Half Yearly Report

RNS Number : 1224X

Anite PLC

01 December 2010

 



For immediate release

Wednesday, 1 December 2010

                                                                                ANITE PLC

Half year results for the six months ended 31 October 2010

Anite plc ("Anite" or "the Company"), the leading provider of software solutions to the international wireless and leisure travel industries, today announces its half year results for the six months ended 31 October 2010.

Financial highlights (adjusted) ¹:

·      Revenue up 20% to £42.3m (2009: £35.2m)

·      Operating profit up 114% to £7.4m (2009: £3.5m)

·      Operating margin of 17.5% (2009: 9.9%)

·      Profit before tax up 160% to £6.5m (2009: £2.5m)

·      Basic earnings per share up 167% to 1.6p (2009: 0.6p)

·      Interim dividend up 5% to 0.315p per share (2009: 0.3p per share) 

·      Net cash of £28.4m (April 2010: £29.8m; October 2009: £26.0m) 

Statutory results:

·      Revenue from continuing operations of £42.3m (2009: £35.2m)

·      Operating profit from continuing operations of £7.0m (2009: £0.2m)

-      includes share based payments credit of £1.3m (2009: charge £1.2m)

·      Profit / (loss) from continuing operations before tax of £6.1m (2009: £(1.1m))

·      Profit for the period of £4.3m (2009: £0.2m)

·      Basic earnings per share 1.5p (2009: 0.1p)

·      Diluted earnings per share 1.4p (2009: 0.1p)

Operating highlights:

·      Wireless: 

-      Market-led recovery in both Handsets and Networks

-      H1 outperformance in Handsets due to pull forward of orders

-      4G market developing as expected

·      Travel:

-      Lower first half results driven by phasing of major TUI contracts.

-      Good operational progress with @comRes and sales pipeline

·      Orders:

-      Intake £38.6m (2009: £33.0m)

-      Closing order book £58.6m (2009: £56.3m) 

-      Book to bill ratio 0.9 (2009: 0.9)

Outlook:

·    First half outperformance is expected to result in a more balanced profit split than typically reported, underpinning confidence in expectations for the year as whole

¹Adjusted results are for continuing operations before share-based payments, amortisation of acquired intangible assets, other gains and losses and recycled hedge losses.

Christopher Humphrey, Chief Executive, said:

"Anite performed well in the first half of this financial year compared to a weak first half last year. Strong recovery in both Handsets and Networks produced a result substantially ahead of last year with group revenues and profits exceeding the Board's prior expectations.

"We believe that Anite is better positioned to take advantage of the new 4G market than for previous technologies, and that the 4G cycle is also likely to be deep and long lasting. Although it is early days in the development of the market, we remain optimistic about the future."

For further information, please contact:
Anite plc	www.anite.com
Christopher Humphrey, Chief Executive Richard Amos, Group Finance Director	01252 775200
MHP Communications	020 3128 8100
Reg Hoare/Anthony Arthur

An analysts' meeting will be held today at 9.45 for 10.00 a.m. at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS

Notes to editors 

Anite is an international software and solutions company focused on the provision of test and operational systems in the wireless market, and reservation and e-commerce solutions to the leisure travel industry.

Anite's solutions, which have developed from its comprehensive sector knowledge, are based around the supply of Anite-owned software products. The full range of services Anite delivers to its customers - which include implementation systems, integration, and maintenance and managed services - enables it to maximise customer satisfaction. With its headquarters in the UK, Anite employs around 450 staff in 11 countries across Europe, America, Asia and the Middle East.

This interim statement contains forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results to differ from any future results or developments expressed or implied from the forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement and, save to the extent required by the applicable law or regulation, we do not undertake any obligation to update or renew any forward-looking statement.

  Half year results for the six months ended 31 October 2010

All references to adjusted profit relate to continuing operations for the period, before share-based payments, amortisation of acquired intangible assets, other gains and losses and recycled hedge losses. See the attached income statement and notes for details. A reconciliation of adjusted results to reported statutory results is given in the Financial Review.

Half Year Overview

Introduction

Anite performed well in the first half of the 2010/11 financial year compared to a weak comparative period last year.

The half finished strongly with the Handset Testing business concluding a number of deals in late October that had been anticipated to complete in the early weeks of the second half.  This resulted in Group revenues and profits exceeding the Board's prior expectations.

We continue to make good progress with our strategy to position Anite as a global leader in Wireless test software, and to take advantage of the future opportunities that will emerge from the development and roll-out of 4G ('LTE') technology.

The Board believes that Wireless is a long-term growth market, which has high barriers to entry and relatively few major competitors in those areas in which Anite operates. This makes it possible to achieve good margins and returns on the investments needed to maintain our technological leadership.

In Travel, our strategy is to optimise the business' long-term value. To achieve this, we will continue to strengthen and improve its market position through the successful development and migration of customers to our new product, @comRes.

Overall, we believe that the success of our products in their respective markets and the investment we have made in them to maintain leadership, is beginning to deliver profitable growth.

Results summary

During the period, recessionary pressures began to ease for Wireless and the trajectory of LTE orders continued to develop in line with the progress of the technology. Customers who last year had postponed spending on legacy technologies, either in anticipation of investing in the launch of the 4G market or due to the financial crisis, began cautiously investing. Overall, strong recovery in both Handsets and Networks produced a result substantially ahead of last year.

In the Travel division, the phasing of milestones associated with the major implementations for TUI in Germany and, at an initial level in the UK, reduced licence and development revenue in the period compared to last year and to expectations at the start of the year. However, Travel continues to make good operational progress and has a strong order book and sales pipeline, providing encouragement for the future.

