Final Results

RNS Number : 3588Z

Anite PLC

18 July 2008

 



For immediate release                                   18 July 2008

ANITE PLC

Results for the year ended 30 April 2008

Anite plc ('Anite' or 'the Company'), the international software and solutions company, today announces its results for the year ended 30 April 2008.

Financial highlights (adjusted)1

• Revenue of £154.0m (2007: £158.4m)

• Operating profit of £24.7m (2007: £27.6m)

• Operating margin of 16.0% (2007: 17.4%)

• EBITDA of £33.6m (2007: £35.7m)

• First full-year contribution of £18.8m of revenue and £5.5m of operating profit from Wireless network testing (Nemo)

• Profit before tax of £22.6m (2007: £26.8m) after net finance charges of £2.1m2 (2007: £0.8m)

• 16.3 million shares bought back during the year and cancelled at an average price of 45.9p per share for a total cost of £7.5m

• Net debt reduced to £15.4m (2007: £22.6m)3 

• Recommended final dividend of 0.60p (2007: 0.55p) making a total of 0.875p (2007: 0.80p)

• Basic earnings per share 4.9p (2007: 5.5p) and diluted earnings per share 4.7p (2007: 5.4p) 

Statutory results4

• Revenue from continuing operations £155.2m (2007: £161.5m)

• Profit from continuing operations before tax £15.0m (2007: £23.3m)

• Profit for the year £13.2m (2007: £20.3m)

• Basic earnings per share 3.8p (2007: 5.8p)

• Diluted earnings per share 3.7p (2007: 5.7p)

Operating highlights

• Strong performance from Wireless Network Testing, Travel and good overall progress by Public Sector; disappointing performance from Wireless Handset Testing

• Actions taken to restructure Wireless Handset Testing

• Good progress in developing readiness for launch of 4G (LTE) systems in handset testing, strengthened by our partnership with Agilent Technologies

1 Adjusted results are for continuing operations for the year before disposed businesses, share-based payments, amortisation of acquired intangible assets and Wireless Handset Testing (Telecoms) restructuring costs.

22008 net finance charges excludes £1.3m exchange gain on translation of Nemo escrow account. See attached income statement and notes for details. 

3 See note 11 for summary of net debt.

4 For a reconciliation of adjusted results highlights to reported statutory results see note 2.4.

Commenting, Steve Rowley, Chief Executive said:

'Anite has a robust balance sheet, is cash generative and profitable across all its businesses, and has sound management and tight cost controls in place. This will help us withstand the current uncertain economic times.  

'Taking the seasonality of our business into account, the current year has had a satisfactory start with trading ahead of the same period last year.'

For further information, please contact:
Anite plc	www.anite.com
Steve Rowley, Chief Executive Christopher Humphrey, Group Finance Director	01753 804000
Smithfield	020 7360 4900
Reg Hoare/Will Henderson

An analysts' meeting will be held today at 9.15am for 9.30am at the offices of JP Morgan Cazenove, 20 Moorgate, London, EC2R 6DA.

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. The industry-specific solutions we provide to the Wireless, Telecoms, Travel and Public Sector markets invariably include our proprietary software at their core.  

The comprehensive service we offer, which includes implementation, systems integration, maintenance and managed services, enables us to build long-standing and mutually rewarding relationships with our customers.

Based in the UK, Anite and its subsidiary companies now employ around 1,100 staff across Europe, America and Asia Pacific. 

  Preliminary results for the year ended 30 April 2008

All references to adjusted revenues and profits relate to continuing operations for the year before disposed businesses, share based payments, amortisation of acquired intangible assets and Wireless Handset Testing (Telecoms) restructuring costs,. See the attached income statement and notes for details. A reconciliation of adjusted results to reported statutory results is given below.

Chairman's statement

Introduction

Further progress was made during the year in our strategy of transforming Anite into a global software-based company that is the leading supplier of industry-specific IT solutions in its chosen markets.

Adjusted revenue and operating profit from continuing operations for the year (the Board's preferred comparative measures) were down 2.8% and 10.5% respectively when compared with the previous year. This was wholly attributable to the handset testing division of our Wireless business which was affected by difficult market conditions during the year. As a result, Wireless revenues and profits were reduced despite a strong performance from its network testing (Nemo) unit and action was taken to restructure the handset business. Travel performed strongly, with better than expected order intake, revenues and profitability, while Public Sector reported a good overall improvement in performance. The Public Sector Division is now in good shape. We have recovered the business to the point where it is now a valuable asset.

Further details of the Company's performance are provided in the Chief Executive's Review and in the Financial Review below. 

Acquisitions and disposals

In July 2007 we disposed of our remaining German IT Services business, Anite Deutschland, for a total consideration of £8.0m paid in cash. We also sold Anite Travel Systems ('Carus'), a small non-core Finnish subsidiary which was part of our Travel business, for £1.0m paid in cash. 

We will continue to review the profile of the Group to sharpen its focus and deliver shareholder value, as well as considering acquisition opportunities. We continue to work actively, with our advisers, to explore a variety of strategic alternatives to remove, or at least significantly reduce, the scale of the discount in the market valuation of our shares that reflects the ownership of several businesses.  

Results 

Adjusted revenue from continuing operations was £154.0m (2007: £158.4m). Adjusted operating profit was £24.7m (2007: £27.6m) and the operating margin was 16.0% (2007: 17.4%). Adjusted operating profit is stated before disposed businesses, share-based payments, Telecoms restructuring costs and amortisation of acquired intangible assets. The reconciliation of adjusted operating profit to profit before tax from continuing operations is as follows:

	2008	2007
	£m	£m
Adjusted operating profit	24.7	27.6
Disposed businesses	0.2	0.7
Share-based payments	(2.3)	(1.8)
Telecoms restructuring costs	(3.3)	-
Amortisation of acquired intangible assets	(3.4)	(1.3)
Operating profit from continuing operations	15.9	25.2
Other gains and losses	(0.1)	(1.1)
Net finance charges	(0.8)	(0.8)
Profit before tax from continuing operations	15.0	23.3

Net finance charges in the year of £0.8m (2007: £0.8m) included a £1.3m currency gain on the translation of the Nemo earnout escrow account. 

Profit from continuing operations before tax was £15.0m (2007: £23.3m), giving basic earnings per share (after tax) of 3.2p (2007: 4.7p). Profit for the period after tax, including discontinued operations, was £13.2m (2007: £20.3m). Basic earnings per share, including discontinued operations, were 3.8p (2007: 5.8p). 

Dividend and share buyback 

The Board has declared a final dividend of 0.60p per share (2007: 0.55p), making a total dividend for the year of 0.875p per share (2007: 0.8p). This dividend will be payable on 20 October 2008 to shareholders on the register at 19 September 2008. 

A resolution to renew the authority to buy back shares was approved at the Company's AGM held on 

3 October 2007. Under this authority, 16.3 million shares were bought back during the year and cancelled at an average price of 45.9 pence per share for a total cost of £7.5m. 

Balance sheet and cash

Net debt reduced to £15.4m (2007: £22.6m), representing gearing of 25% (2007: 35%). In the year we received gross cash consideration of £9.0m from the disposals of Anite Deutschland and Anite Travel Systems and paid £11.8m on share buy backs and shares for the Employee Share Ownership Plan and Share Incentive Plan. The Group has a strong financial position and a good relationship with its banking syndicate.

People

On behalf of the Directors, I would like to thank all our staff for their hard work and support during the year.

Summary 

Anite has a robust balance sheet, is cash generative and profitable across all its businesses, and has sound management and tight cost controls in place. This will help us withstand the current uncertain economic times.  

Clay Brendish

Chairman

  Chief Executive's Review

Introduction

We made further progress during the year in our strategy of transforming Anite into a software-based company which is the leading supplier of industry-specific IT solutions in its chosen markets. This progress was made despite a disappointing performance in Wireless Handset Testing.

On the positive side, however, our network testing business, Nemo, performed strongly, and in November 2007, our handset testing business entered into a strategic partnership with Agilent Technologies to deliver market-leading test solutions for the new LTE (4G) standard. This will result in the launch of a new LTE hardware platform later this year.  The Travel division performed extremely well and, in the Public Sector division, Pericles is now profitable and acknowledged to be a functional revenue and benefits system. 

On the minus side, the weakness in handset testing, which we highlighted at the half year, has continued. Handset testing is a cyclical business and after several years of strong growth, the market is currently in a natural lull created by the transition from 3G to 4G technology. That has coincided with a general dip in the market, particularly in the United States, although the severity of the downturn was greater than we had initially anticipated.  As a result we undertook a restructuring of the business, including senior management changes, created five market facing business units, increased use of offshore development facilities and imposed rigorous cost controls.

I am, however, confident that the reduction in revenue and operating profit resulting from the weakness in the handset testing market is temporary, and that our strategy is sound. Our determination to transform Anite into a software-based company is unchanged - technology is, and will continue to be, at the heart of efficient business and our ambition is, and will continue to be, to make Anite the leading supplier of industry-specific IT solutions in our chosen markets.

