Final Results

Anite Group PLC 12 July 2005 For immediate release Tuesday, 12 July 2005 ANITE GROUP PLC Preliminary results for the year ended 30 April 2005 Anite Group plc ('Anite' or 'the Group'), the worldwide IT solutions and services company, today announces its audited preliminary results for the year ended 30 April 2005. Highlights: • Underlying profit before tax* up 39% at £17.3m (2004: £12.4m) on revenues* up 4% at £162.9m (2004: £156.3m) • Underlying operating profit* (before interest payable of £0.5m) £17.8m (2004: £14.0m) • Profit before tax of £6.8m (2004: loss £28.9m) on total revenues of £189.4m (2004: £196.2m) • Underlying basic earnings per share* up 42% at 3.7p (2004: 2.6p); earnings per share 0.5p (2004: loss per share 8.6p) • Underlying operating margin* improved to 10.9% (2004: 8.9%) • Net funds of £37.2m (2004: net funds £5.0m) • Order intake of £179.3m up 2% on last year giving book to bill ratio of 1.1 • Disposals of Anite Space, Datavance, Calculus, Transport and Anite Austria in line with strategic review • Continuing focus on State of Victoria and Pericles contracts • Board changes completed following the appointment of Clay Brendish • Share buy back planned *ongoing businesses (before exceptional items, amortisation and impairment of goodwill, disposed businesses, discontinued operations, and utilisation of provisions). For a reconciliation to reported profit before tax, see attached Profit and loss account and notes. Commenting on today's results, Steve Rowley, Anite's Chief Executive, stated: 'Anite is in better shape with its strongly performing core businesses outweighing the negative impact of Pericles and SoV. With our strong balance sheet we are now in a position to take forward our strategic plans to enhance shareholder value. 'We are confident that Anite's recovery will continue and anticipate that the current year will be a year of investing in growth. As a result the Board remains cautiously optimistic about future prospects.' For further information, please contact: www.anite.com Anite Group plc 01753 804000 Steve Rowley, Chief Executive Christopher Humphrey, Group Finance Director Smithfield 020 7360 4900 Reg Hoare/Sara Musgrave/Sarah Richardson An analysts' meeting will be held at 9.15 for 9.30 a.m. at The London Stock Exchange, 10 Paternoster Square, EC4 Print resolution images are available for the media to view and download from www.vismedia.co.uk Notes to editors Anite is an international IT company whose primary business is the provision of business critical solutions based on its deep sector knowledge of the public sector, travel and telecoms markets. These solutions almost always include at their core the supply of Anite owned software products. The Group provides 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, following recent disposals, now employs around 1400 staff in 10 countries across Europe, America, and Asia Pacific. Anite solutions are recognised as market leaders in their fields: • the top 10 global mobile phone handset manufacturers all use Anite testing technology • 3 out of 4 UK Local Authorities use Anite applications • around 40% of UK package holiday bookings were made using Anite systems last year. As previously stated, the Group reports the results of disposed/closed businesses and ongoing businesses separately. Preliminary results for the year ended 30 April 2005 Chairman's Statement (Except where indicated below, all figures stated are ongoing businesses, before exceptional items, disposed businesses, discontinued operations, amortisation and impairment of goodwill and utilisation of contract provisions) A year of recovery I am pleased to announce a strong recovery in Anite's profits for the year. This improvement resulted from a strong underlying performance in our core businesses. During the year we further rationalised our business portfolio in order to apply more focus to the main businesses of Public Sector, Telecoms and Travel. The disposals, together with the strong underlying performance, resulted in significant cash balances at the year end that will enable Anite to invest in growth opportunities in the current year. Results Turnover from ongoing businesses rose 4% to £162.9m (2004: £156.3m). Underlying profit before tax increased more strongly, by 39% to £17.3m (2004: £12.4m), benefiting from cost control and improved margins. However, ongoing results continue to be affected by the costs associated with the completion of the State of Victoria and Pericles contracts. These contracts continue to receive considerable management focus. All divisions were profitable, with a strong turnaround in Public Sector, albeit on slightly lower revenues, and very strong growth being reported by Telecoms across the board. Travel had a similar performance to last year in revenue and profit terms. International was significantly reduced in scale following the disposals, consistent with our strategy. Underlying basic earnings per share rose 42% to 3.7p (2004: 2.6p). Statutory Group turnover for the year was £189.4m (2004: £196.2m) and profit for the year was £1.8m (2004: loss £29.9m). Strategy Our strategy is to be number one or two in each of the markets we serve. We can claim this already in many of our chosen sectors within the public sector, travel and telecoms markets. We aim to build on these market leading positions by building up the critical mass and market position of our businesses. Balance sheet and cash The balance sheet has been considerably strengthened during the year reflecting the benefit of the £19.6m net proceeds from the disposal of four businesses. Net funds at the year end stood at £37.2m (2004: net funds £5.0m; 31 October 2004: net funds £7.3m), with net interest 34 times covered (2004: 8 times) by underlying operating profits. The Board Since February 2003, the Board has been transformed with the appointment of new directors. During the year Peter Bertram and David Hurst-Brown replaced David Thorpe and Graham Caleb as non-executive directors. We thank the latter for their significant contribution and commitment and welcome Peter and David. I am delighted to confirm the recent appointment of my successor as Chairman, Clay Brendish, who will join Anite following shareholder approval at the Group's Annual General Meeting on 4 October 2005. Mr Brendish is a Non-Executive director of BT Group Plc and Herald Investment Trust plc and Non-Executive Chairman of Close Beacon Investment Fund. He was co-founder and Executive Chairman of Admiral plc, the software services company, which is now part of LogicaCMG plc. With over 35 years experience in IT and technology, Clay Brendish is both an excellent and significant appointment for Anite. People On behalf of the Board I would like to thank all employees for their contribution, hard work and support during this year of significant change. Dividend policy and share buyback The Board has previously stated its intention to review its dividend policy in the light of the Group's much improved financial and operating performance, whilst it has also held an authority to buy back shares for cancellation for some years. The Board has carefully considered the most effective means of returning value to shareholders, whilst at the same time retaining the financial flexibility to invest in growth opportunities, against a background of strong operating cash flow. Having reviewed the different options, it has decided that