Half Yearly Report

RNS Number : 9725U

Anite PLC

09 December 2013

 



Monday, 9 December 2013

                                                                                ANITE PLC

Half year results for the six months ended 31 October 2013

Anite plc ("Anite" or "the Company" or "the Group"), 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 2013.

Financial highlights (adjusted) ¹:

·      Group order intake up 5% to £56.7m (2012: £53.9m)

-      Closing order book of £106.5m (31 October 2012: £107.2m; 30 April 2013: £107.3m)

·      Revenue down 6% to £57.5m (2012: £61.2m)

·      Operating profit down 63% to £5.3m (2012: £14.3m)

·      Profit before tax down 64% to £5.1m (2012: £14.3m)

·      Diluted earnings per share down 65% to 1.2p (2012: 3.4p)

·      Net debt of £6.0m (31 October 2012: net cash £16.8m; 30 April 2013: net debt £0.9m)

·      Interim dividend unchanged at 0.575p per share (2012: 0.575p per share) 

Statutory results:

·      Revenue from continuing operations of £57.5m (2012: £61.2m)

·      Operating profit from continuing operations of £1.8m (2012: £11.3m), after:

-      share based payments charge of £0.7m (2012: £1.8m)

-      amortisation of acquired intangible assets of £2.4m (2012: £1.2m)

-      restructuring costs of £0.4m (2012: £nil)

·      Profit from continuing operations before tax of £1.6m (2012: £11.3m)

·      Profit for the period of £0.6m (2012: £8.2m)

·      Basic earnings per share 0.2p (2012: 2.9p); diluted earnings per share 0.2p (2012: 2.7p)

Operating highlights:

·      Trading in first half concluded slightly ahead of expectations at time of 16 October trading update

·      Wireless: 

-      Handset Testing impacted by slow start to year and delays to orders driven by significant industry consolidation

-      Fundamental market size and drivers are undiminished

-      Network Testing starting to see benefit from LTE roll-outs resulting in strong organic growth

·      Travel:

-      Encouraging increase in profits as it builds its recurring revenue base

¹Adjusted results are for continuing operations before share-based payments, amortisation of acquired intangible assets and restructuring costs.

Christopher Humphrey, Chief Executive, said:

"Despite the disappointing start to the year, the Board believes that the underlying drivers for the Wireless division, namely the increased market penetration of smartphones, mobile data growth and the roll-out and complexity of mobile technology, are undiminished.  Reflecting our conviction, we continue to invest in these areas developing new products and accessing adjacent markets.

"The Board expects that the Group's second half trading will improve on the first half as it anticipates a material improvement in Handset Testing and continued robust performances from Network Testing and Travel."

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

An analysts' meeting will be held today at 8.45 for 9.00 a.m. at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS

Notes to editors

Anite plc, an international software and solutions company, operates in two discrete markets: we provide device and network testing systems to the wireless market and reservation and e-commerce solutions to the leisure travel industry.  The success of both divisions is based on our comprehensive knowledge of the sectors and on our proprietary software and hardware products.

Our 600 staff work with the world's leading wireless and travel companies, from our headquarters in the UK and from offices in 16 countries throughout Europe, the Americas, 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 2013

All references to adjusted profit relate to continuing operations for the period before share-based payments, amortisation of acquired intangible assets and restructuring costs. A reconciliation of adjusted results to reported statutory results is given in the Financial Review.

HALF YEAR OVERVIEW

Introduction

The first half of the year was a disappointing trading period for Anite, specifically in the Handset Testing business which saw lower activity levels than in the corresponding period last year.  However, there were strong trading performances by both Network Testing and Travel.  Overall, this has resulted in a reduction in Group revenue and adjusted operating profit compared to last year, as indicated in the trading statement issued on 16 October 2013.

Despite the disappointing start to the year, the Board believes that the underlying drivers for the Wireless division, namely the increased market penetration of smartphones, mobile data growth and the roll-out and complexity of mobile technology, are undiminished.  Reflecting our conviction, we continue to invest in these areas developing new products and accessing adjacent markets.

Handset Testing was affected by a number of factors in the period.  The most significant issues were a slow order intake in the first quarter and then delayed and reduced spending by a number of key customers who are involved in significant industry consolidation, much of which occurred towards the end of the half.  This caused what we believe to be a temporary hiatus in their investment plans and resulted in the deferral of expected first half orders.  The resulting lower revenue combined with anticipated increased fixed costs following the acquisition of the Propsim product line in January 2013 resulted in a significant reduction in Handset Testing's profitability to around break even. 