Against this background, the overall half year results for the Group were satisfactory and continue to demonstrate the underlying strength and profitability of our divisions: adjusted operating margins of 22% were reported by the Wireless division and 16% by the Travel division. Order intake was up 17.0% to £38.6m (2009: £33.0m) giving a book to bill ratio of 0.9, the same as last year. This was despite the relatively weak order intake at Travel, partly reflecting the lumpiness of major contracts.

Adjusted operating profit was £7.4m (2009: £3.5m) on revenues up 20% at £42.3m (2009: £35.2m).

Adjusted basic earnings per share more than doubled to 1.6p (2009: 0.6p).

Anite has a strong balance sheet, with net cash resources and significant undrawn bank facilities. Net cash as at 31 October 2010 was £28.4m (April 2010: £29.8m; October 2009: £26.0m). The reported level of net cash above is stated before taking account of the liability on the currency swap which was capped in the last financial year at a maximum liability of £21.6m.

Dividend

The Board has declared an interim dividend of 0.315p per share (2009: 0.3p) representing a 5% increase. The dividend will be paid on 18 February 2011 to shareholders on the register at 28 January 2011.

People

On behalf of the Board, we would like to thank all employees for their contribution, hard work and support during the period.

Outlook 

At this stage, the first half outperformance is expected to result in a more balanced half on half profit split compared with the second half bias that we have typically reported.  This underpins our confidence in our expectations for the year as whole, which are now towards the higher end of market expectations. Notwithstanding this, the fourth quarter of Anite's financial year will be, as it has been in previous years, an important trading period.

It is important to note that we are still in the early stage of the LTE market, but it continues to develop in line with our expectations, with steady and manageable progress to date and no evidence that it is being overly constrained by general economic caution. Our Handset business continues to make good progress in developing and delivering its solutions, with a strong Tier 1 global customer list. The launch of Anite's LTE 9000 product in the fourth quarter of the last financial year continues to be well received and our encouraging progress in conformance test cases positions us well for the next phase of this market's development. 

We believe that Anite is better positioned to take advantage of this new market than for previous technologies, and that the 4G cycle is also likely to be deep and long lasting. Although it is early days in the development of the market, we remain optimistic about the future.

Clay Brendish Chairman                                  Christopher Humphrey Chief Executive

30 November 2010

OPERATING REVIEW

Anite's operations comprise two divisions, Wireless and Travel. The Wireless division is made up of two separately managed businesses, Handset Testing and Network Testing.

The overall results for the Group show a strong performance in the first half of this year compared to the same period last year, specifically in Wireless.

Wireless performance

Handset Testing

The results for the Handset Testing business for the period show that, compared to a relatively weak corresponding period last year, order intake increased by 65% to £20.3m (2009: £12.3m), revenue increased by 35% to £20.6m (2009: £15.2m), and adjusted operating profit increased by £3.1m to £3.5m (2009: £0.4m).

Twelve months ago, the first half of the year was characterised by very weak market demand driven by economic uncertainty. In the first half of this year improved economic conditions, combined with the continuing adoption of LTE 4G technologies, resulted in a significant improvement in revenue and profit compared with the comparative period.

We launched our new LTE product twelve months ago, and in the first half of this year LTE revenues accounted for around 24% of Handset Testing's revenue, compared to 12% for the whole of the last financial year. Multiple sales were made to existing and new customers. However it was not just the new technology that drove improved performance. Demand for older 2G / 3G solutions also increased on the prior year, partly due to the improved market conditions, and partly because of successes in selling interoperability testing (IOT) solutions, with sales in the period to both new and existing mobile operator customers.   

Net revenue margin (revenue less third-party hardware cost) fell to 77% compared to 85% in the same period last year. This was due to the anticipated impact of product mix, with a higher proportion of hardware sales occurring during the current development testing phase of LTE.

Investment in R&D continued, particularly in respect of on-going development of LTE products (Anite 9000) with the charge to the Income Statement amounting to £4.2m in the period, down on the same period last year (2009: £5.2m). An additional £1.0m was capitalised in the period (2009: £0.6m) reflecting costs incurred in maintaining our market lead in conformance test scripts which prepares us for the commencement of that market, expected in the first quarter of calendar year 2011.

Following a first half that benefited from the pull forward of orders, we expect Handset's performance for the year as whole to be in line with our expectations.

Network Testing

The results for the Network Testing business show that order intake was up 25% at £10.9m (2009: £8.7m) and revenue up 38% to £12.0m (2009: £8.7m) and adjusted operating profit more than doubled to £3.6m (2009: £1.5m).

The network testing market has continued to see the improvement that started in the latter part of the last financial year when customers, previously impacted by economic conditions, began to release budgets, and the number and size of sales opportunities improved. The continuing capacity issues that are affecting many operator networks and subsequent quality of service problems have resulted in upgrades to 3G networks and their continued roll-out across the globe. These have helped to maintain the improvement in demand that the business has seen over the last twelve months. The market continues, however, to be extremely competitive and order book visibility is generally very short.

Net revenue margin increased slightly to 75% (2009: 73%). Investment in R&D in Network Testing was maintained at £1.1m (2009: £1.1m). 

We are well positioned with our Network Testing LTE products to take advantage of operators' LTE network investments as these start to roll out over the next three years. However, we anticipate that the Network Testing business will continue to be affected by some seasonality. As a result the second half performance is not expected to be as strong as the first half, and is likely to be in line with the second half of last year.

Travel

The results for the division show that order intake decreased by 38% to £7.4m (2009: £12.0m) and revenue fell by 14% to £9.7m (2009: £11.3m). Adjusted operating profit fell £1.0m to £1.5m (2009: £2.5m).