Strategic objectives

The longer-term strategic objectives, which I set out in our 2007 annual report, are also unchanged. 

Our commitment to putting Wireless at the heart of our business continues to be our main strategy. While development and growth in that business has, for the time being, changed pace a little, the market is still growing and has great potential. In readiness for 4G, the Wireless division is currently focusing the majority of its investment on the R&D phase to enable it to meet the requirements of what is expected to be the dominant 4G standard, LTE (Long Term Evolution). In conjunction with this we have signed agreements with the early developers of LTE and, to date, have four collaborative arrangements in place, including those with NXP Semiconductors (NXP) and LG Electronics (LG), which will strengthen the development of our new LTE products. Meanwhile, our network testing business continues to benefit from operators' technical upgrades and a broader geographic spread.

Clearly, we will continue to drive organic growth in all our operations, to focus on increasing our revenue and earnings, improving margins, and maintaining strong operational cash flow. As part of our dedication to achieving that, we are becoming more of a global business. While operating in other economies brings some challenges - such as fluctuations in exchange rates - which affect our business and which are outside our control, they are outweighed by the tremendous opportunities that being an international business creates.

The success of our more recent acquisitions, Nemo and Invenova, encourages us to continue to look for businesses in our core markets - particularly in network testing - which will enable us to increase our geographic presence, as well as adding to the range of products and technology we offer.

Strategic progress

During the past year, we sharpened our focus on the transformation of our business into a software-based company when we disposed of two non-core businesses, began to reap benefits from the two businesses we had bought in the second half of the previous financial year, and signed a collaboration agreement with Agilent Technologies, which enabled us to cease development of our own hardware platform (Nevis). 

Disposals

In July 2007, we sold the last of our European IT services businesses, Anite Deutschland, for £8 million, and in February 2008 a small Finnish business, Anite Travel Systems (Carus), for £1 million. 

Acquisitions

Invenova, a smaller business acquired in January 2007, brought WiMAX testing into the group. Now fully integrated into the Wireless division, it has given us a foothold in the wireless broadband test systems market and enabled us to add many of the major WiMAX developers to our customer base.

Nemo, which we acquired in November 2006, and which added network testing to our Wireless business, is also helping to increase our geographic presence - its biggest potential growth areas are Asia, particularly India, the Middle East (where we opened an office in Dubai in August 2007), Latin America, the CIS countries and Africa. Nemo tools enable network operators to check the quality of their networks regularly, to verify coverage, and to deal with problems such as dropped calls and poor voice quality. They also enable the effectiveness of new services, such as video streaming, to be tested and measured. 

Our markets

Anite operates in three clearly-defined markets: Wireless, Travel and Public Sector. 

Wireless

Anite provides specialist systems and software which enable manufacturers of mobile phones and network equipment to bring their new products to market quickly, WiMAX providers to test their coverage, and service providers to optimise their networks.

Handset testing works in three stages: our software enables manufacturers first, to test the viability of new products; second, to test products' conformance - to prove that they meet the rigorous standards set by the network operators and industry regulators; and third, to test their interoperability - their ability to communicate with other devices and networks. Our partnership with Agilent Technologies gives us the ability to supply customers with a scalable platform to test all three stages, rather than having to use a variety of different hardware platforms to do the same job. 

The Wireless business is driven by innovation (new technology, the proliferation of new types of handset, and new devices). The next generation 4G (LTE) will offer huge benefits to consumers by providing high-speed access to data and a true mobile broadband experience. It will offer equally big benefits to operators by enabling them to make more efficient use of the spectrum - and bring new and existing services to consumers more rapidly.

Several of the leading operators have already committed to LTE, and have asked to see engineering samples by the end of 2008. In the early days of a new technology, such as LTE, developers of user equipment need to work with a test solution partner to verify their designs. This collaboration involves alignment of standards, advanced test tools, and the provision of early test capability. In effect, through these relationships, Anite is pioneering the eco-system needed to make LTE happen. We have already signed up four agreements with leading operators/equipment manufacturers as collaboration partners - including NXP and LGE to help us to develop our LTE test solutions in conjunction with Agilent Technologies. 

We expect our WiMAX business to grow, as fixed-line operators adopt the technology to enable them to offer subscribers easier access to high-speed broadband on laptops - rather than having to rely on hotspots - thereby complementing the services provided by mobile operators and existing wireless networks. The world's leading chip maker, Intel, is now integrating WiMAX capability into many of its products. 

Our network testing business provides measurement tools that enable network operators to verify the initial radio plan and network coverage during roll-out, to troubleshoot problem areas, including dropped calls, poor voice quality and indoor coverage during operation, and to test the effect of new services, such as video streaming, on existing networks. Investment in R&D is, therefore, essential to ensure that it is first-to-market with the latest technologies. As a leading vendor of test-drive solutions, we have global agreements in place with several large mobile operators and network vendors. A focus on after-sales support, through 49 local distributors on three continents, makes our test drive solutions product a compelling choice in the market.

Travel

Anite is a leading provider of travel technology solutions for tour operators, low cost airlines,ferry and holiday park operators in the UK and Europe. Customers can choose to license our products, manage the system themselves, or - as many do - take advantage of our transaction fee based service where we provide hosting and 24x7 system availability from our secure data centre. 

In last year's annual report, we said we had increased our investment in our @comRes reservation system. A browser-based solution, @comRes combines content management, reservations and customer relationship management for internet bookings, call centre reservations and fast-search facilities. In addition, we have successfully developed the capabilities of @comRes to offer further applications, such as supplier connectivity and procurement facilities, which form part of our @com eBusiness suite.

During this financial year, our belief in the value of the system has been justified. At the beginning of April 2008, @comRes went live at TUI AG, the largest tour operator in Germany, on time and on budget - completing the first phase of this project. Anite's software enables TUI AG to manage bookings through more than 9,400 retail outlets to 180 destinations throughout the world. Once all the TUI AG brands are live, @comRes will manage several million passengers per year.

Superbreak Mini Holidays is one of the latest customers to adopt @comRes. With more than 1 million bookings per year, Superbreak is the market leader in the provision of UK and European short breaks. The implementation of @comRes will enable this specialist tour operator to run its operations on new technology, providing a more flexible solution to offer improved marketing services to its customers and sell holidays faster and more effectively

The consolidation in the UK travel market confirms the wisdom of us looking to expand internationally and we have already opened an office in Cologne, Germany, to aid us in that endeavour. We focus on providing excellent service to our customers, maintaining relationships with them and delivering solutions which meet their needs. We are now marketing @comRes and the @com eBusiness suite, which are constantly developing, together with the services we offer, to this market.

Public Sector 

Anite is a market leader in software and solutions for local government, including document management,  social care, housing management and the collection of local taxes and benefits. We work with 70% of local authorities, and also supply software and services to the police and a number of national government departments through our Secure Information Solutions Division (SIS). 

Local authorities are constantly under pressure to provide better, and better value-for-money, services. Our transformation products, such as document management and mobile working, help the public sector to cut costs by improving efficiency and effectiveness. Our solutions also help them to make information more accessible and transparent, and to share information with other services where necessary. SIS supplies security solutions to all UK police forces. In October 2007, it was awarded a three-year £3.6m contract to support the national Automatic Number Plate Recognitions (ANPR) system, which positions Anite as a major supplier of national police information systems.

In the past financial year, we continued our response to the separation local government services for adults and children with the launch of our new adults solution supporting the central government drive towards personalisation and social care. Within Public Sector, the year's greatest success was the successful implementation of Pericles, our browser-based revenues and benefits solution, at 35 local authorities. Front-line staff and management are reporting that Pericles is streamlining the process of delivering more co-ordinated services.

In what is generally considered to be a tough market, the Public Sector division is performing well.

Looking ahead

In our drive to continue creating long-term shareholder value, we will maintain our focus on investing in growth markets, on meeting customers' needs and on maximising opportunities from advances in technology. 

In our Wireless division, we will continue to take advantage of growth in emerging regions and from advances in technology, will maintain our investment in development and focus on increasing our sales to network operators. We believe that the current negative trends in demand for 2G and 3G systems will continue throughout the current year.  We will commence shipments of our 4G (LTE) systems towards the end of 2008, although we do not expect to see the full benefits come through to the bottom line until the 2009/2010 financial year. We will also continue to look for acquisitions, particularly in the network testing market, which is fragmented and is likely to consolidate. 

A strong order book indicates that the Travel division will continue to make good progress, although the price of fuel and the risk of recession is of increasing concern to tour operators. @comRes is making the progress we predicted, and we are confident that it will build on its initial success. We expect the division to increase its business outside the UK in the coming year, particularly in Germany and northern Europe. 