Network Testing had a strong first half, achieving significant underlying organic growth in revenue and profit albeit against relatively unchallenging comparatives from the previous year.  This first half underlying growth was supported by a strengthening of the euro compared to sterling and by a small positive contribution from its former French distributor which was acquired in July 2013.

Travel traded slightly ahead of the Board's expectations, reporting an encouraging increase in profit as it continues to build its underlying recurring revenue base as more deployments of @com go live and enter the maintenance and support phase.  This was supported by some licence income from new sales.

Group results summary

Overall in the first half of the year, the Group reported a 6% decrease in revenue and a 63% decrease in adjusted operating profit.  Adjusting for the impact of foreign exchange rate fluctuations and for acquisitions, the underlying organic reductions in revenue and adjusted operating profit were 17% and 71% respectively.  

Overall Group order intake in the six month period was up 5% to £56.7m (2012: £53.9m).  Within this, Handset Testing order intake was down 5% year on year, with Networks Testing up 33% and Travel up 11%.  The Group's closing order book was similar to last year at £106.5m (31 October 2012: £107.2m; 30 April 2013: £107.3m).  The order book in the Wireless businesses grew year on year by 42% to £31.3m (31 October 2012: £22.1m; 30 April 2013: £26.9m) as Handset Testing customers signed up to more multi-year maintenance contracts in the period.  Travel continues to report a large order book of £75.2m (31 October 2012: £85.1m; 30 April 2013 £80.4m) although lower than last year, reflecting the progress it has made delivering the major multi-year contracts that it won in 2011 and 2012. 

Although both Network Testing and Travel reported double digit underlying revenue growth, Group revenue fell by 6% to £57.5m (2012: £61.2m) due to a 21% reduction in Handset Testing revenue. This reduction, combined with the anticipated increase in fixed costs in that business following the Propsim acquisition, led to Handset Testing breaking even in the period and this resulted in Group adjusted operating profit declining 63% to £5.3m (2012: £14.3m).  Finance costs in the period were £0.2m (2012: £nil) following the drawdown of part of the revolving credit facility in January 2013 to fund the Propsim acquisition.  As a result, adjusted profit before tax was £5.1m (2012: £14.3m).

Adjusted diluted earnings per share reduced 65% to 1.2p (2012: 3.4p).

Net debt as at 31 October 2013 was £6.0m (30 April 2013: net debt of £0.9m; 31 October 2012: net cash of £16.8m), with cash consumed in the first half of the year consistent with usual seasonal patterns combined with outflows associated with acquisitions (£1.9m), the purchase of shares for the employee benefit trust (£3.4m) and the final 2013 dividend (£3.6m).  The Group retains significant financial strength, with gross cash of £11.7m at the period end plus £10.0m of undrawn overdraft facility and £2.4m of undrawn revolving credit facility. 

Dividend

The Board is declaring an unchanged interim dividend of 0.575p per share (2012: 0.575p per share). The interim dividend is being maintained despite the reduction in year on year profitability as the Board believes that trading in the first half of the year reflected temporary market conditions.  The interim dividend will be paid on 14 February 2014 to shareholders on the register at 31 January 2014.

Outlook 

The Board expects that the Group's second half performance will improve on the first half.

There are a number of specific technology and customer-related revenue catalysts that are expected to lead to a material improvement in Handset Testing's second half trading.  Combined with Handset Testing's usual seasonal second half bias this means that, as stated at the time of the Trading Update on 16 October, the Board expects second half revenue in Handset Testing to be broadly in line with that achieved in the second half of last year with fixed costs similar to the first half this year.  The Board's expectation for second half Handset Testing performance is set in the context of the usual limited visibility of the timing of receipt of orders.  There is the potential for improvement in this expectation if the recovery in its markets proves more significant.  

Network Testing is expected to grow in the second half as it maintains the progress demonstrated in the first half.  For the full year, the Board expects Network Testing to achieve its original expectation of mid to high single digit underlying profit growth despite more demanding second half comparatives.

Travel is on track to deliver on its original expectation of low to mid single digit profit growth.  Second half revenue in Travel is well supported by the substantial order book which already contains over £8m for second half delivery.     