Travel's order intake tends to be focused on a few significant long-term orders and is characterised by a lengthy sales cycle. The closing order book at 31 October 2010 is £46.8m compared to £43.9m twelve months ago.

Travel had a tough first half, with the major factor being issues around the transition from the TUI Germany to the TUI UK pilot contracts. This resulted in correspondingly lower development work being performed, which also negatively impacted licence revenue, down from £0.7m to £0.3m. The first half benefited from the re-negotiation of an existing managed services contract that yielded just under £1.0m of revenue, but in comparison lacked the repetition of a bonus payment of £0.8m received last year due to the delivery of a key customer contract milestone.

The division however continues to have a strong backlog of contracted orders and a healthy pipeline of sales prospects. Although these will both benefit the second half year and beyond, we currently expect Travel's performance for the year as whole to be below last year's.

Other Group costs

During the period, unallocated Group corporate costs were £1.2m (2009: £0.9m). Corporate costs included non-operational property costs of £0.5m (2009: £0.1m), of which £0.4m was in respect of a provision for a non-operational property where the tenant ceased to trade in the period.

FINANCIAL REVIEW

Key Performance Indicators ("KPIs")

As set out in our most recent annual report, the Board uses a range of financial and non-financial performance indicators, reported on a periodic basis, to monitor the Group's performance over time.

	H1 2010	H1 2009	%Inc/(dec)
Financial KPIs
Order Intake	£38.6m	£33.0m	17%
Revenue	£42.3m	£35.2m	20%
Adjusted operating profit	£7.4m	£3.5m	111%
Research & development total spend	£5.7m	£6.0m	(5%)
Non Financial KPI
Headcount (period end)	444	464	(4%)

The directors consider the performance against these KPIs to be satisfactory.

Revenue

Revenue from continuing operations was up 20% at £42.3m (2009: £35.2m). Geographically, revenues by destination were: UK 17% (2009: 22%); Europe 32% (2009: 35%); North America 21% (2009: 22%); and Asia 30% (2009: 21%).

Reconciliations of Adjusted and Statutory Profits

Reconciliations of adjusted EBITDA of £9.7m to the operating profit of £7.0m and adjusted operating profit of £7.4m to the reported profit before tax for the year of £6.1m are set out in the tables below. The reconciling items are those that, in the opinion of the Board, are either one-off in nature or are non-cash related and are not, therefore, indicative of the Group's underlying trading.

	H1 2010	H1 2009
	£m	£m
Adjusted EBITDA	9.7	6.1
Depreciation	(1.4)	(1.4)
Amortisation of intangible assets	(0.9)	(1.2)
Adjusted operating profit	7.4	3.5
Share-based payments	1.3	(1.2)
Amortisation of acquired intangible assets	(1.7)	(2.1)
Operating profit	7.0	0.2

	2010	2009
	£m	£m
Adjusted operating profit	7.4	3.5
Net finance charges before recycled hedge losses	(0.9)	(1.0)
Adjusted profit before tax	6.5	2.5
Share-based payments	1.3	(1.2)
Amortisation of acquired intangible assets	(1.7)	(2.1)
Other gains and losses	0.1	0.2
Recycled hedge losses	(0.1)	(0.5)
Profit/ (loss) from continuing operations before tax	6.1	(1.1)

Currency effects

Effects of movements in foreign exchange rates in the period were relatively limited.  Overall there was a £(0.4)m negative impact on revenue (Handsets £0.2m, Networks £(0.6)m) and a £0.9m positive impact on first half operating profit compared to the previous year.  The divisional split of the profit impact was Handsets £0.7m, Networks £0.2m, Travel £(0.1)m and Group £0.1m.

The average exchange rates, half year on half year, for the US dollar strengthened against sterling from £1=US$1.62 to £1=US$1.53, and for the euro weakened from £1=€1.14 to £1=€1.19.  The closing exchange rate for the euro strengthened against sterling to £1= €1.151 (April 2010: £1 = €1.153) and the closing exchange rate for the US dollar depreciated to £1= US$1.604 (April 2010: £1= US$1.526).

Operating expenses

Operating expenses in the period decreased to £18.3m (2009: £21.4m). A detailed breakdown is given in note 2.3. Of these total expenses, underlying operating expenses (i.e. those included in calculating adjusted results), were essentially unchanged at £17.9m (2009: £18.1m).

After the underlying operating expenses, adjusted operating profit more than doubled to £7.4m (2009: £3.5m). Adjusted EBITDA was up 59% at £9.7m (2009: 6.1m).

One-off and non-trading expenses excluded from adjusted profit calculations totalled £0.4m (2009: £3.3m). These included amortisation of acquired intangible assets of £1.7m (2009: £2.1m) and a net credit for share-based payments of £1.3m (2009: charge £1.2m).  In the period several share option schemes matured and lapsed due to a failure to meet performance targets, resulting in a one-off share-based payment credit in the period of £2.1m (2009: nil).  The charge for ongoing schemes was £0.8m (2009: £1.2m) giving the overall net credit of £1.3m (2009: net charge £1.2m). Neither of these items had any cash impact.

After these non-operational costs, the Group reported an overall operating profit of £7.0m (2009: operating profit of £0.2m).

Group finance costs

The Group incurred a net finance charge of £1.0m (2009: £1.5m). This was despite having an excess of £28.4m of cash over borrowings at 31 October 2010 (31 October 2009: £26.0m, 30 April 2010: £29.8m). This was principally because the borrowings within the capital structure are fixed at the relatively high long-term rates available when the facilities were put in place in 2006, but surplus cash earns interest only at current low rates. This position will normalise in November 2011 when the current facilities and interest arrangements expire. The net finance charge includes £0.1m (2009: £0.5m) in respect of the recycling of a fair-value loss on a cash flow hedge. This charge is excluded from adjusted profit before tax calculations.