The Public Sector division is now in good shape. It is expected to continue to improve its overall performance led by Local Government. 

Taking the seasonality of our Wireless business into account, the current year has had a satisfactory start with trading ahead of the same period last year.

Steve Rowley

Chief Executive

  Financial Review

The Group has continued to progress its strategy to improve the quality of its earnings despite the drop in overall revenues and profits which was wholly attributable to the performance of the Wireless Handset testing business. There were good underlying margins in our other businesses, strong cash generation, and a reduction in debt.

Group KPIs

The Group uses a variety of key performance indicators (KPIs) across its various businesses as well as at Group level. The most important of these at Group level for continuing operations (excluding disposed businesses and SoV) are:

Group KPIs	2008	2007
Order intake, £m	162.6	171.3
Revenue, £m	154.0	158.4
Adjusted operating profit1 ,£m	24.7	27.6
Operating margin, %	16.0	17.4
EBITDA, £m	33.6	35.7
Free cash2 (excluding exceptional SoV and lease settlement in prior year),£m	16.0	20.4
R&D P&L expense, £m (note 2.7)	18.4	15.0
R&D total spend3, £m	17.3	18.0
Headcount (closing)	1,141	1,199

1 Continuing operations before disposed businesses, share based payments, amortisation of acquired intangible assets and Telecoms restructuring costs

2 Free cash represents net cash generated from operating activities less capital expenditure and capitalised development costs

3  R&D total spend is the total development cost before the effect of capitalisation/amortisation

Net capitalised R&D in the period reduced profits by £1.1m (net amortisation), compared with the previous year when net capitalised R&D improved profits by £3.0m (note 2.3).

Divisional overview

With the exception of the Wireless handset testing business, we made good progress in our other businesses during the year. 

Wireless division

Wireless KPIs	2008	2007
Orders, £m	61.0	68.4
Revenue, £m	60.4	64.7
Adjusted operating profit 1, £m	11.7	18.5
Operating margin2 ,%	19.4	28.6
R&D P&L expense, £m	12.2	9.6
R&D total spend3, £m	12.2	11.1
Headcount (closing)	265	283

1 Continuing operations before disposed businesses, share based payments, amortisation of acquired intangible assets and Telecoms restructuring costs

2 Operating margin represents adjusted operating profit divided by revenue

3 R&D total spend is the total development cost before the effect of capitalisation/amortisation

Despite a strong first time full-year contribution from Nemo, our network testing business, overall revenues, and profits in Wireless declined. They were affected by the reduced revenues in handset testing - which accelerated in the second half - and a planned increase in development spending in the division (an additional £2.6m was expensed in the income statement) impacted the operating margin. The effect of net capitalisation of R&D under IAS 38 had a neutral impact to the P&L, compared with the previous period, in which net capitalised R&D improved profits by £1.5m. 

The currency effect of exchange rate fluctuations in the US dollar had the effect of reducing overall Wireless revenues by £0.6m and profits by £0.7m on a constant currency basis. In addition, sales of third-party hardware fell by £4.8m. 

During the year £3.3m of exceptional restructuring costs were incurred in the handset testing business. These resulted from the cost of discontinuing our own platform development project (Nevis), of £2.4m, following our strategic agreement with Agilent Technologies - and also from management and structure changes in the business to mitigate the weakness in its trading, of £0.9m. 

Handset testing After three years of strong growth this business experienced a fall in demand during the year. This was the result of a number of influences: the technology cycle (2G revenues in long-term decline, 3G revenues peaking and 4G revenues yet to compensate) which principally affected the conformance testing segment of our market; budget constraints at key customers in the USA (focusing on higher utilisation of existing test systems rather than purchasing new); and weakness in Europe, Japan and Korea.

To mitigate the impact of these trends on profitability, while at the same time taking the Agilent partnership into consideration, we made a number of changes to the business to increase focus and reduce costs.  

Network testing (Nemo) This business performed strongly: it returned good revenue growth and profitability in what was its first full year of Anite ownership. We have focused on expanding the business geographically, through the opening of new offices, such as that in Dubai which will serve the Middle East, and by appointing new distributors, strengthening our business development team and launching new and updated products. This was reflected in strong sales in Europe and emerging markets. Nemo's results in euros showed revenue increased 21.9% to €26.2m (2007:12 months €21.5m) and operating profit (including integration costs) up 20.0% at €7.8m (2007:12 months €6.5m).

The network testing market continues to be extremely competitive and order book visibility is generally very short, but the business has excellent products -on which investment continues - and improved routes to market. Overall, Nemo's market position has improved during the year and we believe that we can grow our network test presence further, both organically and through acquisition.  

Travel division

Travel KPIs	2008	2007
Orders, £m	40.8	44.1
Revenue, £m	31.2	27.5
Adjusted operating profit 1, £m	8.5	6.4
Operating margin 2, %	27.2	23.3
R&D P&L expense and total spend, £m	0.5	0.5
Headcount (closing)	218	222

1 Continuing operations before disposed businesses and share based payments

2 Operating margin represents adjusted operating profit divided by revenue

Travel had a strong year, with excellent growth in revenue and operating profit. This was driven by good demand for our @comRes product (our internet based booking suite) and associated services.  We also continue to work with Norwich Union's Lifetime division, for which we supply hosting and infrastructure support services.

Multi-million pound orders were received from TUI AG, the German subsidiary of the TUI Travel Group (through confirmation of future phases of the contract), and from Superbreak (a division of Holidaybreak Plc). International revenues as a percentage of Travel's total revenues continue to rise, to 18.6% (2007: 12.4%).

@comRes is being very well received in the market and our key projects, the most significant of which is the TUI contract in Germany, are making good progress. The level of engagement and satisfaction among @comRes customers provides encouragement for the growth of the order book.

During the year, we announced the opening of an office in Cologne, to enable us to realise our plans to win more customers for @comRes in the market in Germany.  

Increasing pressure on margins of tour operators is forcing them to look at finding ways of reducing costs through the use of effective systems, such as @comRes to improve their profitability

Public Sector division

Public Sector KPIs	2008	2007
Orders, £m	60.8	58.8
Revenue, £m	62.4	66.2
Adjusted operating profit 1, £m	6.0	5.1
Operating margin 2, %	9.6	7.7
R&D P&L expense, £m	5.7	4.9
R&D total spend 3, £m	4.6	6.4
Headcount (closing)	621	653

1 Continuing operations before share based payments

2 Operating margin represents adjusted operating profit divided by revenue

3  R&D total spend is the total development cost before the effect of capitalisation/amortisation.

Total Public Sector Public Sector benefited from the continuing reduction in Pericles losses, reduced by £2.4m to £0.3m, and tight cost control, resulting in a good increase in operating profit and continuing sequential progress. Although total revenue fell by £3.8m, software and recurring maintenance revenue increased by £4.0m to £36.7m, while our development and systems integration revenue fell by £6.6m to £17.7m. Our revenue from our legacy VME business declined by £1.8m and had a £1.1m negative impact on profit compared with the previous year.

Net capitalised R&D in the period reduced profit by £1.1m (net amortisation), compared with last year, when net capitalised R&D improved profit by £1.5m. Capitalised R&D is amortised over three years.

Local Government Our investment in new products focused on the areas in which we are strongest and believe that opportunities are greatest. We also made savings by reducing our cost base in the year. 

We continue to make good progress with Pericles and believe that it will prove to be a successful product that will generate profits in the future as a core part of our Local Government business. As a result, there was no increase in the contract provision related to it. During the year we used £0.3m of our existing provision leaving £0.3m carried forward to the new financial year to meet remaining development commitments.

Secure Information Solutions (SIS) SIS profits were down year-on-year. This was anticipated, since the business benefited from a disproportionately high level of software licence sales and high professional services utilisation in the previous year. 

In October 2007, SIS was awarded a three-year £3.6m contract to support the national Automatic Number Plate Recognition (ANPR) system which secures our position as a major supplier of national police information systems.  Anite's ANPR solution stores readings from roadside traffic cameras in a secure database enabling police to deny criminals the use of the UK's road network. The UK leads the world in sophisticated forensic and police information systems. We have won an initial international contract in Holland and we are currently exploring opportunities to secure further international business. 

Group trading summary - continuing operations

The tables below set out the operating results of continuing operations for the Group as a whole and by division. These enable readers to identify key accounting adjustments, such as share-based payments, intangible asset amortisation (resulting from recent acquisitions) and Telecoms restructuring costs.