the best means of enhancing long term shareholder returns is by means of a share buy back programme. A dividend in respect of the past financial year will therefore not be declared. A share buy back programme is expected to have a positive impact on earnings per share whilst counterbalancing the excess liquidity that has occurred both from the cash received from disposals and following the issue of some 47 million shares between 2002 and 2005. Accordingly, and depending on market conditions, it is intended initially to spend at least £3.5m (equivalent to a dividend of 1p per share) buying back shares. We continue to review acquisition and other growth opportunities. Dependent upon resulting cash requirements and market conditions, we will commit up to a further £25 million to buy back shares over the next three financial years. Summary I am pleased to be handing over the Chair at a time when Anite is in the best shape it has been for a number of years following the considerable transformational work undertaken by the new management team. We are confident that Anite's recovery will continue and anticipate that the current year will be a year of investing in growth opportunities. As a result the Board remains cautiously optimistic about future prospects. Alec Daly Chairman Chief Executive's Operating Review Strategy Anite's primary business is the provision of business critical solutions based on its deep sector knowledge of the public sector, travel and telecoms markets. These solutions almost always include at their core the supply of Anite owned software products. Our strategy is to be number one or two in each of these markets as we believe that businesses with strong market positions have demonstrably superior returns. We can claim that position in many of our chosen sectors within the public sector, travel and telecoms markets, achieved by virtue of our expertise and experience. We aim to build on these market leading positions by investing in growth opportunities and by building up the critical mass and market position of those businesses. In order to execute this strategy we have disposed of four non-core, peripheral businesses during the year, Anite Space, Datavance, Transport, Calculus and Anite Austria since the year end. These disposals, together with strong ongoing cash generation have provided the necessary funds with which to execute our strategy. Divisional performance Divisional performance* was as follows: 2005 Revenue Underlying Utilisation of Underlying Margin operating provisions operating % profit* profit** Public Sector 64.1 12.3 - 12.3 19.2 SoV/Pericles 5.6 (11.4) 5.6 (5.8) - Total Public Sector 69.7 0.9 5.6 6.5 9.3 Travel 30.0 6.4 - 6.4 21.3 Telecoms 45.8 11.6 - 11.6 25.3 International 17.4 0.9 - 0.9 5.2 162.9 19.8 5.6 25.4 15.6 *Ongoing businesses before goodwill amortisation and impairment, exceptional items, disposed businesses, discontinued operations and utilisation of contract provisions Also stated before unallocated Group central costs and property provision of £2.0m and finance charges of £0.5m. **After utilisation of contract provisions totalling £5.6m. The Statutory results of the divisions were as follows: Public Sector, revenue £70.7m and operating loss £1.6m, Travel, revenue £30.0m and operating profit £3.6m, Telecoms revenue £47.0m and operating profit £11.7m and International Consultancy revenue £41.7m and operating loss of £11.2m. Public Sector Anite is a market leader in applications for key parts of local government - such as local tax collection, benefits payments, housing management and social care solutions - as well as an important supplier into the central government and police markets. Public Sector improved its performance considerably during the year despite the continuing run off of VME income, and the business was profitable before and after utilisation of contract provisions. Excluding the impact of Pericles and State of Victoria (SoV) trading losses and provision utilisation, the Public Sector business increased operating profits by 40% and reported a double digit margin. The division has benefited from the management actions taken to restore profitability in the last two years. During the year we continued to evolve our sales model to align with the changing requirements of our local government customers. The Gershon efficiency review, the drive to provide on-line access to services and the need to share data across departments and agencies are all resulting in a need for more complete corporate solutions rather than simply the sale of departmental software products. Second half order intake saw increased momentum, rising by 6.7% on a year on year basis. Pericles Pericles is our Local Government product for revenues and benefits administration. It consists of three modules, council tax, business rates and benefits. Council tax and business rate modules have been implemented at 40 sites, whereas the benefits modules, of which 9 have been implemented, has proved more challenging for larger authorities and requires more intensive implementation effort. Our regular review of these contracts has resulted in additional costs of £0.9m being added to the provision and expensed during the period. New releases of the software are expected to progressively de-risk these projects but implementation will still take some time to complete. We remain fully committed to our Pericles customers as they remain patient with us. These implementations continue to represent a risk to Anite's overall performance. State of Victoria (SoV) The State of Victoria contract, where completion is due during 2007, continues to be the subject of significant management scrutiny. The majority of the development work is now being done in Melbourne, Australia, which is close to the customer. Following a recent contract review with the Victoria Office of Housing (the customer) a number of outstanding cost containment issues have been concluded satisfactorily. Functional testing of stage one has made good progress with broad user acceptance. However, issues remain with regards to system performance and scalability, which are currently being addressed. Development of the other remaining stages continues in parallel, and overall approximately 60% of the estimated man time on the project has been expended. Although no change to the contract provision is required at this time, the Board will continue to review the situation. We intend to publish an update on progress at the AGM. Travel Anite is one of the leading reservation systems and e-commerce providers to UK tour operators and to cruise, ferry and rail operators worldwide, providing critical software systems and managed services. The Travel division had another steady year with revenue growth of 6% which included one off hardware sales in the first half. Profit grew a more modest 3% partly reflecting lower levels of new licences combined with the costs associated with the continuing development of the new @comRes product. Order intake was strong in the first half of the year from new customers including development and managed service contracts from STA Travel (£5.3m) and Center Parcs (£2.2m). Orders from MyTravel of £6.0m for hardware, software and a three year extension of their managed services contract were received during the year. We continue to develop our major new technology platform, @comRes, which went live on parts of the system with three customers. This platform