Taxation

The tax charge for the period on continuing operations was £1.8m (2009: tax credit £0.2m). The tax rate on the statutory operating profit was 29.3% (2009: 21.6%). The underlying tax rate on adjusted profit before tax is 28.9% (2009: 29.3%). Tax paid in the period was £1.0m (2009: £1.4m).

Shareholder returns

After taking account of the factors described above, adjusted basic earnings per share was 1.6p (2009: 0.6p), adjusted diluted earnings per share was 1.5p (2009: 0.6p). The overall basic earnings per share for continuing operations was 1.5p (2009: loss per share of 0.2p).

Cash flow

Net cash flow generated from operating activities was £4.6m (2009: £3.0m). This represented a conversion of 70% of adjusted profit before tax (2009: 120%). Within this, working capital was adversely affected by the timing of creditor payments in the period.

Capital expenditure in the period was £1.9m (2009: £1.2m) and a further £1.0m was incurred on capitalised development expenditure (2009: £0.6m), which represented the cost of writing conformance test cases for Handset Testing's LTE product.

Cash paid out to shareholders through dividends was £1.9m (2009: £1.9m) and £1.0m was incurred on buying shares for the Employee Benefit Trust (2009: £0.2m). After these movements, net cash decreased by £1.4m (2009: net cash decrease of £1.3m).

Borrowings and facilities

The outstanding balance on the Group's term loan facility at 31 October 2010 was £15.0m (October 2009: £20.0m). This is covered by £43.4m of cash at 31 October 2010 (October 2009: £46.0m). The facility expires on 30 November 2011. A £5.0m repayment of the term loan facility was made on 30 November 2010.

The Group has further borrowing facilities available, including a syndicated revolving facility of £20.0m (2009: £20.0m) and a net overdraft facility of £5.0m (2009: £5.0m). Both were undrawn at 31 October 2010.

Key risks and uncertainties, going concern and Statement of Directors' Responsibilities

Risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results.

These risks include:

·      Business asset risk

·      Political  and economic climate risks

·      Project delivery risk

·      Strategic and operational risks

·      Human resource and organisation risks, and

·      Financial risks

The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 30 April 2010. A detailed explanation of these risks is set out on pages 28 and 29 of the annual report which is available at www.anite.com.

Outlook

Any forward looking statements, made within this interim half year report, have been made in good faith by the Directors based on the information made available up to the date of the Directors' approval of this report, and these forward looking statements should be treated with caution due to the inherent uncertainties, including macroeconomic, IT service and solution market uncertainties and business risk factors which may affect the outcome.

Going concern

In considering going concern and liquidity risk, the Directors have reviewed the Group's future cash requirements and earnings projections. The Directors believe these forecasts, which show the Group being covenant compliant for the foreseeable future, have been prepared on a prudent basis, and have also considered the impact of a range of reasonably possible changes to trading performance. The Directors have concluded that given these circumstances, together with the significant cash balances and unused loan facilities, it is appropriate to prepare the financial statements of the Group on a going concern basis.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

·      The condensed set of financial statements have been prepared in accordance with IAS 34; and

·      The financial highlights and review of business performance includes a fair review of the information required by the Disclosure and Transparency Rules (DTR) of the Financial Services Authority, paragraph DTR 4.2.7R and DTR 4.2.8R.

By order of the Board

Richard Amos

Group Finance Director and Company Secretary

30 November 2010

INDEPENDENT REVIEW REPORT TO ANITE PLC

We have been engaged by the company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 31 October 2010 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, and the condensed consolidated cash flow statement and related notes 1 to 10. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

30 November 2010

Condensed consolidated income statement

		Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Continuing operations
Revenue	2.1	42,299	35,195	78,770
Cost of sales		(17,049)	(13,563)	(29,710)
Gross profit		25,250	21,632	49,060
Distribution costs		(5,239)	(5,290)	(10,708)
Research and development		(5,888)	(7,239)	(15,666)
Administrative expenses		(7,160)	(8,857)	(24,529)
Operating expenses	2.3	(18,287)	(21,386)	(50,903)
Operating profit before share-based payments, impairment of goodwill, impairment and amortisation of acquired intangible assets and restructuring costs		7,403	3,501	11,866
Share-based payments	3	1,280	(1,154)	(2,446)
Amortisation of acquired intangible assets		(1,720)	(2,101)	(4,231)
Impairment of goodwill and acquired intangible assets		-	-	(6,172)
Restructuring costs		-	-	(860)
Operating profit / (loss)		6,963	246	(1,843)
Other gains and losses		113	232	473
Finance income	4	153	133	222
Finance charges	4	(1,130)	(1,682)	(2,843)
Profit / (loss) from continuing operations before tax		6,099	(1,071)	(3,991)
Tax (expense) / credit	5	(1,789)	231	(436)
Profit / (loss) from continuing operations		4,310	(840)	(4,427)
Profit from discontinued operations	5	-	1,000	1,000
Profit / (loss) for the period		4,310	160	(3,427)
Profit / (loss) attributable to equity holders of the parent		4,310	160	(3,427)
Continuing and discontinued operations
Earnings per share - basic	6	1.5 p	0.1 p	(1.2)p
- diluted		1.4 p	0.1 p	(1.2)p
Continuing operations
Earnings per share - basic	6	1.5 p	(0.2)p	(1.5)p
- diluted		1.4 p	(0.3)p	(1.5)p