Group results: continuing operations	2008			2007
	Before disposed £m	Disposed £m	Total continuing £m	Before disposed £m	Disposed £m	Total continuing £m
Revenue	154.0	1.2	155.2	158.4	3.1	161.5
Adjusted operating profit1	24.7	0.2	24.9	27.6	0.7	28.3
Share-based payments	(2.3)	-	(2.3)	(1.8)	-	(1.8)
Amortisation of acquired intangible assets	(3.4)	-	(3.4)	(1.3)	-	(1.3)
Telecoms restructuring costs	(3.3)	-	(3.3)	-	-	-
Operating profit	15.7	0.2	15.9	24.5	0.7	25.2
Other gains and losses	-	(0.1)	(0.1)	-	(1.1)	(1.1)
Finance charges - net interest	(2.1)	-	(2.1)	(0.8)	-	(0.8)
Finance charges - exchange gain2	1.3	-	1.3	-	-	-
Profit from continuing operations before tax	14.9	0.1	15.0	23.7	(0.4)	23.3

1 Before share based payments, amortisation and Telecoms restructuring costs.

2 Exchange gain of £1.3m from translation of Nemo escrow account

Group results - EBITDA (excluding disposed businesses)

	2008 £m	2007 £m
Adjusted operating profit	24.7	27.6
Depreciation	4.1	4.6
Amortisation	4.8	3.5
EBITDA	33.6	35.7

Divisional Results	2008				2007
£m	Revenue1	Profit pre-SBP/ AAIA/ Except.	SBP/  AAIA/ Except.2	Profit1	Revenue1	Profit pre-SBP/ AAIA	SBP/  AAIA2	Profit1
Wireless -Telecoms	41.6	6.2	(4.0)	2.2	57.8	16.5	(0.5)	16.0
Wireless - Nemo	18.8	5.5	(3.2)	2.3	6.9	2.0	(1.2)	0.8
Total Wireless	60.4	11.7	(7.2)	4.5	64.7	18.5	(1.7)	16.8
Travel	31.2	8.5	(0.3)	8.2	27.5	6.4	(0.3)	6.1
Secure Information Solutions	18.5	1.2	(0.1)	1.1	21.0	3.1	-	3.1
Local Government	40.5	5.1	(0.2)	4.9	39.9	4.7	(0.2)	4.5
Pericles	3.4	(0.3)	-	(0.3)	5.3	(2.7)	-	(2.7)
Total Public Sector	62.4	6.0	(0.3)	5.7	66.2	5.1	(0.2)	4.9
	154.0	26.2	(7.8)	18.4	158.4	30.0	(2.2)	27.8
Unallocated corporate costs		(1.6)	(1.2)	(2.8)		(2.0)	(0.9)	(2.9)
Surplus properties		0.1	-	0.1		(0.4)	-	(0.4)
Operating profit		24.7	(9.0)	15.7		27.6	(3.1)	24.5
Net finance charges		(2.1)	1.3	(0.8)		(0.8)	-	(0.8)
Profit before tax		22.6	(7.7)	14.9		26.8	(3.1)	23.7
Basic EPS		4.9p	(1.8)p	3.1p		5.5p	(0.7)p	4.8p

1 Continuing operations excluding disposed businesses

2 Share based payments (SBP), amortisation of acquired intangible assets (AAIA), Telecoms restructuring costs and exchange gain on translation of Nemo escrow account

Orders

Orders for continuing businesses (excluding disposed businesses) decreased by 5.1% and are analysed by division below:

Orders	2008			2007
	Order intake £m	Revenue £m	Order intake as a % of revenue	Order intake £m	Revenue £m	Order intake as a % of revenue
Wireless	61.0	60.4	100%	68.4	64.7	106%
Travel	40.8	31.2	131%	44.1	27.5	160%
Public Sector	60.8	62.4	97%	58.8	66.2	89%
Total	162.6	154.0	106%	171.3	158.4	108%

Revenue

Revenue for continuing businesses, excluding disposed businesses, decreased by 2.8% to £154.0m and is analysed by type in the table below:

One of the Group's financial objectives is to improve the quality of its 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 the revenue stemming from sales of software licences, embedded in its software, which derive from the Group's internally developed IPR and know-how.

	Wireless		Travel		Public Sector		Total
Revenue analysis	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m
Managed services	-	-	10.2	6.9	7.6	7.5	17.8	14.4
Software maintenance	16.1	14.5	4.5	4.5	18.8	17.4	39.4	36.4
Recurring revenues	16.1	14.5	14.7	11.4	26.4	24.9	57.2	50.8
Software licences	36.1	37.2	0.7	0.8	10.3	7.8	47.1	45.8
Total software and recurring	52.2	51.7	15.4	12.2	36.7	32.7	104.3	96.6
% to total	86%	80%	49%	44%	59%	49%	68%	61%
Bespoke & SI	-	-	10.0	8.6	17.7	24.3	27.7	32.9
IT Consultancy	-	-	-	-	3.0	4.6	3.0	4.6
Third-party	8.2	13.0	5.8	6.7	5.0	4.6	19.0	24.3
Total	60.4	64.7	31.2	27.5	62.4	66.2	154.0	158.4

Overhead costs

Divisional performances are stated before unallocated corporate costs. Unallocated corporate costs include head office staff costs, Directors' remuneration, professional and office costs, and non-operational costs. During the period unallocated corporate costs totalled £1.6m (2007: £2.0m) and were reduced by lower overhead costs and reduced bonuses. Unallocated share-based payments totalled £1.2m (2007: £0.9m). 

Non-operational properties resulted in a small surplus in the period of £0.1m (2007: net cost £0.4m). We continue to manage an orderly and low-risk run-down of this portfolio which comprises legacy properties previously occupied by Group businesses. We take the opportunity to exit from non-operational properties, where economically advantageous, although this does cause fluctuations in our costs and cash flows from time to time.

  Overall costs of the continuing operations of the Group are analysed below.

Continuing operations costs	2008			2007
	Pre Nemo £m	Nemo costs £m	2008 Total £m	Pre Nemo £m	Nemo costs £m	2007 Total £m
Total operating expenses	58.6	9.8	68.4	54.5	4.0	58.5
Less:
Share-based payments	(2.0)	(0.3)	(2.3)	(1.8)	-	(1.8)
Telecoms restructuring costs	(3.3)	-	(3.3)	-	-	-
Amortisation of acquired intangible assets	(0.5)	(2.9)	(3.4)	(0.1)	(1.2)	(1.3)
Research & Development	(16.8)	(1.6)	(18.4)	(14.3)	(0.7)	(15.0)
Adjusted operating costs	36.0	5.0	41.0	38.3	2.1	40.4
Continuing revenue, %	26.6%	26.6%	26.6%	25.3%	30.4%	25.5%

Costs related to the Nemo acquisition are for five months only in 2007. 

Development costs

Development spending by division during the year was as follows:

		2008						2007
		Capitalised in year						Capitalised in year
	P&L £m	Gross £m	Amorti-sation £m	Net £m		Total spend £m	P&L £m	Gross £m	Amorti-sation £m	Net £m	Total spend £m
Wireless	12.2	2.3	(2.3)	-		12.2	9.6	3.5	(2.0)	1.5	11.1
Travel	0.5	-	-	-		0.5	0.5	-	-	-	0.5
Public Sector	5.7	0.7	(1.8)	(1.1)		4.6	4.9	2.5	(1.0)	1.5	6.4
Total	18.4	3.0	(4.1)	(1.1)		17.3	15.0	6.0	(3.0)	3.0	18.0

Total development spending (excluding the effect of capitalisation/amortisation) reduced in the year to £17.3m (2007: £18.0m). £18.4m (2007: £15.0m) was expensed in the year, including net amortisation of £1.1m (2007: net capitalisation £3.0m). Development spending largely focused on Wireless and Public Sector. 

Group finance costs

The Group had a net debt position on 30 April 2008 of £15.4m (2007: £22.6m). Gearing was 25% (2007: 35 %). Net finance costs (note 4) of £0.8m (2007: £0.8m) included a one-off exchange gain of £1.3m on the translation of the escrow account (euro denominated) held for the Nemo earnout, which was released in April 2008. 

Taxation

The tax rate for the continuing operations for the year was 25.7% (2007: 30.1%). The charge for the year amounted to £3.8m (2007: £7.0m). The cash payment for the year amounted to £3.9m (2007: £2.5m). The tax rate decreased in the year, as a result of the decrease in profits from countries where tax rates are higher than the UK, principally in Anite Wireless's US operation. As Wireless continues to widen its geographic spread of profits in higher tax regimes, the Group tax rate is expected to show some volatility as the profit mix between high-tax and low-tax locations changes from year to year. 

Shareholder returns and dividends

•    Adjusted basic earnings per share was 4.9p (2007:5.5p).

•    The Board has proposed a final dividend of 0.60p per share (2007: 0.55p) making a total for the year of 0.875p (2006: 0.80p) - covered six times by adjusted earnings.

•    Retained earnings to equity holders were £13.2m (2007: £20.3m) for the year.

At 30 April 2008, the number of shares in issue had decreased by 14.7million in the period under review to 338.04 million, from 352.7 million at 30 April 2007. In total, 16.26 million shares were bought back and cancelled at an average price of 45.9p per share and a total cost of £7.5m; 1.55 million new shares were issued to settle SAYE and grant/award maturities. The weighted average number of shares in issue used to calculate basic earnings per share was, therefore, 344.53 million (2007: 350.16 million). This does not include the dilutive effect of share option and grant/award schemes.