is designed to enable customers to take advantage of the major industry trend towards 'dynamic packaging', where the individual components of a holiday can be selected separately. We entered the current year with an increased order backlog and a satisfactory trading outlook, but with a substantial increase in development spending to complete @comRes, current year profits are likely to be slightly lower. Telecoms Anite provides specialist systems and software for mobile phone network simulation and handset testing around the globe. We supply all of the world's leading mobile phone manufacturers, and many operators and test houses. The Telecoms business had an outstanding year resulting from an improved market, expanded geographical sales, greater take up from 3G technology and a strong partnership with Agilent, our hardware provider. Revenues and Profits both grew 33%, with order intake up by 51% with strong and consistent operating profit margin. In order to facilitate growth and improve operational efficiency the management team has been strengthened and the decision was taken to consolidate the division's UK operation into one modern, refurbished freehold site in Fleet, Hampshire. The strongest markets during the year were the US and Asia Pacific. We have recently opened a new office in Shanghai, continuing the expansion of our global sales organisation. In order to maintain its leading position and to take advantage of the buoyant market conditions, the Telecoms Division continued to invest heavily in Research and Development. This spend will be increased further in the current financial year, an essential factor in the continued growth of the business. The launch of our new platform supporting 2G and 3G (GSM, GPRS, EDGE, W-CDMA and HSDPA technologies) using Anite software and Agilent hardware has been well received by our customers. Production and sales of the new platform commence during the first half of the current year. We are planning for further progress in the current financial year, on the back of a strong order backlog and continued interest in our new systems. International International brings together Anite's remaining European consultancy businesses, focusing on IT consultancy and systems integration in a range of vertical markets including finance, telecoms and public sector. Following recent disposals (Space, Datavance and Austria), International is now made up of two businesses in Germany and Anite Finance, based in the UK. In Germany, profitability has been adversely affected by revised terms on one of our long-term contracts. Market conditions continue to be difficult in these businesses and we expect only a modest contribution in aggregate in the current year. Research and development We have identified a number of areas for investment within the Group's core markets and as a result are planning a significant increase in research and development expenditure. This supports our strategy of building solutions with Anite owned software at their core. The principal areas of investment focus are: • In Public Sector, we plan to focus new investment in areas such as the Integrated Children's System • In Travel, we are investing around £1m, principally to progress the development of @comRes • In Telecoms, we are planning to spend over £8m to enable investment in enhancements to existing and new 2G and 3G technologies We believe that this spending will maintain our momentum in our core markets as well as ensure that our products remain competitive. Order Book The Group's order intake for the year was up 2% at £179.3m with a significant increase from our Telecoms business being offset by lower orders in Public Sector and International. Public Sector orders in 2004 benefited from a significant contract from IPCC which was not repeated in 2005. However, Public Sector's orders in the second half showed a 6.7% improvement year on year. Divisional order intake was: Year ended 30 April 2005 2004 Book to Order intake Order intake Bill ratio £m £m Public Sector 79.5 87.7* 1.1 Travel 33.1 33.2 1.1 Telecoms 51.5 34.0 1.1 International 15.2 20.3 0.9 Total Operating Companies 179.3 175.2 1.1 *Public sector in 2004 included £12.3m IPCC order Board Changes I am delighted to welcome Clay Brendish who will be joining as our new non-executive Chairman following the AGM. Alec Daly has served as Chairman for ten years and on behalf of the Board I would like to recognise and thank him for his commitment and contribution over that long period. Outlook Anite is in better shape with its strongly performing core businesses outweighing the negative impact of Pericles and SoV. With our strong balance sheet we are now in a position to take forward our strategic plans to enhance shareholder value. We plan to increase development spending by some £3m in the first half alone and significantly for the year as a whole. A further update on SoV along with a current trading update will be published at the time of the Group's Annual General meeting in early October. Overall, we expect to continue our forward momentum in the current financial year encouraged by the strength of our order book, the continued success of Telecoms and continuing improvement by Public Sector, although we expect Travel to be held back by its additional development spending, with International much reduced in scale following disposals. Steve Rowley Chief Executive Group Finance Director's Review Overview The Group's financial performance during the year benefited from the impact of the last three years' management actions principally cost cutting, disposals and sound financial management. Anite now has a strong balance sheet, with three core high margin businesses. Notwithstanding the issues relating to Pericles and State of Victoria, the Group is in better shape with a robust financial base, having retained profits for the first time since 2001 and with £37.2m of net funds. Costs During the last two years the Group's cost base has been significantly reduced which, combined with an emphasis on higher margin business, has had a significant effect on ongoing operating profits. These actions have been of particular benefit to the Travel and Public Sector businesses. Whilst we continue to identify cost cutting opportunities where possible to ensure that the Group's cost base is aligned with market conditions, at the same time there are a number of growth opportunities where investment in people and facilities is being made. Divisional performances are stated before unallocated Group corporate costs. These costs include head office staff costs, directors' remuneration, professional and office costs, and non-operational costs, but exclude costs directly allocated to operations. During the period unallocated Group corporate costs totalled £2.0m (2004: £2.3m). There was also a net increase of £0.8m (2004: £0.6m) in our non-operational property provision. We continue to manage an orderly and low risk run down of this portfolio which comprises 21 legacy properties previously occupied by Group businesses. We expect that there will be periodic, albeit relatively limited costs, associated with this run down. Development spending has been in line with expectations for the year as whole at £10.1m (2004: £11.8m), once again largely focused on Public Sector and Telecoms. The level of development spending is expected to increase by approximately 50% in the current year, with a first half to second