Condensed consolidated statement of comprehensive income

		Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Retained profit / (loss) for the period		4,310	160	(3,427)
Exchange differences arising on translation of foreign operations		(113)	(433)	24
Cash flow hedges taken to equity		171	89	189
Recycling of fair value loss on cash flow hedges from equity to profit or loss1		84	559	655
Fair value gains/(losses) on net investment hedges (net of foreign exchange and tax)2		100	(294)	(2,735)
Gain on sale of shares from treasury		6	-	3
Recognition of share-based payments before tax		(1,280)	1,154	2,446
Tax credit / (charge) taken directly to other comprehensive income	5	6	92	(134)
Total comprehensive income / (loss)		3,284	1,327	(2,979)

1  The fair value losses recycled to the income statement in the period are disclosed within finance charges (note 4).

2  The net gain of £100,000 (2009: loss £294,000) comprises the fair value gain on the net investment hedge of £nil (2009: loss £88,000), relating to the effective portion of the cross currency swaps, and the foreign exchange gain of £100,000 (2009: loss £206,000).

Condensed consolidated statement of changes in equity

	Issued share capital	Share premium account	Own shares	Merger reserve	Capital redemption reserve	Other reserves	Retained earnings	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Balance at 1 May 2009 Changes in equity for the period to 31 October 2009	33,644	25,485	(3,657)	722	2,741	(5,087)	30,062	83,910
Total comprehensive income for the period	-	-	-	-	-	13	1,314	1,327
Issue of share capital	8	15	-	-	-	-	-	23
Purchase of own shares into treasury	-	-	(158)	-	-	-	-	(158)
Dividend paid	-	-	-	-	-	-	(1,912)	(1,912)
Balance at 31 October 2009 (unaudited)	33,652	25,500	(3,815)	722	2,741	(5,074)	29,464	83,190
Changes in equity for the period to 30 April 2010
Total comprehensive (loss) for the period	-	-	(29)	-	-	(1,674)	(2,603)	(4,306)
Issue of share capital	-	-	-	-	-	-	-	-
Purchase of own shares into treasury	-	-	(51)	-	-	-	-	(51)
Dividend paid	-	-	-	-	-	-	(883)	(883)
Balance at 30 April 2010 (audited)	33,652	25,500	(3,895)	722	2,741	(6,748)	25,978	77,950
Changes in equity for the period to 31 October 2010
Total comprehensive income for the period	-	-	17	-	-	248	3,019	3,284
Issue of share capital	15	29	-	-	-	-	-	44
Purchase of own shares into treasury	-	-	(957)	-	-	-	-	(957)
Dividend paid	-	-	-	-	-	-	(1,905)	(1,905)
Balance at 31 October 2010 (unaudited)	33,667	25,529	(4,835)	722	2,741	(6,500)	27,092	78,416

Condensed consolidated balance sheet

		31 October 2010	31 October 2009	30 April 2010
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Non-current assets
Goodwill		57,412	63,740	57,323
Other intangible assets		17,911	23,856	19,171
Property, plant and equipment		10,055	10,186	10,038
Deferred tax assets		1,957	2,178	2,406
		87,335	99,960	88,938
Current assets
Inventories		3,244	2,274	4,452
Trade and other receivables		24,699	22,806	24,518
Derivative financial assets		927	102	856
Current tax assets		224	381	267
Cash and cash equivalents		43,427	45,898	44,803
		72,521	71,461	74,896
Total assets		159,856	171,421	163,834
Current liabilities
Trade and other payables		(22,022)	(22,852)	(25,758)
Bank borrowings	7	(4,996)	(4,986)	(4,988)
Current tax payable		(8,056)	(5,646)	(7,439)
Derivative financial liabilities		(23,233)	(78)	(49)
Provisions		(4,289)	(4,515)	(4,611)
		(62,596)	(38,077)	(42,845)
Non-current liabilities
Bank borrowings	7	(9,991)	(14,958)	(9,979)
Deferred tax liabilities		(3,936)	(5,503)	(4,389)
Derivative financial liabilities		-	(24,254)	(23,569)
Provisions		(4,917)	(5,439)	(5,102)
		(18,844)	(50,154)	(43,039)
Total liabilities		(81,440)	(88,231)	(85,884)
Net assets		78,416	83,190	77,950
Equity
Issued share capital	8	33,667	33,652	33,652
Share premium account		25,529	25,500	25,500
Own shares		(4,835)	(3,815)	(3,895)
Merger reserve		722	722	722
Capital redemption reserve		2,741	2,741	2,741
Other reserves		(6,500)	(5,074)	(6,748)
Retained earnings		27,092	29,464	25,978
Total equity		78,416	83,190	77,950

