- Analysed as: Current liabilities 14,443 14,649 Non -current liabilities 5,884 10,730 -------------------------------------------------------------------------------- 20,327 25,379 -------------------------------------------------------------------------------- The provision for deferred consideration represents the Group's best estimate of the potential liability for cash contingent consideration payments in respect of the Nemo (Â£5.4m) and Invenova (Â£3m) businesses acquired during the year (note 7). The warranty provision has been made to cover any potential claims made by disposed businesses during the contractual warranty period. The release of warranty provision of Â£1.1m was in respect of a previously disposed business for which the provision was no longer required. The amount established of Â£1.46m represents the Group's best estimate of a claim in respect of a previously disposed business. The net charge of Â£0.36m is included in the 'loss of disposal of previously disposed businesses' in note 3b - discontinued operations. The property provision is in respect of all properties surplus to business requirements and dilapidation provisions for properties currently in use. The dilapidation provisions for properties established during the year were Â£1m which were capitalised in 'property, plant and equipment' and will be charged to income statement on a straight line basis over the remaining term of the relevant property lease. The onerous contract provision was provided in 2004 and 2005 in respect of the Pericles and State of Victoria ('SoV') contractual commitments. A further Â£12.0m provision was made in 2006 to cover the costs of settlement with the customer and restructuring costs of SoV. In the year, Â£0.4m (2006:Â£0.5m) and Â£11.4m (2006:Â£5.0m) was utilised in respect of the Pericles and SoV contracts respectively. Other provisions included a provision of Â£0.3m disposed of as part of the disposal of the assets and liabilities of Anite Opentur S.r.l. 14. Post balance sheet event On 9 July 2007, the Group disposed of Anite Deutschland Management GmbH ('Anite Deutschland') and its subsidiaries to Vega Group plc for a total consideration of Â£8.0m payable in cash on completion. At 30 April 2007, the Directors considered that the sale was not highly probable and therefore did not qualify as a held for sale disposal group or as a discontinued operation. The results of Anite Deutschland were the only results in continuing operations in the International Consulting segment shown in note 2.3. The results will be presented as a discontinued operation in the 2008 financial statements. This information is provided by RNS The company news service from the London Stock Exchange

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