half split of roughly 50:50. Development spend was as follows: £m 2005 2004 Public Sector 4.3 6.4 Travel - 0.4 Telecoms 5.8 5.0 Total 10.1 11.8 The contract provisions utilised during the year were £3.5m in respect of SoV and £2.1m in respect of Pericles making a total of £5.6m; provisions carried forward total £7.6m, of which £4.9m relates to SoV and £2.7m Pericles, in line with our expectations. During the year we made a further provision of £0.9m for additional delays in the Pericles implementation which was expensed in Public Sector's operating costs in the period. Capital expenditure of £9.4m (2004: £2.3m) increased partly reflecting the costs of acquiring and re-fitting the new Telecoms' headquarters, at a cost in the year of £4.8m, and partly due to an increase in spending on operating IT systems within the businesses. Interest costs fell during the period, reflecting the increased benefit from higher net funds following strong cash flow and receipt of disposal proceeds. Any interest charge should be eliminated in the current financial year. Interest cover based on ongoing businesses before goodwill and exceptional items and utilisation of contract provisions for the year was 34 times (2004: 8 times). Disposals A major feature of the year was the continued programme of disposals of peripheral, non-core businesses as follows, the sale of which added an exceptional £6.8m contribution to reported profit before tax: Name Division Completed Consideration Profit/(loss) (gross) on disposal Anite Space International Sept 2004 £7.4m £6.0m Anite Calculus Telecoms Nov 2004 £0.7m £0.7m Anite Transport Public Sector Dec 2004 £0.8m £0.8m Datavance International Feb 2005 £13.1m (£0.7m) Total £22.0m £6.8m The disposal of Anite Austria (International division) for a gross consideration of £2.6m (including cash balances) was completed after the year end and will therefore be reported in the Group's interim results later this year. Exceptional items, goodwill amortisation and impairment Exceptional items were much reduced compared to last year as the Group has completed the vast majority of its restructuring. Year ended 30 April 2005 2004 £m £m Included in operating profit Redundancy / restructuring costs - 6.2 Contract provisions - 14.2 Aborted acquisition cost recovery - (0.4) Goodwill amortisation 14.2 16.6 Goodwill Impairment 11.2 18.5 25.4 55.1 Not included in operating profit Profit on disposal of businesses (6.8) (4.4) Other - (1.1) Total 18.6 49.6 The carrying value of goodwill after the impairment and amortisation charges detailed above, is £30.2m. Under International Financial Reporting Standards, there will, in future, be impairment reviews but no annual amortisation. Balance Sheet The Group's syndicated banking facilities were renewed last year to provide a facility of £20m, which is due for review in August 2006. In addition, the Group retains a £10m overdraft facility, renewable annually. We believe these facilities are appropriate for the Group's expected future requirements, given that remaining earnout payments are modest. However, the Board believes it has access to additional facilities if required to fund appropriate acquisitions. Net funds/(debt) and gearing are as follows: Analysis of net funds £m 2005 2004 2003 Net cash at bank / (overdraft) 37.4 12.4 (3.3) Finance leases (0.1) (0.9) (1.9) Loan notes (0.1) (6.7) (11.1) Current asset investment - 0.2 - Net funds / (debt) 37.2 5.0 (16.3) Gearing Nil Nil 27% Interest cover 34x 8x 7x Cash flow The increase in cash in the year of £26.2m (2004: £1.8m) included, net receipts from disposals at £19.6m (2004: £0.8m), tax payments of £0.2m (2004: £0.8m) but after settlement of loan notes and earn outs payments £7.9m (2004: £11.0m) and capital expenditure £9.4m (2004: £3.2m). Total net funds at the year end were £37.2m (2004: £5.0m). Strong management of working capital continued but further improvements are not anticipated. Earnouts We have virtually completed the process begun three years ago to unwind this legacy issue. Remaining earnout payments total £1.0m which are expected to be settled in cash in the current year. Taxation The tax rate for the ongoing business, after utilisation of provisions, for the year was 20.6% (2004: 20.7%). The tax rate is likely to rise in future years following the recent disposal of businesses based in Europe and the increase in Telecoms' US and Asia Pacific profits, where tax rates are higher. Earnings per share The number of shares in issue increased in the period under review from 351.89m at 30 April 2004 to 353.95m at 30 April 2005 following the issue of 2.06m shares in settlement of earnouts and through share option and SAYE exercises. The weighted average number of shares in issue used to calculate basic earnings per share was 353.05m (30 April 2004: 348.34m). This does not include the dilutive effect of share option and SAYE schemes. Fully diluted earnings per share further adjusts basic earnings per share for the dilutive effect of potential shares related to outstanding share option and SAYE schemes at 30 April 2005. Foreign exchange The group has not been materially affected by currency movements. Following the disposal of many of its European businesses sensitivity to the euro/sterling exchange rate has significantly decreased. However following the increase in Telecoms' US dollar denominated sales, the Group now has greater exposure to the US dollar, albeit as much of its hardware costs are also expressed in US dollars, there is in part a natural hedge. Further limited hedging is also utilised to minimise volatility. Accounting standards The first accounting period for adoption by the Group of International Financial Reporting Standards ('IFRS') will be the current financial year commencing 1 May 2005. The main impacts on the Group are expected to be in the areas of accounting for remuneration, in particular share based payments, research and development, goodwill, deferred tax and holiday pay. All Anite pension schemes are money purchase schemes. The group does not operate any defined benefit pension schemes. An analysis of the impact of these changes and restated accounts for comparative years will be presented in time for the interim results in December 2005. It should be emphasised that although the introduction of IFRS has some impact on the presentation of the primary financial statements and the results of the Group, including restatement of some of the results, it does not change the economics, risk profile or cash flow of the business itself. Christopher Humphrey Group Finance Director Consolidated profit and loss account for the year ended 30 April 2005 Total Total Notes 2005 2004 (Restated)* £000 £000 ______________________________________________________________________________ Turnover ______________________________________________________________________________ Ongoing businesses 162,951 156,272 Disposed businesses 2,192 4,626 ______________________________________________________________________________ Turnover - continuing operations 165,143 160,898 Discontinued operations 24,260 35,334 ______________________________________________________________________________ Total Turnover 1 189,403 196,232 ______________________________________________________________________________ Cost of sales ______________________________________________________________________________ Cost of sales before exceptional items (112,918) (114,307) Exceptional