The accompanying notes are an integral part of this consolidated balance sheet

Condensed consolidated cash flow statement

		Six months ended 31 October 2010	Six months ended 31 October 2009	Year  Ended  30 April 2010
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Profit/ (loss) for the period
Continuing operations		4,310	(840)	(4,427)
Discontinued operations		-	1,000	1,000
		4,310	160	(3,427)
Adjustments for:
Tax charge / (credit) - continuing and discontinued	5	1,789	(1,231)	(564)
Other gains and losses		(113)	(232)	(473)
Finance charges	4	977	1,549	2,621
Depreciation and impairment of property, plant and equipment		1,434	1,424	3,170
Amortisation of intangible assets		936	1,224	2,623
Amortisation of acquired intangible assets		1,720	2,101	4,231
Loss on disposal of property, plant and equipment		-	-	31
Impairment of goodwill		-	-	5,092
Impairment of acquired intangible assets		-	-	1,080
Impairment of intangible assets		-	-	403
Share-based payments	3	(1,280)	1,154	2,446
Decrease in provisions		(581)	(1,133)	(1,490)
Operating cash flows before movements in working capital		9,192	5,016	15,743
Decrease/(increase) in inventories		1,208	15	(2,163)
(Increase)/decrease in receivables		(181)	1,494	(220)
(Decrease)/increase in payables		(3,518)	(1,264)	799
Movements in working capital		(2,491)	245	(1,584)
Cash generated from operations		6,701	5,261	14,159
Interest received		102	142	259
Interest paid		(1,189)	(985)	(1,695)
Income taxes paid		(1,053)	(1,392)	(1,720)
Net cash generated from operating activities		4,561	3,026	11,003
Cash flow from investing activities
Deferred consideration paid		-	(364)	(364)
Purchase of foreign exchange options		-	-	(1,000)
Purchase of property, plant and equipment		(1,526)	(862)	(2,159)
Purchase of software licences		(401)	(302)	(387)
Expenditure on capitalised product development		(1,013)	(587)	(1,319)
Net cash used in investing activities		(2,940)	(2,115)	(5,229)
Cash flow from financing activities
Issue of ordinary share capital		44	23	23
Purchase of own shares into treasury		(957)	(158)	(209)
Proceeds from sale of own shares from treasury		6	-	3
Dividend paid to Company's shareholders		(1,905)	(1,912)	(2,795)
Decrease in bank loans		-	-	(5,000)
Net cash used in financing activities		(2,812)	(2,047)	(7,978)
Net decrease in cash and cash equivalents		(1,191)	(1,136)	(2,204)
Effect of exchange rate changes		(185)	(143)	(170)
Cash and cash equivalents at beginning of period		44,803	47,177	47,177
Cash and cash equivalents at end of period	7	43,427	45,898	44,803

1 BASIS OF PREPARATION AND accounting policies

The unaudited condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with International Accounting Standard (IAS) 34: 'Interim Financial Reporting'.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in preparation of the Group's annual financial statements for the year ended 30 April 2010 as available on our website www.anite.com.

1.1  Information regarding future accounting standards

The IFRIC interpretations, amendments to existing standards and new standards that are mandatory for the Group's accounting periods beginning on or after 1 May 2010 have been adopted in the Group's October 2010 Interim Report.

1.2  Other information

The financial information contained in this Interim Report does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The financial information contained in this Interim Report has been reviewed by the auditors but not audited.

The figures for the year ended 30 April 2010 do not constitute the statutory accounts for that period but are based upon the Group's audited accounts prepared under IFRS. The statutory accounts for the year ended 30 April 2010 have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

On 30 November 2010, this unaudited Interim Report was approved by the Board of Directors for issue.

2  Revenue and segmental information

2.1 Revenue from operations

		Six months ended  31 October 2010	Six months ended  31 October 2009	Year  ended  30 April 2010
	Note	£000	£000	£000
Own product software licences		16,314	11,881	30,716
Bespoke services, systems integration and implementation of software products		3,394	3,710	7,389
Managed services		2,284	2,694	5,284
Software maintenance and support		10,880	10,434	21,158
Sale of third-party products and services		8,469	5,711	13,458
Other		958	765	765
Revenue from operations	2.2	42,299	35,195	78,770
Finance income	4	153	133	222
Total revenue		42,452	35,328	78,992

2.2 Operating segments - primary basis

The Group is organised into four operating segments: Handset Testing, Network Testing, Travel and Group. With the exception of Group, which performs the head office function, each operating segment derives its revenue from the development, installation and support of software products relating to its relevant industry sector.

Operating segment information under the primary reporting format is as disclosed in the tables below:

	Handset Testing	Network Testing	Total Wireless	Travel	Group	Total
Six months ended 31 October 2010	£000	£000	£000	£000	£000	£000
External revenue	20,606	11,965	32,571	9,728	-	42,299
Internal revenue	-	-	-	-	620	620
Total revenue	20,606	11,965	32,571	9,728	620	42,919
Segment adjusted1 profit / (loss) before tax	3,537	3,610	7,147	1,548	(2,185)	6,510
Net finance charges before recycled hedge loss	-	-	-	-	893	893
Segment adjusted1 operating profit / (loss)	3,537	3,610	7,147	1,548	(1,292)	7,403
Share-based payments	559	31	590	168	522	1,280
Amortisation of acquired intangible assets	-	(1,720)	(1,720)	-	-	(1,720)
Segment operating profit / (loss)	4,096	1,921	6,017	1,716	(770)	6,963
Other gains and losses	-	-	-	-	113	113
Finance charges (net)	-	-	-	-	(977)	(977)
Profit / (loss) from continuing operations before tax	4,096	1,921	6,017	1,716	(1,634)	6,099
Tax  expense	-	-	-	-	(1,789)	(1,789)
Profit / (loss) from continuing operations	4,096	1,921	6,017	1,716	(3,423)	4,310
Profit from discontinued operations	-	-	-	-	-	-
Profit / (loss) for the period	4,096	1,921	6,017	1,716	(3,423)	4,310
Segment total assets	22,959	10,413	33,372	10,750	115,734	159,856

1 Profit / (loss) from continuing operations before share-based payments, amortisation of acquired intangible assets, other gains and losses and recycled hedge losses