Looking to the future, the Board believes that the fundamental underlying business drivers for the Wireless division are undiminished.  All our businesses have good market positions, products and people and operate in attractive growth markets.  We believe that our continued investment in R&D coupled with these market positions will enable us to continue to make good progress over the next few years.

Clay Brendish Chairman                                               Christopher Humphrey Chief Executive

8 December 2013

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 results for the Group show a mixed first half, with good performance compared to the same period last year in Network Testing and Travel, but a disappointing result in Handset Testing due primarily to market driven delays.

Wireless performance

Handset Testing

The results for the Handset Testing business for the period show that order intake decreased by 5% to £35.7m (2012: £37.4m) and revenue decreased by 21% to £31.8m (2012: £40.5m).  Adjusting for the impact of the Propsim product line, which contributed £4.7m of revenue and £0.7m of operating profit, the underlying organic revenue reduction on a constant currency basis was 33%.  The shortfall in gross margin associated with this revenue decline, in addition to the c.£6m annual increase in fixed costs taken on with the Propsim acquisition, resulted in the business recording an adjusted operating profit of £0.5m compared to £11.4m in the comparative period.  This level of performance was disappointing in the context of the growth that the business has achieved in the last three years and was unexpected.

The first half of the year started slowly, partly as a consequence of the very strong final quarter that the business had seen in the last months of the prior financial year.  This strong close meant that the business had opened the new financial year with a relatively low pipeline of opportunities which it took some time to re-build.  It also became clear as the period developed that opportunities that were being progressed were taking longer to close than in prior periods.  This became particularly acute towards the end of the period, as a number of Handset Testing's major customers became involved in consolidation and re-organisation activities which resulted in delayed investment decisions. 

The decline in revenue affected Development Testing, Conformance Testing and Interoperability Testing (IOT).  Revenue from the Propsim product line acquired in January was £4.7m, slightly lower than our expectations, but we anticipate this improving in the second half of the year.

The Board firmly believes that the reduction in revenue seen over the last six months is a temporary phenomenon caused by specific market conditions that should gradually rebalance over the next six months and beyond.  The underlying demand driving our business is the inexorable increase in data that is being consumed over mobile connections and we see no change in this trend with a recent Ericsson report for example forecasting a ten-fold increase in mobile data traffic between 2013 and 2019.  This will continue to lead to cellular network overload which is driving the need for continued technology innovation and hence in the testing systems that they require.  There is a technology roadmap for this within the existing LTE 4G plans, going from the initial LTE deployments that have already been adopted by certain operators through to the more advanced configurations that have been defined within LTE Advanced but which have yet to be fully implemented by operators or manufacturers.  These requirements will, we believe, provide growth opportunities for Anite for some years to come.  Looking further into the future, LTE 4G will itself reach its limitations and the industry, including Anite, is already looking at what will be needed then - i.e. the scope of "5G".

These technology developments support growth in our traditional core protocol Conformance Testing and IOT product areas and the earlier stage Development Testing market area that we successfully entered with our LTE 4G offering.  Additionally, market opportunities are developing for Performance Testing where it is necessary to measure "how well does it work", not just "does it work" and which we are able to address through both internal product developments and the acquisition of the Propsim product line that we completed in January 2013.  We expect these opportunities to develop further in the second half of the year and beyond. One such opportunity is MIMO-OTA where a simulated radio signal is delivered "over the air" (OTA) to test the challenges thrown up by the multiple antennae configurations required by LTE Advanced to accelerate data transmission speeds.

Net revenue margin in the period (revenue less third-party hardware cost) was 75%, in line with the same period last year.  This margin was helped by continued strong recurring maintenance revenue, up 16% to £13.1m (2012: £11.3m).

Investment in R&D has increased in the period, primarily because of the extra R&D resource acquired with Propsim. The R&D charge to the income statement was £7.8m in the period (2012: £6.6m) including £1.3m amortisation of previously capitalised costs (2012: £1.0m).  An additional £1.4m of development cost was capitalised in the period (2012: £1.4m) reflecting investment incurred in maintaining market leadership in conformance and interoperability test scripts.

Other fixed costs in Handset Testing have increased from £12.7m last year to £15.4m partly due to Propsim costs and partly due to additional staffing in customer support and development maintenance areas to support the growing installed base of systems.  