items 2 - (15,341) Utilisation of contract provisions 5,634 4,284 ______________________________________________________________________________ Total Cost of sales (107,284) (125,364) ______________________________________________________________________________ Gross profit 82,119 70,868 Net operating costs ______________________________________________________________________________ Goodwill amortisation (14,214) (16,558) Goodwill impairment (11,151) (18,480) Exceptional items 2 - (4,654) Other operating costs (56,267) (64,025) ______________________________________________________________________________ Total net operating costs (81,632) (103,717) ______________________________________________________________________________ Operating profit /(loss) ______________________________________________________________________________ - ongoing businesses before utilisation of contract provisions, goodwill and exceptional items 17,813 13,992 - ongoing businesses - utilisation of contract provision 5,634 4,284 ______________________________________________________________________________ - ongoing businesses 23,447 18,276 - disposed businesses 1 143 292 ______________________________________________________________________________ - Continuing operations before goodwill and exceptional items 23,590 18,568 - goodwill 1 (22,309) (24,798) - exceptional items 2 - (19,995) ______________________________________________________________________________ Operating profit/(loss) - continuing operations 1 1,281 (26,225) Operating loss - discontinued operations (after goodwill £3,056,000 (2004:£10,240,000)) 1 (794) (6,624) ______________________________________________________________________________ Total operating profit/(loss) 1 487 (32,849) Profit on disposal of businesses 2 6,850 4,407 ______________________________________________________________________________ Profit/(loss) on ordinary activities before finance charges 7,337 (28,442) Profit on sale of fixed asset investment - 57 Finance charges - net (517) (512) ______________________________________________________________________________ Profit /(loss) on ordinary activities before tax 1 6,820 (28,897) Tax charge on profit/(loss) on ordinary activities 3 (5,065) (1,046) ______________________________________________________________________________ Profit/(loss) for the financial year 6 1,755 (29,943) ______________________________________________________________________________ Earning/(loss) per share -basic 4 0.5p (8.6)p -diluted 4 0.5p (8.6)p Adjusted earnings per share based on ongoing businesses excluding amortisation of goodwill and exceptional items a) Before utilisation of contract provisions -basic 4 3.7p 2.6p -diluted 3.6p 2.6p b) After utilisation of contract provisions -basic 4 5.1p 3.8p -diluted 5.0p 3.8p ______________________________________________________________________________ *The 2004 results have been restated for the impact of UTIF 38 'Accounting for ESOP trusts' - (£134,000 adjustment - see note attached) Reconciliation of movements in consolidated shareholders' funds for the year ended 30 April 2005 2005 2004 (Restated)* £000 £000 ______________________________________________________________________________ Profit/(loss) for the financial year 1,755 (29,943) Other recognised gains and losses relating to year (net) 37 (1,622) Amounts recovered from own shares 82 134 Share capital issued 1,082 8,740 Shares to be issued (net) (800) (8,382) ______________________________________________________________________________ Net increase/(reduction) in shareholders' funds 2,156 (31,073) Opening shareholders' funds 28,311 59,384 ______________________________________________________________________________ Closing shareholders' funds 30,467 28,311 ______________________________________________________________________________ Consolidated statement of total recognised gains and losses for the year ended 30 April 2005 2005 2004 (Restated)* £000 £000 ______________________________________________________________________________ Profit/(loss) for the financial year as previously stated 1,755 (29,809) Prior period adjustment - amounts recovered from own shares - (134) ______________________________________________________________________________ Profit/(loss) for the financial year 1,755 (29,943) Net gain/(loss) on foreign currency translation 37 (1,622) ______________________________________________________________________________ Total recognised gains and losses since last annual report and financial statements 1,792 (31,565) ______________________________________________________________________________ * The 2004 results have been restated for the impact of UITF 38 - 'Accounting for ESOP trusts'. The accompanying notes are an integral part of this consolidated profit and loss account, reconciliation of movements in consolidated shareholders' funds and consolidated statement of total recognised gains and losses. Consolidated balance sheet as at 30 April 2005 2005 2005 2004 2004 Notes £000 £000 £000 £000 ______________________________________________________________________________ Fixed assets Goodwill 30,213 63,523 Other intangible assets 34 52 ______________________________________________________________________________ Intangible assets 30,247 63,575 Tangible assets 12,554 7,741 Investments - 1 ______________________________________________________________________________ 42,801 71,317 Current assets Stocks 4,279 4,111 Debtors 52,215 57,729 Current asset investments - 170 Short-term deposits - 1,095 Cash at bank and in hand 37,443 11,353 ______________________________________________________________________________ 93,937 74,458 Creditors: Amounts falling due within one year (84,829) (94,103) ______________________________________________________________________________ Net current assets/(liabilities) 9,108 (19,645) ______________________________________________________________________________ Total assets less current liabilities 51,909 51,672 Creditors: Amounts falling due after more than one year (268) (681) Provisions for liabilities and charges (21,174) (22,680) ______________________________________________________________________________ Net assets 30,467 28,311 ______________________________________________________________________________ Capital and reserves Called-up share capital 35,446 35,239 Share premium account 6 23,390 22,856 Merger reserve 6 4,953 14,227 Shares to be issued 6 - 800 Profit and loss account 6 (33,322) (44,811) ______________________________________________________________________________ Shareholders' funds 30,467 28,311 ______________________________________________________________________________ Shareholders' funds are analysed as: 2005 2004 £000 £000 ______________________________________________________________________________ Equity interests 30,417 28,261 Non-equity interests 50 50 ______________________________________________________________________________ 30,467 28,311 ______________________________________________________________________________ The accompanying notes are an integral part of this consolidated balance sheet. Approved by the Board and signed on its behalf by S P Rowley Chief Executive C J Humphrey Finance Director 11 July 2005 Consolidated cash flow statement for the year ended 30 April 2005 2005 2004 (Restated) Notes £000 £000 ______________________________________________________________________________ Net cash inflow from operating activities 23,765 30,080 ______________________________________________________________________________ Returns on investments and servicing of finance Interest received 51 203 Interest paid (443) (1,688) Interest element of finance lease rental payments (66) (100) ______________________________________________________________________________ Net cash outflow from returns on investments and servicing of finance (458) (1,585) ______________________________________________________________________________ Taxation Foreign taxation paid (324) (788) UK corporation tax refunded/(paid) 139 (43) ______________________________________________________________________________ Net cash outflow from taxation (185) (831) ______________________________________________________________________________ Capital expenditure and financial investment Purchase of tangible fixed assets (9,381) (3,205) Sale of tangible fixed assets 31 1,513 ______________________________________________________________________________ Net cash outflow from capital expenditure and financial investment (9,350) (1,692) ______________________________________________________________________________ Acquisitions and disposals Sale of subsidiary undertakings 20,680 811 Net cash in businesses sold (1,308) (743) Disposal of fixed asset investment 170 75 Proceeds from previously closed businesses 216 766 Recovery of aborted acquisition costs - 379 Deferred consideration paid for previous years' acquisitions (1,061) (1,304) ______________________________________________________________________________ Net cash inflow/(outflow) from acquisitions and disposals 18,697 (16) ______________________________________________________________________________ Cash inflow before management of liquid resources and financing 32,469 25,956 ______________________________________________________________________________ Management of liquid resources Decrease in short term deposits 1,095 953 ______________________________________________________________________________ Net cash inflow from management of liquid resources 1,095 953 ______________________________________________________________________________ Financing Issue of ordinary share capital 238 558 Decrease in bank loans - (15,191) Capital element of finance lease rental payments (783) (1,085) Proceeds from sale of own shares - 314 Redemption of vendor loan note instruments (6,838) (9,686) _____________________________________________________________________________ Net cash outflow from financing (7,383) (25,090) _____________________________________________________________________________ Increase in cash in the year 5 26,181 1,819 ______________________________________________________________________________ Companies sold in the year contributed £1,910,000 to the Group's net operating cash flows, paid £1,000 in respect of taxation and paid £29,000 in respect of net returns on investment and servicing of finance and utilised £101,000 for capital expenditure. The accompanying notes form an integral part of this consolidated cash flow statement. Notes to the cash flow statement Reconciliation of operating profit/(loss) to net cash inflow from operating activities for the year ended 30 April 2005 2005 2004 £000 £000 ______________________________________________________________________________ Operating profit/(loss) 487 (32,849) Depreciation 4,346 6,988 Amortisation of software licences 52 94 Goodwill amortisation 14,214 16,558 Goodwill impairment 11,151 18,480 (Increase)/decrease in stock (878) 1,749 (Increase)/decrease in debtors (3,179) 9,536 Increase/(decrease) in creditors 231 (226) (Decrease)/increase in provisions (2,687) 9,537 Loss on disposal of fixed assets 28 592 Recovery in respect of aborted acquisition costs - (379) ______________________________________________________________________________ Net cash inflow from operating activities 23,765 30,080 ______________________________________________________________________________ Analysis and reconciliation of net funds for the year ended 30 April 2005 Non 30 1 May Cash -cash Exchange April 2004 flow items movement 2005 £000 £000 £000 £000 £000 ______________________________________________________________________________ Cash at bank and in hand 11,353 26,181 - (91) 37,443 Finance leases (906) 783 (28) - (151) Current asset investments 170 (170) - - - Short- term deposits 1,095 (1,095) - - - ______________________________________________________________________________ Net funds excluding loan notes 11,712 25,699 (28) (91) 37,292 Vendor loan notes due within one year (6,750) 6,838 (165) - (77) ______________________________________________________________________________ Net funds (note 5) 4,962 32,537 (193) (91) 37,215 ______________________________________________________________________________ Non cash items relate mainly to vendor loan notes issued in respect of the earnout entitlement due for prior acquisitions. Basis of preparation The financial information set out in this preliminary announcement does not constitute the company's statutory accounts for the years ended 30 April 2005 and 2004, but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies and those for 2005 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 statutory accounts for 2005 have been prepared following accounting standards consistent with those for the year ended 30 April 2004, except for the adoption of UITF38 'Accounting for ESOP trusts' which resulted in the restatement of the prior-year results. The effect of the change was to reduce prior-year profit by £134,000. This preliminary announcement for the year ended 30 April 2005 was approved by the Board of Directors on 11 July 2005. 1. Segmental Analysis Ongoing businesses before goodwill and exceptional items Public Sector Travel Telecoms International Total Consultancy __________________________________________________________________________________________________________ 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 __________________________________________________________________________________________________________ Turnover on ongoing businesses 69,721 72,216 29,988 28,304 45,778 34,346 17,464 21,406 162,951 156,272 Underlying operating profit(1) - before utilisation of provisions 852 (477) 6,381 6,158 11,651 8,726 909 1,904 19,793 16,311 Contract provisions utilised(2) 5,634 4,284 - - - - - - 5,634 4,284 __________________________________________________________________________________________________________ Underlying operating profit(1) 6,486 3,807 6,381 6,158 11,651 8,726 909 1,904 25,427 20,595 Unallocated corporate costs (1,980) (2,319) Finance charges (net)(3) (517) (1,594) __________________________________________________________________________________________________________ Underlying profit before taxation(1) 22,930 16,682 __________________________________________________________________________________________________________ Underlying profit before taxation(1) - before contract provision 17,296 12,398 - contract provision utilised 5,634 4,284 ________________ 22,930 16,682 ________________ Additional analysis of Public Sector ongoing businesses Public Sector Pericles State of Victoria Total (Excluding development Pericles and SoV) __________________________________________________________________________________________________________ 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 __________________________________________________________________________________________________________ Turnover on ongoing businesses 64,065 67,198 3,184 2,888 2,472 2,130 69,721 72,216 Operating profit(2) - before utilisation of provisions 12,252 8,788 (7,909) (5,079) (3,491) (4,186) 852 (477) Contract provisions utilised(2) - - 2,143 98 3,491 4,186 5,634 4,284 __________________________________________________________________________________________________________ Total operating profit/(loss)(1) 12,252 8,788 (5,766) (4,981) - - 6,486 3,807 __________________________________________________________________________________________________________ (1) Ongoing businesses before goodwill and exceptional items. (2) Contract provisions relate to the utilisation of the contract provisions made for the State of Victoria and Pericles contracts. (3) Prior year finance charge excludes exceptional exchange gain of £1,082,000. This additional information has been given to give a clearer understanding of the results of the core ongoing businesses. 