	Handset Testing	Network Testing	Total Wireless	Travel	Group	Total
Six months ended 31 October 2009	£000	£000	£000	£000	£000	£000
External revenue	15,226	8,634	23,860	11,335	-	35,195
Internal revenue	-	-	-	-	618	618
Total revenue	15,226	8,634	23,860	11,335	618	35,813
Segment adjusted1 profit / (loss) before tax	375	1,517	1,892	2,512	(1,893)	2,511
Net finance charges before recycled hedge loss	-	-	-	-	990	990
Segment adjusted1 operating profit / (loss)	375	1,517	1,892	2,512	(903)	3,501
Share-based payments	(193)	(121)	(314)	(178)	(662)	(1,154)
Amortisation of acquired intangible assets	(309)	(1,792)	(2,101)	-	-	(2,101)
Segment operating (loss) / profit	(127)	(396)	(523)	2,334	(1,565)	246
Other gains and losses	-	-	-	-	232	232
Finance charges (net)	-	-	-	-	(1,549)	(1,549)
(Loss) / profit from continuing operations before tax	(127)	(396)	(523)	2,334	(2,882)	(1,071)
Tax credit	-	-	-	-	231	231
(Loss) / profit from continuing operations	(127)	(396)	(523)	2,334	(2,651)	(840)
Profit from discontinued operations	-	-	-	-	1,000	1,000
(Loss) / profit for the period	(127)	(396)	(523)	2,334	(1,651)	160
Segment total assets	27,695	8,026	35,721	12,660	123,040	171,421

1 Profit / (loss) from continuing operations before share-based payments, amortisation of acquired intangible assets, other gains and losses and recycled hedge losses

	Handset Testing	Network Testing	Total Wireless	Travel	Group	Total
Year ended 30 April 2010	£000	£000	£000	£000	£000	£000
External revenue	35,753	20,026	55,779	22,991	-	78,770
Internal revenue	-	-	-	-	1,387	1,387
Total revenue	35,753	20,026	55,779	22,991	1,387	80,157
Segment adjusted1 profit / (loss) before tax	3,460	4,569	8,029	5,575	(3,704)	9,900
Net finance charges before recycled hedge loss	-	-	-	-	1,966	1,966
Segment adjusted1 operating profit / (loss)	3,460	4,569	8,029	5,575	(1,738)	11,866
Share-based payments	(1,019)	(219)	(1,238)	(331)	(877)	(2,446)
Amortisation of acquired intangible assets	(625)	(3,606)	(4,231)	-	-	(4,231)
Impairment of goodwill and acquired intangible assets	(6,172)	-	(6,172)	-	-	(6,172)
Restructuring costs	(860)	-	(860)	-	-	(860)
Segment operating (loss) / profit	(5,216)	744	(4,472)	5,244	(2,615)	(1,843)
Other gains and losses	-	-	-	-	473	473
Finance income	-	-	-	-	222	222
Finance charges	-	-	-	-	(2,843)	(2,843)
(Loss) / profit from continuing operations before tax	(5,216)	744	(4,472)	5,244	(4,763)	(3,991)
Tax expense	-	-	-	-	(436)	(436)
(Loss) / profit from continuing operations	(5,216)	744	(4,472)	5,244	(5,199)	(4,427)
Profit from discontinued operations	-	-	-	-	1,000	1,000
(Loss) / profit for the period	(5,216)	744	(4,472)	5,244	(4,199)	(3,427)
Segment total assets	36,517	60,173	96,690	10,478	56,666	163,834

1 Profit / (loss) from continuing operations before share-based payments, impairment of goodwill, impairment and amortisation of acquired intangible assets, restructuring costs, other gains and losses and recycled hedge losses

2.3 Operating expenses

	Six months ended  31 October 2010	Six months ended  31 October 2009	Year  ended 30 April 2010
	£000	£000	£000
Distribution costs
- amortisation of acquired intangible assets	1,096	1,165	2,345
- other	4,143	4,125	8,363
	5,239	5,290	10,708
Research and development
- amortisation of internally generated assets	638	859	1,940
- other	4,626	5,444	11,252
	5,264	6,303	13,192
- amortisation of acquired intangible assets	624	936	1,886
- restructuring costs	-	-	588
	5,888	7,239	15,666
Administrative expenses
- impairment of goodwill	-	-	5,092
- impairment of acquired intangible assets	-	-	1,080
- restructuring costs	-	-	272
- share-based payments	(1,280)	1,154	2,446
- other	8,440	7,703	15,639
	7,160	8,857	24,529
Total operating expenses	18,287	21,386	50,903
Analysed as:
- amortisation of acquired intangible assets	1,720	2,101	4,231
- amortisation of internally generated assets	638	859	1,940
- impairment of goodwill	-	-	5,092
- impairment of acquired intangible assets	-	-	1,080
- restructuring costs	-	-	860
- share-based payments	(1,280)	1,154	2,446
- other	17,209	17,272	35,254
	18,287	21,386	50,903

3 SHARE-BASED PAYMENTS

	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	£000	£000	£000
Charge relating to employee service during the vesting period	849	1,154	2,446
Credit relating to lapses due to non-performance of non-market vesting conditions	(2,129)	-	-
Share-based payments (credit)/charge	(1,280)	1,154	2,446

The Group has applied the provisions of IFRS2: 'Share-based payments' and has revised the estimate of shares that will vest as a result of non-market vesting conditions.