Disposals

The disposals of Anite Deutschland Management GmbH (part of the International division) for a gross consideration of £8.0m, and Anite Travel Systems Ab Ltd ('Carus') (part of the Travel division), for a gross consideration of £1.0m, were completed within the financial year. Revenue and profit attributable to disposed and discontinued businesses in the period were £3.2m (2007:£15.4m) and £0.3m (2007:£3.7m)

Cash management

Despite the lower profit performance, the Group achieved strong cash conversion from operating profits during the year. The key movements in the year were as follows:

• Net proceeds from disposals - £8.5m (2007: £0.1m)

• Tax paid - £3.9m (2007: £2.5m)

• Capital expenditure - £3.8m (2007: £3.7m)

• Shares bought back for cancellation - £7.5m (2007: £0.6m)

• Shares bought for employee trust - £4.3m (2007: £0.3m)

• Dividends paid - £3.7m (2007: £1.7m)

• Earnouts paid for Invenova and Nemo acquisitions - £2.3m (2007: nil)

• Term loan repayment - £5m (2007: nil)

The dividend payments included three payments (two interims and a final) in the year to bring payments into line with the financial year end.

  Balance sheet and cash

The Group has further reduced its net debt this year following the acquisitions of Nemo and Invenova in the previous year at a cost of £63.7m, and remains well within its Bank covenant levels.

Analysis of net debt	2008 £m	2007 £m
Cash and cash equivalents	29.4	18.7
Escrow deposit re Nemo earnout	-	8.2
Bank borrowings	(45.0)	(50.0)
Unamortised issue costs	0.2	0.5
Net debt	(15.4)	(22.6)

The Group entered into a new syndicated banking facility in November 2006 for £90m (£50m term loan and £40m) for the acquisition of Nemo. This reduced to £85m at 30 April 2008 following the first £5m scheduled repayment of the term loan in November 2007. The facility is not due to be renewed until 30 November 2011. In addition, the Group retains a £10m overdraft facility, renewable annually. We believe these facilities are appropriate for our expected future requirements. 

Christopher Humphrey

Finance Director

  FINANCIAL STATEMENTS

consolidated income statement

For the year ended 30 April 2008

		2008	2007
	Note	£000	£000
Continuing operations
Revenue	2.3	155,183	161,478
Cost of sales		(71,014)	(77,740)
Gross profit		84,169	83,738
Distribution costs		(16,031)	(12,737)
Research & development		(22,435)	(15,581)
Administrative expenses		(29,889)	(30,186)
Operating expenses	2.7	(68,355)	(58,504)
Operating profit before disposed businesses, share-based payments,
amortisation of acquired intangible assets and Telecoms restructuring costs	2.4	24,653	27,595
Disposed businesses	2.4	202	741
Share-based payments		(2,297)	(1,825)
Amortisation of acquired intangible assets		(3,416)	(1,277)
Telecoms restructuring costs	2.2	(3,328)	-
Operating profit	2.3	15,814	25,234
Other gains and losses	3(a)	(65)	(1,136)
Finance income	4	3,030	1,336
Finance charges	4	(3,792)	(2,087)
Profit from continuing operations before tax		14,987	23,347
Tax expense	5	(3,849)	(7,039)
Profit from continuing operations		11,138	16,308
Profit from discontinued operations	3(b)	2,096	3,963
Profit for the year		13,234	20,271
Profit attributable to equity holders of the parent		13,234	20,271
Continuing and discontinued operations
Earnings per share - basic	6	3.8p	5.8p
- diluted		3.7p	5.7p
Continuing operations
Earnings per share - basic	6	3.2p	4.7p
- diluted		3.1p	4.6p

  consolidated balance sheet

30 April 2008

		2008	2007
	Note	£000	£000
Non-current assets
Goodwill		78,658	83,233
Other intangible assets		30,755	32,431
Property, plant and equipment		11,653	12,754
Deferred tax assets		104	1,895
Derivative financial assets		-	121
Trade and other receivables		-	934
		121,170	131,368
Current assets
Inventories	7	3,885	4,509
Trade and other receivables	8	53,123	58,327
Derivative financial assets		13	-
Current tax assets		160	195
Cash deposit held in escrow		-	8,197
Cash and cash equivalents		29,374	18,665
		86,555	89,893
Total assets		207,725	221,261
Current liabilities
Trade and other payables	9	(57,617)	(65,996)
Bank borrowings	10	(4,981)	(4,829)
Current tax payable		(10,283)	(12,354)
Derivative financial liabilities		(4,328)	-
Provisions	12	(4,887)	(14,443)
		(82,096)	(97,622)
Non-current liabilities
Bank borrowings	10	(39,843)	(44,610)
Deferred tax liabilities		(6,356)	(6,481)
Derivative financial liabilities		(11,949)	(1,722)
Provisions	12	(4,937)	(5,884)
		(63,085)	(58,697)
Total liabilities		(145,181)	(156,319)
Net assets		62,544	64,942
Equity
Issued share capital		33,854	35,325
Share premium account		25,406	25,010
Own shares		(5,132)	(1,019)
Merger reserve		6,538	6,538
Capital redemption reserve		2,485	859
Other reserves		(940)	(7)
Retained earnings		333	(1,764)
Total equity		62,544	64,942

  consolidated statement of changes in equity

for the end of the year 30 April 2008

	Share	Share			Capital
	capital	premium	Own	Merger	redemption	Other	Retained
	issued	account	shares	reserve	reserve	reserves	earnings	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Balance at 1 May 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 loss 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 into 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
Changes in equity for the year
to 30 April 2008
Exchange differences arising
on translation of foreign operations2	-	-	-	-	-	(25)	-	(25)
Cash flow hedges taken to equity	-	-	-	-	-	(263)	-	(263)
Fair value losses on net
investment hedges (net of foreign
exchange and tax)1	-	-	-	-	-	(645)	-	(645)
Net loss recognised directly in equity	-	-	-	-	-	(933)	-	(933)
Profit for the year	-	-	-	-	-	-	13,234	13,234
Total recognised income
and expense for the year	-	-	-	-	-	(933)	13,234	12,301
Issue of share capital	155	396	-	-	-	-	-	551
Purchase of own shares in treasury	-	-	(4,333)	-	-	-	-	(4,333)
Sale of own shares from treasury			220				(220)	-
Dividends paid	-	-	-	-	-	-	(3,709)	(3,709)
Share buy back and cancellation	(1,626)	-	-	-	1,626	-	(7,497)	(7,497)
Recognition of share-based
payments before tax	-	-	-	-	-	-	2,294	2,294
Deferred tax related to share-based
payments	-	-	-	-	-	-	(2,005)	(2,005)
Balance at 30 April 2008	33,854	25,406	(5,132)	6,538	2,485	(940)	333	62,544

1    The net loss of £645,000 comprises the fair value loss on the net investment hedge of £14,807,000 relating to the effective portion of the cross currency swaps,  partly offset by the foreign exchange gains (£10,745,000) and tax credit (£3,417,000), totalling £14,162,000.

2  Includes amount recycled through the income statement on disposal of businesses (note 3a).

  consolidated cash flow statement

for the year ended 30 April 2008

		2008	2007
	Note	£000	£000
Profit for the year
Continuing operations		11,138	16,308
Discontinued operations		2,096	3,963
		13,234	20,271
Adjustments for:
Tax expense - continuing and discontinued	5	5,049	3,237
(Profit)/loss before tax on disposal of discontinued operations	3(b)	(3,200)	467
Loss before tax on disposal of disposed businesses	3(a)	65	1,136
Finance charges - continuing and discontinued	4	762	745
Share-based payments		2,294	1,916
Depreciation and impairment of property, plant and equipment		4,583	4,604
Amortisation and impairment of intangible assets		8,736	4,790
Loss on disposal of property, plant and equipment		94	74
Decrease in provisions		(1,260)	(14,709)
Operating cash flows before movements in working capital		30,357	22,531
Decrease/(increase) in inventories		624	(1,424)
Decrease in receivables		2,979	118
Decrease in payables		(5,613)	(1,392)
Movements in working capital		(2,010)	(2,698)
Cash generated from operations before exceptional cash payments		28,347	33,456
Cash payments for SoV contract and onerous property lease1		-	(13,623)
Cash generated from operations		28,347	19,833
Finance income received		2,104	1,591
Finance charges paid		(3,699)	(2,362)
Income taxes paid		(3,928)	(2,510)
Net cash generated from operating activities		22,824	16,552
Cash flow from investing activities
Purchase of subsidiary undertakings		-	(63,738)
Net bank balance acquired with subsidiary undertakings		-	717
Proceeds from disposal of subsidiary undertakings		8,535	76
Net bank balance disposed with subsidiary undertakings		(677)	(372)
Increase/( decrease) in cash held in escrow related to acquisitions		9,471	(8,097)
Net payments for previously closed businesses		(492)	-
Deferred consideration paid		(2,309)	-
Part settlement of cross currency swap		(440)	-
Purchase of property, plant and equipment		(2,781)	(3,007)
Proceeds from disposal of property, plant and equipment		43	32
Purchase of software licences		(1,080)	(687)
Expenditure on capitalised product development		(2,982)	(6,077)
Net cash generated from/(used in) investing activities		7,288	(81,153)
Cash flow from financing activities
Issue of ordinary share capital		551	932
Share buy back for cancellation		(7,497)	(613)
Purchase of own shares into treasury		(4,333)	(304)
Dividend paid to Company's shareholders		(3,709)	(1,753)
(Decrease)/increase in bank loans		(5,000)	49,439
Redemption of vendor loan note instruments		-	(478)
Net cash (used in)/generated from financing activities		(19,988)	47,223
Net increase/ (decrease) in cash and cash equivalents		10,124	(17,378)
Effect of exchange rate changes		585	(220)
Cash and cash equivalents at 1 May		18,665	36,263
Cash and cash equivalents at 30 April		29,374	18,665