1. Segmental Analysis (continued) Group analysis including goodwill and exceptional costs Public Sector Travel Telecoms International Total Consultancy 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 __________________________________________________________________________________________________________ Turnover - ongoing businesses 69,721 72,216 29,988 28,304 45,778 34,346 17,464 21,406 162,951 156,272 - disposed businesses 958 1,688 - - 1,234 2,938 - - 2,192 4,626 __________________________________________________________________________________________________________ - continuing operations 70,679 73,904 29,988 28,304 47,012 37,284 17,464 21,406 165,143 160,898 -discontinued operations - - - - - - 24,260 35,334 24,260 35,334 __________________________________________________________________________________________________________ Total 70,679 73,904 29,988 28,304 47,012 37,284 41,724 56,740 189,403 196,232 turnover __________________________________________________________________________________________________________ Analysis of operating profit/(loss) Segment profit* - ongoing businesses 6,486 3,807 6,381 6,158 11,651 8,726 909 1,904 25,427 20,595 - disposed businesses 76 (26) - - 67 318 - - 143 292 __________________________________________________________________________________________________________ - continuing operations 6,562 3,781 6,381 6,158 11,718 9,044 909 1,904 25,570 20,887 Unallocated corporate costs (1,980) (2,319) (after recharges) ________________ Operating profit for continuing 23,590 18,568 operations before goodwill and exceptional items - goodwill amortisation and impairment (8,206) (8,013) (2,762) (1,997) - (193) (11,341) (14,595) (22,309) (24,798) - exceptional costs - (18,655) - 622 - (119) - (241) - (18,393) - exceptional corporate costs - (1,602) ________________________________________________________________________________________ (1,644) (22,887) 3,619 4,783 11,718 8,732 (10,432) (12,932) ________________ - Operating profit/(loss) continuing operations 1,281 (26,225) - Operating loss from discontinued operations - - - - - - (794) (6,624) (794) (6,624) ________________________________________________________________________________________ Operating profit/(loss) (1,644) (22,887) 3,619 4,783 11,718 8,732 (11,226) (19,556) ________________________________________________________________________________________ ________________ Total operating profit/(loss) 487 (32,849) Profit on disposal of businesses 6,850 4,407 Profit on sale of fixed asset - 57 Investment Finance charges (net) (517) (512) Profit/(loss) on ordinary 6,820 (28,897) activities before tax __________________________________________________________________________________________________________ Segment net assets 12,249 21,659 3,310 2,580 7,397 3,390 922 24,939 23,878 52,568 Non operating liabilities (30,626) (29,049) __________________________________________________________________________________________________________ Net funds (excluding current 37,215 4,792 asset investments) __________________________________________________________________________________________________________ Net assets 30,467 28,311 __________________________________________________________________________________________________________ *Operating profit before goodwill and exceptional items Disposed businesses comprise the turnover and operating results of continuing operations which have ceased during the year and which do not meet the definition of discontinued operations under FRS 3. Ongoing businesses comprise the turnover and operating results of continuing operations less the turnover and operating results of disposed businesses. Discontinued operations are all within the International Consultancy business segment. 1. Segmental Analysis (continued) Additional analysis of turnover 2005 2004 £000 £000 ______________________________________________________________________________ IT Consultancy 19,755 21,950 Own product software licences 31,536 29,588 Bespoke services, systems integration and implementation of software products 56,664 64,193 Managed services (includes software maintenance and support) 49,660 49,020 Originating from third party 31,788 31,481 ______________________________________________________________________________ 189,403 196,232 ______________________________________________________________________________ The comparative figures have been restated following a review of the classification of underlying data. This information is given to show the main areas from which the group's turnover is derived. Geographic analysis of turnover Origin Destination 2005 2004 2005 2004 £000 £000 £000 £000 ______________________________________________________________________________ Europe - United Kingdom 127,271 122,954 94,810 101,370 Europe - Other 43,025 57,908 60,074 72,270 North America 10,704 8,025 10,938 8,141 Rest of the World 8,403 7,345 23,581 14,451 ______________________________________________________________________________ 189,403 196,232 189,403 196,232 ______________________________________________________________________________ Geographical analysis of profit/(loss) on ordinary activities before tax and net assets 2005 2004 Profit Loss before Net before Net tax assets tax assets £000 £000 £000 £000 ______________________________________________________________________________ Europe - United Kingdom 25,797 22,099 11,912 1,222 Europe - Other 4,720 15,571 3,110 35,283 North America 404 1,160 754 1,128 Rest of the World 1,264 (8,363) (9,635) (9,322) ______________________________________________________________________________ 32,185 30,467 6,141 28,311 Less: goodwill amortisation and impairment (25,365) - (35,038) - ______________________________________________________________________________ 6,820 30,467 (28,897) 28,311 ______________________________________________________________________________ Goodwill is attributed to Europe - United Kingdom £13,934,000 (2004:£16,427,000) and Europe-other £11,431,000 (2004:£18,611,000). 