4 Net finance charge

	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	£000	£000	£000
Finance income
Interest receivable and similar income	7	9	25
Interest on short-term deposits	146	124	197
Total finance income	153	133	222
Finance charges
Bank loans and overdrafts1	(118)	(243)	(325)
Other loans/commitment fees	(30)	(56)	(118)
Losses on financial instruments in a hedging relationship:
- Interest rate swaps and caps - cash flow hedges	(479)	(437)	(928)
- Cross currency swaps - net investment hedge	(345)	(303)	(617)
Unwinding of discount on provisions 2	(74)	(84)	(200)
Finance charges before recycled hedge loss	(1,046)	(1,123)	(2,188)
Recycling of fair value loss on cash flow hedges 3	(84)	(559)	(655)
Total finance charges	(1,130)	(1,682)	(2,843)
Adjusted net finance charge before recycled hedge loss	(893)	(990)	(1,966)
Recycling of fair value loss on cash flow hedges 3	(84)	(559)	(655)
Net finance charge	(977)	(1,549)	(2,621)

1  Finance charges on bank loans and overdrafts include amortisation of issue costs of £20,000 (2009: £33,000).

2  The unwinding of discount on provisions relates to property and deferred consideration provisions.

3  The recycling of fair value loss on cash flow hedges arises due to the future repayments of the term loan reducing the interest payments causing some of the interest cash flows to be classed as no longer probable. In accordance with IAS 39, an equivalent proportion of the fair value losses under the interest rate swap arrangement, previously taken to equity, are released to profit and loss.

5 tax expense / (credit)

Continuing operations	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	£000	£000	£000
Current tax
UK corporation tax	596	130	614
Foreign tax	1,192	671	2,015
	1,788	801	2,629
Adjustments in respect of prior years
Foreign tax	-	-	(42)
Total current tax expense	1,788	801	2,587
Deferred tax
UK	449	(447)	(565)
Foreign	(448)	(585)	(1,586)
Total deferred tax expense / (credit)	1	(1,032)	(2,151)
Total income tax expense / (credit)	1,789	(231)	436

Income tax for the interim period is charged at 28.9% (October 2009: 29.3%), representing the weighted average of the estimated annual effective income tax rate expected to apply to the adjusted profit for the full year in each jurisdiction and major category of income within continuing operations.

Discontinued operations	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April  2010
	£000	£000	£000
Current tax - Adjustments in respect of prior years
UK corporation tax	-	(1,000)	(1,000)
Total income tax credit	-	(1,000)	(1,000)

Total income tax expense / (credit)

1,789

(1,231)

(564)

Tax (credit) / charge taken directly to other comprehensive income	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	£000	£000	£000
Deferred tax relating to share based payments	-	-	(110)
Deferred tax relating to foreign exchange on acquired intangible assets	(6)	(92)	(206)
UK corporation tax relating to discontinued activities	-	-	450
	(6)	(92)	134

6 Earnings per share

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

		Basic			Diluted
	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
EPS summary
Basic EPS	1.5 p	0.1 p	(1.2)p	1.4 p	0.1 p	(1.2)p
Basic EPS for continuing operations	1.5 p	(0.2)p	(1.5)p	1.4 p	(0.3)p	(1.5)p
Adjusted EPS2	1.6 p	0.6 p	2.4 p	1.5 p	0.6 p	2.3 p
	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April 2010
	Pence per share	Pence per share	Pence per share	£000	£000	£000
Profit / (loss) for the period	1.5	0.1	(1.2)	4,310	160	(3,427)
Profit from discontinued operations	-	(0.3)	(0.3)	-	(1,000)	(1,000)
Profit / (loss) for the year on continuing operations	1.5	(0.2)	(1.5)	4,310	(840)	(4,427)
Reconciliation to adjusted profit:
Other gains and losses (net of tax)	-	(0.1)	(0.1)	(81)	(167)	(341)
Recycled hedge losses3 (net of tax)	-	0.1	0.2	61	402	472
Amortisation of acquired intangible assets (net of tax)	0.4	0.5	1.0	1,272	1,516	2,947
Share-based payments (net of tax)	(0.3)	0.3	0.6	(931)	865	1,822
Impairment of goodwill and acquired intangible assets (net of tax)	-	-	2.0	-	-	5,870
Restructuring costs (net of tax)	-	-	0.2	-	-	619
Adjusted profit1	1.6	0.6	2.4	4,631	1,776	6,962

1  Profit from continuing businesses before other gains and losses, recycled hedge losses, impairment of goodwill, impairment and amortisation of acquired intangible assets, share-based payments and restructuring costs.

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

3  Recycled hedge losses relate to the recycling of fair value losses on cash flow hedges reclassified from equity to profit or loss in the period.

Number of shares ('000)	Six months ended 31 October 2010	Six months ended 31 October 2009	Year  ended 30 April  2010
Weighted average number of shares in issue - used to calculate basic earnings per share	290,164	293,176	292,166
Effect of potentially dilutive ordinary shares
- SAYE and share option schemes	22,906	14,193	14,100
Number of shares used to calculate diluted earnings per share	313,070	307,369	306,266

7 Net CASH

	31 October 2010	31 October 2009	30 April 2010
	£000	£000	£000
Cash and cash equivalents	43,427	45,898	44,803
Bank borrowings - current	(4,996)	(4,986)	(4,988)
Bank borrowings - non-current	(9,991)	(14,958)	(9,979)
Net cash	28,440	25,954	29,836

8 Called up share capital

	Ordinary shares of 11.25p each		Deferred redeemable shares of £1 each
	Number	£000	Number	£000
Allotted, issued and fully paid:
At 1 May 2010	298,683,195	33,602	50,000	50
Issued during the period	136,125	15	-	-
At 31 October 2010	298,819,320	33,617	50,000	50

9 Dividends

The Company paid a final dividend of 0.65p (2009: 0.65p) per share, totalling £1,905,000 (2009: £1,912,000) on 20 October 2010.

10 Contingent liabilities

There are contingent liabilities that arise in the normal course of business in respect of indemnities, warranties, guarantees and legal claims. However, the Directors have considered that none of these claims is expected to result in a material loss to the Group. There has been no change in the Directors' assumptions in regard to contingent liabilities since the year ended 30 April 2010.

 

END

 

 

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