1    The exceptional cash payments of £13.6m in April 2007 relate to the settlement of the SoV contract (£11.4m) and settlement of an onerous property lease contract (£2.2m).

Discontinued operations include International Consultancy businesses which generated net operating cash outflows of £348,000 (2007: £144,000), paid £nil (2007: £198,000) in respect of net returns on investment and servicing of financing, and paid £16,000 (2007: £93,000) for capital expenditure.

1 Statement of accounting policies

a) Basis of preparation

The preliminary results have been prepared under the historical cost convention and in accordance with current International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations. However, this announcement does not contain sufficient information to comply with all the disclosure requirements of IFRS.

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions in certain areas that affect the reported amounts in the financial statements. Although these estimates and assumptions are based on management's best knowledge, the actual results ultimately may differ from those estimates.

The statutory accounts for 2008 have been prepared following accounting policies consistent with those for the year ended 30 April 2007. 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 2008 but is derived from those accounts. Statutory accounts for 2008 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 2008 was approved by the Board of Directors on 17 July 2008.

2 Revenue and segmental information

2.1  Revenue from continuing and discontinued operations

		2008	2007
	Note	£000	£000
IT Consultancy		3,013	4,617
Bespoke services, systems integration and implementation of software products		27,665	32,974
Own product software licences		47,081	45,800
Software maintenance and support		39,411	36,385
Managed services		17,858	14,370
Sale of third-party products and services		18,996	24,267
Continuing businesses excluding disposed businesses		154,024	158,413
Disposed businesses		1,159	3,065
Revenue from continuing operations	2.3	155,183	161,478
Finance income	4	3,030	1,336
Total revenue from continuing operations		158,213	162,814
Discontinued operations
Revenue	2.3	2,052	12,384
Finance income	4	-	6
Total revenue		160,265	175,204

2.2 Telecoms restructuring costs

In the absence of acceptable alternatives being available in the marketplace, Anite had pursued a strategy of developing its own in-house hardware platform, Nevis, in respect of the LTE standard. On 12 November 2007, Anite Wireless announced a strategic partnership with Agilent Technologies to deliver test solutions for the design of next generation mobile communications products conforming to the new 3GPP Long Term Evolution (LTE) standard. The new strategic partnership with Agilent Technologies will enhance development of best of breed solutions, making a clear business case for Anite to cease its in-house development.

In addition, a restructuring of the Telecoms handset testing business has taken place, resulting in management changes and a reduction in the overall workforce.

The impact of asset write downs and cash settlement of exiting the current Nevis own-platform development and costs incurred as a result of restructuring the business were £3.3m as set out below.

		Note	£000
Impairment of inventories			298
Impairment of property, plant and equipment			443
Impairment of capitalised Nevis development costs			475
Redundancy costs - development			309
Other exit costs including inventory commitments			949
Cost of existing Nevis development		2.7	2,474
Other restructuring/redundancy costs		2.7	854
		2.7	3,328

The analysis of the above restructuring costs is between research and development costs (£2,474,000) and administrative expenses (£854,000), as disclosed in note 2.7.

2.3 Business segments - primary basis

The Group is organised into three business segments: Wireless, Public Sector and Travel.

These three business segments are the Group's primary reporting format for segment information. During the period, Anite Deutschland Management GmbH and its subsidiaries ('Anite Deutschland'), the last remaining part of the International Consultancy operation was sold. Its results are included as a discontinued operation and details are disclosed in note 3.

Segment results, assets and liabilities include items directly attributable to a segment as well as those than can be allocated on a reasonable basis. Unallocated items comprise several income-earning assets, interest-bearing loans, corporate assets and liabilities and expenses.

Segment information under the primary reporting format is as disclosed in the table below:

	Wireless		Travel		Public Sector		Total
	2008	2007	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000	£000	£000
Revenue
- continuing businesses1	60,410	64,728	31,598	27,733	62,414	66,236	154,422	158,697
- inter-segment revenue2	-	-	(360)	(229)	(38)	(55)	(398)	(284)
	60,410	64,728	31,238	27,504	62,376	66,181	154,024	158,413
- disposed businesses3	-	-	1,159	3,065	-	-	1,159	3,065
Revenue
- continuing operations	60,410	64,728	32,397	30,569	62,376	66,181	155,183	161,478
- discontinued operations3	-	-	-	-	-	-	2,052	12,384
Total revenue							157,235	173,862
Continuing operations
Segment profit
- continuing businesses1	11,273	18,100	8,217	6,068	5,598	4,881	25,088	29,049
- disposed businesses3	-	-	202	456	-	285	202	741
- continuing operations	11,273	18,100	8,419	6,524	5,598	5,166	25,290	29,790
Unallocated corporate costs
(after recharges)							(2,732)	(3,279)
Operating profit for continuing
operations before amortisation
and exceptional items							22,558	26,511
Amortisation of acquired
intangible assets	(3,416)	(1,277)	-	-	-	-	(3,416)	(1,277)
Telecoms restructuring costs	(3,328)	-	-	-	-	-	(3,328)	-
Segment operating profit	4,529	16,823	8,419	6,524	5,598	5,166
Operating profit							15,814	25,234
Other gains and losses (note 3(a))			(65)	(1,136)			(65)	(1,136)
Finance charges (note 4)							(762)	(751)
Profit from continuing operations
before tax							14,987	23,347
Tax expense							(3,849)	(7,039)
Profit from continuing operations							11,138	16,308
Discontinued operations
Operating profit from discontinued
operations (note 3(b))							96	622
Operating profit/(loss)
Profit/(loss) on disposal of businesses							3,200	(467)
Finance income (note 4)							-	6
Profit from discontinued operations							3,296	161
Tax (charge)/credit							(1,200)	3,802
Profit from discontinued operations							2,096	3,963
Profit for the year							13,234	20,271
Profit for the period is stated after:
Capitalisation of development
costs (DC)	2,309	3,579	-	-	673	2,498	2,982	6,077
Amortisation of capitalised DC	(2,309)	(2,061)	-	-	(1,786)	(955)	(4,095)	(3,016)
Net (amortisation)/capitalisation
of DC	-	1,518	-	-	(1,113)	1,543	(1,113)	3,061

1    Continuing businesses comprise operating results of continuing operations before the operating results of disposed businesses and SoV.

2    Inter-segment revenues are charged at prevailing market rates.

3    Disposed businesses 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 3(a)). Discontinued operations are all within the International Consultancy business segment.

  Other information

	Wireless		Travel		Public Sector		Unallocated items		Total
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Capital additions	4,608	31,942	677	244	1,200	3,762	1,299	881	7,784	36,829
Depreciation and
intangible amortisation	10,007	6,839	376	392	2,599	1,796	337	367	13,319	9,394
Balance sheet
Assets
Segment assets	94,440	100,888	12,449	12,508	52,629	78,351	48,207	29,514	207,725	221,261
Liabilities
Segment liabilities	14,143	30,012	7,582	11,852	33,879	36,201	89,577	78,254	145,181	156,319

2.4 Business segments - continuing operations1

	Wireless		Travel		Public Sector		Total
	2008	2007	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000	£000	£000
Revenue
- continuing before disposed
businesses	60,410	64,728	31,238	27,504	62,376	66,181	154,024	158,413
Segment profit1	11,764	18,530	8,461	6,393	5,944	5,104	26,169	30,027
Unallocated corporate costs							(1,516)	(2,432)
Adjusted operating profit1							24,653	27,595
Net finance charges before exchange
gain (note 4)							(2,044)	(751)
Adjusted profit1 before tax							22,609	26,844
Net finance changes - exchange
gain (note 4)							1,282	-
Share-based payments
- corporate charge							(1,216)	(847)
- business segment	(491)	(430)	(244)	(325)	(346)	(223)	(1,081)	(978)
Amortisation of acquired
intangible assets	(3,416)	(1,277)	-	-	-	-	(3,416)	(1,277)
Telecoms restructuring costs	(3,328)	-	-	-	-	-	(3,328)	-
Segment operating profit
before disposed businesses	4,529	16,823	8,217	6,068	5,598	4,881
Profit before disposed
businesses and tax							14,850	23,742
- disposed businesses	-	-	202	456	-	285	202	741
Other gains and losses (note 3(a))			(65)	(1,136)			(65)	(1,136)
Profit from continuing
operations before tax (note 2.3)							14,987	23,347

1    Continuing operations before disposed businesses, share-based payments, amortisation of acquired intangible assets and Telecoms restructuring costs.