2. Exceptional items Exceptional items reported before operating profit/(loss): 2005 2004 £000 £000 ________________________________________________________________________________ Redundancy and restructuring costs - 1,147 Contract provisions - 14,194 ________________________________________________________________________________ Charged to cost of sales - 15,341 ________________________________________________________________________________ Redundancy and restructuring costs - 5,033 Aborted acquisition costs - recovery - (379) ________________________________________________________________________________ Charged to net operating costs - 4,654 ________________________________________________________________________________ Total exceptional items - 19,995 ________________________________________________________________________________ Exceptional items reported after operating profit /(loss): 2005 2004 £000 £000 ________________________________________________________________________________ Disposed businesses: Profit on sale of business and assets of: Telecoms Billing business (Anite Calculus Limited) 742 - Transport division ( Anite Public Sector Limited) 823 - Discontinued operations: Profit on disposal of Anite Systems GmbH 6,187 - Loss on disposal of Datavance Informatique SAS (734) - Loss on disposal of French Space Business ( Delta Partners SAS) (168) - Loss on disposal of Anite Benelux bv - (1,102) Consideration received in respect of previously disposed businesses - 1,287 Write back of tax warranty and earnout provisions no longer required on previously disposed businesses - 4,222 ________________________________________________________________________________ Profit on sale of businesses 6,850 4,407 ________________________________________________________________________________ There is no tax charge on the above items (2004:£6,000). 3. Tax charge on profit/(loss) on ordinary activities The tax charge is made up as follows: 2005 2004 Current tax £000 £000 ______________________________________________________________________________ UK corporation tax 4,073 1,452 Foreign tax 821 768 ______________________________________________________________________________ 4,894 2,220 ______________________________________________________________________________ Adjustments in respect of prior years - UK corporation tax (228) 10 - foreign tax 24 (839) ______________________________________________________________________________ (204) (829) ______________________________________________________________________________ Total current tax charge 4,690 1,391 ______________________________________________________________________________ Deferred tax UK (234) (252) Foreign 609 (93) ______________________________________________________________________________ Total deferred tax charge/(credit) 375 (345) ______________________________________________________________________________ Total tax on profit/(loss) on ordinary activities 5,065 1,046 ______________________________________________________________________________ Included in the total tax charge is £161,000 (2004:£197,000) in respect of discontinued businesses. 4. Profit/(loss) per ordinary share The calculations of profit/(loss) and adjusted earnings per share are based on the following profit/(loss) and number of shares: 2005 2004 2005 2004 ___________________________________________________________________________________ Pence Pence £000 £000 per per share share ___________________________________________________________________________________ Profit/(loss) for the financial year- basic and diluted 0.5 (8.6) 1,755 (29,943) ___________________________________________________________________________________ Reconciliation to adjusted earnings: - goodwill amortisation 3.9 4.8 14,214 16,558 - goodwill impairment 3.2 5.3 11,151 18,480 Exceptional items - other ( note 2) - 5.7 - 19,995 - profit on sale of fixed asset investment - - - (57) - exchange gain on net foreign currency borrowings - (0.3) - (1,082) - profit on sale/closure of businesses (1.9) (1.3) (6,850) (4,407) - charge/(release) of prior-year tax provisions and tax credit on exceptional operating items, disposed businesses and discontinued operations - (0.7) 161 (2,328) Operating profit from disposed businesses - (0.1) (143) (292) Operating profit from discontined operations before goodwill (0.6) (1.0) (2,262) (3,616) ___________________________________________________________________________________ Adjusted earnings - profit for the financial year on ongoing businesses before goodwill amortisation, impairment, disposed businesses, discontinued operations and exceptional items 5.1 3.8 18,026 13,308 ___________________________________________________________________________________ - ongoing businesses - utilisation of contract provisions (net of tax) (1.4) (1.2) (4,991) (4,284) ___________________________________________________________________________________ Adjusted earnings (as above) before utilisation of contract provisions 3.7 2.6 13,035 9,024 ___________________________________________________________________________________ Number of shares ('000) Weighted average number of shares in issue - used to calculate basic earnings per share 353,046 348,340 ___________________________________________________________________________________ Effect of dilutive ordinary shares - SAYE and share option schemes 5,122 4,342 - contingent consideration - 1,128 ___________________________________________________________________________________ Number of shares used to calculate diluted earnings per share 358,168 353,810 ___________________________________________________________________________________ Adjusted earnings per share on ongoing businesses excluding goodwill amortisation, impairment, disposed businesses, discontinued operations and exceptional items have also been included as the Directors consider that this figure provides a more meaningful measure of the ongoing businesses. The prior-year figures have been restated to show earnings per share on a consistent basis. 5. Reconciliation of net funds 2005 2004 £000 £000 ______________________________________________________________________________ Increase in cash in year 26,181 1,819 Cash outflow from decrease in bank loan and lease financing 783 16,276 Cash inflow from decrease in liquid resources (1,265) (953) ______________________________________________________________________________ Change in net funds resulting from cash flows 25,699 17,142 Increase in finance lease (28) (78) Receipt of shares - 170 Exchange movement (91) (296) Net funds/(debt) at 1 May excluding loan notes 11,712 (5,226) ______________________________________________________________________________ Net funds at 30 April 37,292 11,712 excluding loan notes Vendor loan notes (77) (6,750) ______________________________________________________________________________ Net funds at 30 April 37,215 4,962 ______________________________________________________________________________ 6. Reserves Shares Share Profit and to be premium Merger loss issued account reserve account £000 £000 £000 £000 ______________________________________________________________________________ At 1 May 2004 800 22,856 14,227 (44,811) Retained profit for the year - - - 1,755 Amounts recovered from own shares - - - 82 Premium on shares issued - 534 341 - Transfer goodwill amortisation and impairment to merger reserve - - (9,615) 9,615 Shares issued against earnouts in the year (800) - - - Net gain on foreign currency translation - - - 37 ______________________________________________________________________________ At 30 April 2005 - 23,390 4,953 (33,322) ______________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange

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