    This additional information has been disclosed to give a clearer understanding of the results of the business segments before and after share-based payments, exceptional items, amortisation of acquired intangible assets and disposed businesses.

2.5  Public Sector continuing businesses

	Local Government		Pericles development		Subtotal Local Government		Secure Information Solutions		Total Public Sector
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Revenue on continuing operations1	40,455	39,905	3,415	5,313	43,870	45,218	18,506	20,963	62,376	66,181
Operating profit/(loss)1
- before share-based payments	5,131	4,749	(326)	(2,738)	4,805	2,011	1,139	3,093	5,944	5,104
- share-based payments	(278)	(176)	-	-	(278)	(176)	(68)	(47)	(346)	(223)
Operating profit/(loss)1	4,853	4,573	(326)	(2,738)	4,527	1,835	1,071	3,046	5,598	4,881

1    Continuing businesses comprise the revenue and operating results of continuing operations before disposed businesses. This additional information has been disclosed to give a clearer understanding of the results of the Public Sector continuing businesses.

  2.6 Geographical segment - secondary basis

The three 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 customers, irrespective of the origin of the goods or services. The corresponding segment assets are based on the geographical location of the assets.

	Revenue		Revenue		Revenue
	continuing operations		discontinued operations		total
	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000
Europe - United Kingdom	91,861	94,617	-	-	91,861	94,617
Europe - other	23,573	21,897	2,052	12,384	25,625	34,281
North America	15,716	25,015	-	-	15,716	25,015
Rest of the World	24,033	19,949	-	-	24,033	19,949
	155,183	161,478	2,052	12,384	157,235	173,862

			Carrying amount of segment assets		Additions to property, plant and equipment and intangible assets
			2008	2007	2008	2007
			£000	£000	£000	£000
Europe - United Kingdom			116,603	110,539	7,237	35,629
Europe - other			78,256	87,635	298	1,058
North America			11,302	20,186	8	9
Rest of the World			1,564	2,901	241	133
			207,725	221,261	7,784	36,829

2.7 Operating expenses

			2007
		2008	(Restated)
		£000	£000
Distribution costs
- amortisation of acquired intangible assets		1,900	745
- other		14,131	11,992
		16,031	12,737
Research & development
- amortisation of capitalised development costs		4,095	3,016
- other		14,350	12,033
		18,445	15,049
- Telecoms restructuring costs		2,474	-
- amortisation of acquired intangible assets		1,516	532
		22,435	15,581
Administrative expenses
- Telecoms restructuring costs		854	-
- share-based payments		2,297	1,825
- other		26,738	28,361
		29,889	30,186
Total operating expenses		68,355	58,504
Analysed as:
- amortisation of acquired intangible assets		3,416	1,277
- amortisation of capitalised development costs		4,095	3,016
- Telecoms restructuring costs		3,328	-
- share-based payments		2,297	1,825
- other		55,219	52,386
		68,355	58,504

Restatement of April 2007 operating expenses - amortisation of acquired intangible assets of £1,277,000, research and development of £12,033,000 and amortisation of capitalised development costs of £3,016,000, totalling £16,323,000, which had been previously reported under administrative expenses, have been reclassified between distribution costs of £745,000 and research and development of £15,581,000. The restatement above aligns this expense more accurately with the relevant cost classification.

  3 Disposed businesses/discontinued operations

a) Other gains and losses:

	2008	2007
	£000	£000
Loss on sale of business and assets of:
Anite Travel Systems Ab Ltd ('Carus')	(65)	-
Anite Opentur S.r.l ('Opentur')	-	(1,136)
	(65)	(1,136)

In the opinion of the Directors, Anite Travel Systems Ab Ltd ('Carus'), based in Finland, which was disposed of on 5 February 2008, 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 of Carus was £202,000 (2007: £364,000).

Net assets disposed of and the related loss on disposal were as follows:

	2008	2007
	£000	£000
	Carus	Opentur
Goodwill	706	1,000
Intangible assets	-	15
Property, plant and equipment	56	5
Current assets	407	767
Cash and cash equivalents	280	177
Creditors	(292)	(464)
Provisions	-	(305)
Net assets	1,157	1,195
Recycled foreign exchange	(58)	-
Loss on disposal	(65)	(1,136)
Net consideration	1,034	59
Satisfied by:
Cash consideration	1,050	93
Disposal costs	(16)	(34)
	1,034	59
Net cash flows in respect of the disposal of operations are as follows:
Cash received (net of disposal costs paid)	1,034	59
Cash and cash equivalents sold	(280)	(177)
	754	(118)

  b) Discontinued operations

During the year, the Directors completed the disposal of all the non-core businesses within the International Consultancy Division. The results of these businesses that meet the criteria as discontinued operations under IFRS 5, are included in the International Consultancy division as discontinued operations for segment reporting purposes (see note 2).

	2008	2007
	£000	£000
Profit after tax for the year from discontinued operations
Revenue	2,052	12,384
Cost of sales	(1,618)	(9,780)
Gross profit	434	2,604
Operating expenses	(338)	(1,982)
Operating profit before interest	96	622
Finance income	-	6
Profit before tax	96	628
Tax credit	-	2
Profit after tax	96	630
Profit on sale of discontinued operations
Warranty provision movements of previously disposed businesses (note 12)	1,367	(417)
Warranty settlement/consideration received in respect of previously disposed businesses	568	-
Loss on disposal of GMO (note 3(c))	-	(50)
Profit on disposal of Anite Deutschland (note 3(c))	1,265	-
Net profit/(loss) before tax on sale of discontinued operations	3,200	(467)
Tax charge on the profit/(loss) on sale of discontinued operations	(1,200)	-
Tax credit relating to activities discontinued in prior years	-	3,800
Profit after tax on sale of discontinued operations	2,000	3,333
Total	2,096	3,963

c) Sale of businesses

On 9 July 2007 the Group sold its 100% interest in the ordinary share capital of Anite Deutschland Management GmbH and its subsidiaries ('Anite Deutschland') in Germany. The operating profit up to the date of disposal was £112,000 (2007: £699,000). The results of this business are included in the International Consultancy division as discontinued operations for segment reporting purposes (see note 2).

On 9 November 2006, the Group sold its 100% interest in the ordinary share capital of GMO Management Consulting GmbH ('GMO') in Germany.

Net assets disposed of and the related profits on disposal were as follows:

	2008	2007
	£000	£000
	Anite Deutschland	GMO
Goodwill	4,000	-
Intangible assets	91	-
Property, plant and equipment	87	21
Current assets	2,716	306
Cash and cash equivalents	397	195
Creditors	(1,220)	(455)
Provisions for liabilities	(169)	-
Net assets	5,902	67
Recycled foreign exchange	37	-
Profit/(loss) on disposal	1,265	(50)
Net consideration	7,204	17
Satisfied by:
Cash consideration	8,000	68
Disposal costs	(796)	(51)
	7,204	17
Net cash flows in respect of the disposal of operations are as follows:
Cash received (net of disposal costs paid)	7,204	17
Cash and cash equivalents sold	(397)	(195)
	6,807	(178)

  4 Net finance (charge)/income

	Continuing operations		Discontinued operations		Total
	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000
Finance income
Interest receivable and similar income	106	703	-	6	106	709
Interest on short-term deposits	712	114	-	-	712	114
Exchange gain on translation of the cash
deposit held in escrow	1,282	-	-	-	1,282	-
Gains on financial instruments
in a hedging relationship:
- Interest rate swaps and caps
- cash flow hedges	76	3	-	-	76	3
- Cross currency swaps -
net investment hedge	694	516	-	-	694	516
Others	160	-	-	-	160	-
	3,030	1,336	-	6	3,030	1,342
Finance charges
Bank loans and overdrafts	(3,505)	(1,764)	-	-	(3,505)	(1,764)
Other loans/commitment fees	(137)	(97)	-	-	(137)	(97)
Vendor loan notes	-	(2)	-	-	-	(2)
Unwinding of discount on provisions
(note 12)	(150)	(224)	-	-	(150)	(224)
	(3,792)	(2,087)	-	-	(3,792)	(2,087)
Net finance (charge)/income	(762)	(751)	-	6	(762)	(745)

Finance charges on bank loans and overdrafts include amortisation of issue costs of £385,000 (2007: £150,000).

The unwinding of discount on provisions (note 12) relates to property and deferred consideration provisions.

5 Income tax expense

	Continuing operations		Discontinued operations		Total
	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000
Current tax
UK corporation tax	3,700	5,528	-	(2)	3,700	5,526
Foreign tax	2,587	1,621	-	-	2,587	1,621
	6,287	7,149	-	(2)	6,287	7,147
Adjustments in respect of prior years
UK corporation tax	9	(307)	-	(3,800)	9	(4,107)
Foreign tax	-	(154)	-	-	-	(154)
	9	(461)	-	(3,800)	9	(4,261)
Total current tax expense	6,296	6,688	-	(3,802)	6,296	2,886
Deferred tax
UK	(1,414)	785	-	-	(1,414)	785
Foreign	(1,033)	(434)	1,200	-	167	(434)
Total deferred tax (credit)/expense	(2,447)	351	1,200	-	(1,247)	351
Total income tax expense	3,849	7,039	1,200	(3,802)	5,049	3,237

The tax charge on the profit/(loss) on sale of discontinued operations was £1.2m (2007: £nil).

Corporation tax is calculated at 29.84% (2007: 30%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

		2008	2007
		£000	£000
Charged/ (credited) to equity
Deferred tax relating to share-based payments		2,005	(664)
Deferred tax relating to amortisation of acquired intangibles		908	-
UK corporation tax relating to foreign exchange		(4,325)	(516)
		(1,412)	(1,180)

6 Earnings per share

The calculations of earnings per share are based on the Group profit for the year, adjusted profit1 and weighted average number of shares in issue:

	Basic		Diluted
	2008	2007	2008	2007
EPS summary
Basic EPS	3.8p	5.8p	3.7p	5.7p
Basic EPS for continuing operations	3.2p	4.7p	3.1p	4.6p
Adjusted EPS2	4.9p	5.5p	4.7p	5.4p
	2008	2007
	Pence	Pence	2008	2007
	per share	per share	£000	£000
Profit for the year	3.8	5.8	13,234	20,271
Profit from discontinued operations	(0.6)	(1.1)	(2,096)	(3,963)
Profit for the year on continuing operations	3.2	4.7	11,138	16,308
Reconciliation to adjusted profit:
Operating (profit) from disposed businesses	(0.1)	(0.2)	(202)	(741)
Other gains and losses	-	0.3	65	1,136
Profit for the year on continuing operations (before disposed businesses)	3.1	4.8	11,001	16,703
Exchange gain on retranslation of the cash deposit
held in escrow (net of tax)	(0.3)	-	(899)	-
Telecoms restructuring costs (net of tax)	0.7	-	2,354	-
Acquired intangible assets amortisation (net of tax)	1.0	0.3	3,291	894
Share-based payments (net of tax)	0.4	0.4	1,199	1,542
Adjusted profit1	4.9	5.5	16,946	19,139

1    Profit from continuing businesses before disposed businesses, share-based payments, acquired intangible assets amortisation and Telecoms restructuring costs.

2    Earnings per share on adjusted profit1 have been included to give a clearer understanding of the results of the continuing businesses.

Both basic and diluted EPS for discontinued operations is 0.6p (2007: 1.1p).

Number of shares ('000)	2008	2007
Weighted average number of shares in issue - used to calculate basic earnings per share	344,533	350,163
Effect of dilutive ordinary shares
- SAYE and share option schemes	12,296	4,565
Number of shares used to calculate diluted earnings per share	356,829	354,728

7 Inventories

	2008	2007
	£000	£000
Electronic components	3,657	4,146
Work in progress	156	164
Finished goods	72	199
	3,885	4,509

8 Trade and other receivables

	2008	2007
	£000	£000
Current assets
Trade debtors	41,585	46,249
Less: provision for impairment of trade receivables	(643)	(670)
Trade debtors net of provision	40,942	45,579
Other receivables	2,185	2,082
Prepayments	3,781	4,382
Amount due from construction customers	302	353
Accrued income	5,913	5,931
	53,123	58,327
Non-current assets
Accrued income	-	934
	53,123	59,261

9 Trade and other payables

		2008	2007
		£000	£000
Trade creditors		7,922	12,017
Other taxes and social security		6,018	6,330
Amount due to contract customers		647	475
Payments received on account		4,265	6,561
Deferred income		26,151	25,174
Accruals		10,284	13,585
Other creditors		2,330	1,854
		57,617	65,996

10 Bank borrowings

		2008	2007
		£000	£000
Current
Bank loans		4,981	4,829
Non-current
Bank loans		39,843	44,610
		44,824	49,439
The borrowings are repayable as follows:
On demand or within one year		4,981	4,829
In the second year		4,980	4,854
In the third to fifth years inclusive		34,863	39,756
		44,824	49,439
Less: amounts due for settlement within 12 months (shown under current liabilities)		(4,981)	(4,829)
Amount due for settlement after 12 months		39,843	44,610

The current and non-current bank loans comprise a £45m (2006: £50m) fixed term loan less £0.176m 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 . The first repayment was made on 30 November 2007 and the loan 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.

11 Net debt

			2008	2007
		Note	£000	£000
Cash deposit held in escrow			-	8,197
Cash and cash equivalents			29,374	18,665
Bank borrowings - current		10	(4,981)	(4,829)
Bank borrowings - non-current		10	(39,843)	(44,610)
Net debt			(15,450)	(22,577)

A reconciliation of the movement in net debt for the year is as detailed below:

		2008	2007
		£000	£000
Net (debt)/cash at 1 May		(22,577)	35,785
(Decrease)/increase in cash deposit held in escrow		(9,471)	8,097
Net increase/(decrease) in cash and cash equivalents		10,124	(17,378)
Unamortised issue costs of bank borrowings		(385)	561
Decrease/(increase) in bank borrowings		5,000	(50,000)
Decrease in loan notes		-	478
Exchange movement		1,859	(120)
Net debt at 30 April		(15,450)	(22,577)

  12 Provisions

				Onerous
	Deferred		Property	contract	Other	Group
	consideration	Warranties	provision	provisions	provisions	total
	£000	£000	£000	£000	£000	£000
At 1 May 2007	8,440	5,185	4,450	1,917	335	20,327
Release of deferred consideration/cost
provisions credited to goodwill	(5,901)	-	-	-	-	(5,901)
Release of provision credited
to profit and loss	-	(1,367)	(235)	(44)	-	(1,646)
Established during the year	-	-	1,069	-	1,744	2,813
Disposal of subsidiaries (note 3(c))	-	-	-	-	(170)	(170)
Utilised during the year	(2,309)	(786)	(81)	(1,582)	(1,211)	(5,969)
Unwinding of discount	(15)	-	165	-	-	150
Exchange movement	(13)	202	-	-	31	220
At 30 April 2008	202	3,234	5,368	291	729	9,824

		2008	2007
		£000	£000
Analysed as:
Current liabilities		4,887	14,443
Non-current liabilities		4,937	5,884
		9,824	20,327

Following the final cash consideration payments of £0.3m (€0.4m) and £2.0m (US$4m) during the year to the vendors of Nemo and Invenova, respectively, the amounts of £5.2m (Nemo) and £0.7m (Invenova) were credited against goodwill. The remaining balance of £0.2m (US$0.4m) represents the Group's best estimate of the cash consideration payable for Invenova. This is expected to be utilised within a year.

The warranty provision has been made to cover any potential claims made by disposed businesses during the contractual warranty period. It is expected to be utilised in one to six years.  The release of warranty provision of £1.4m (2007: £1.1m) was in respect of a previously disposal no longer required. This amount released is included in 'Warranty provision movements of previously disposed businesses' in note 3(b) - discontinued operations.  

The property provision is in respect of all properties surplus to business requirements and dilapidation provisions for properties currently in use. It is expected to be utilised in one to 14 years.

Additional dilapidation provisions for properties were established during the year amounting to £0.9m (2007: £1.0m). These were capitalised in 'property, plant and equipment' and will be charged to the income statement on a straight line basis over the remaining term of the relevant property lease.

The onerous contract provision includes Pericles and State of Victoria (SoV) contractual commitments. In the year, £1.5m (2007: £0.4m) and £0.04m (2007: £11.4m) was utilised in respect of the Pericles and SoV contracts, respectively. The remaining provision of SoV of £0.04m was released. This provision is expected to be utilised within a year.

Other provisions included a provision of £1.7m (2007: £nil) established during the year for the Telecoms restructuring costs (note 2.2). Of this amount, £1.2m (2007: £nil) was utilised during the year, leaving £0.5m carried forward at year end. The other provisions are expected to be utilised within a year.

 

END

 

 

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