Network Testing

Network Testing performed strongly in the period.  Order intake was up 33% year on year at £16.1m (2012: £12.1m) with revenue up a corresponding 32% to £15.6m (2012: £11.8m).  Adjusted operating profit was up 27% at £3.2m (2012: £2.6m).  These reported results were positively impacted by a 6% period-on-period strengthening of the euro and by the impact of the acquisition in July 2013 of the French distributor Genetel, which contributed incremental revenue of £1.0m and profit of £0.2m in the four month period since its acquisition.  Adjusting for these two impacts, the underlying organic growth in revenue and profit was 16% and 10% respectively.

Market conditions for the Network Testing business, although still challenging, have improved with some benefit from the roll-out of LTE 4G technology.  Demand for its traditional products was good including increased demand for the analysis product.  Additionally, the business had particular success with the newer products in which it has been investing in recent years.  Demand for the benchmarking product was strong and there was particularly good growth in sales of scanner products.

Margins in the business were also strong with the net revenue margin maintaining a high 69%.  This was down slightly from the corresponding period, but this was due to changes in the product mix.

The income statement charge for investment in R&D in Network Testing increased slightly to £2.1m (2012: £1.8m) including £0.1m amortisation of previously capitalised costs (2012: £0.1m).  In addition, £0.3m of R&D costs (2012: £0.2m) were capitalised in the period in relation to the development of the scanner and benchmarking products.  Other fixed costs in Network Testing were up £1.3m, of which £0.4m were costs associated with the Genetel business and £0.8m were additional sales and support costs.  The net operating margin in Network Testing was similar to last year at 21% (2012: 22%).

We expect that the roll-out of LTE 4G networks will continue to benefit the Network Testing business in the second half of the year although stronger comparatives from 12 months ago mean that we do not expect growth rates to be as strong as seen in the first half.  However, we see continued growth opportunities as the LTE 4G roll-out develops through the next few years. 

Travel

The Travel division has performed well in the first half of the year, delivering growth in revenue and profit in excess of expectations.  Revenue at £10.1m was up 13% on the £8.9m reported in the same period in the prior year.  Within that, licence revenue was £1.0m (2012:  £0.6m).  Adjusted operating profit meanwhile was up 53% at £2.6m (2012: £1.7m) as the business benefited from the operational gearing effect of delivering the incremental revenue on a largely fixed cost base. Order intake for the period was £4.9m, up 11% from the £4.4m of the comparative period.  The business closed the period with a very strong contracted but undelivered order book of £75.2m (30 April 2013: £80.4m).  This order book is made up predominantly of multi-year maintenance and support contracts which will be delivered over the next 5-10 years.

New orders included a contract to install the @com reservations system at Canadian Affair, the UK's leading tour operator to Canada, as well as a number of follow-on contracts and extensions for existing customers.  In addition the business continued to progress with the major contracts that it has been working on over the last few years.  In particular, the Thomas Cook UK mainstream contract is now fully live and in the maintenance and support phase and progress continues to be made on the TUI UK implementation where initial phases are now live. 

The net revenue percentage in Travel increased to 97% (2012: 91%) reflecting a 41% increase in maintenance revenue in the period to £2.4m (2012: £1.7m) and a reduction in third party product sales.  Travel's fixed costs increased 12% to £7.2m (2012: £6.4m), mainly as a result of increased sales and marketing costs and increased property costs.  However despite this, its operating margin increased to 26% (2012: 19%).

With its substantial order book and increased profit from the growth in recurring revenue, Travel is well placed to deliver a strong second half and thus achieve its expectation of low to mid single digit percentage profit growth. 

FINANCIAL REVIEW

Revenue

Revenue from continuing operations was down 6% at £57.5m (2012: £61.2m).  Adjusting for the impact of acquisitions and at constant currency, on an underlying, organic basis, revenue fell by 17%.  Geographically, revenue by destination was: United Kingdom 15% (2012: 13%); other Europe, Middle East & Africa 23% (2012: 25%); the Americas 25% (2012: 30%); and Asia & Rest of World 37% (2012: 32%).  The changes in split reflected performance in the Handset Testing business where North America in particular was affected by the consolidation-led market delays.

Reconciliations of Adjusted and Statutory Profits

Reconciliations of adjusted EBITDA of £9.5m to the operating profit of £1.8m and adjusted operating profit of £5.3m to the reported profit before tax for the year of £1.6m 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.

Half year ended 31 October:	2013	2012
	£m	£m
Adjusted EBITDA	9.5	17.2
Depreciation	(2.4)	(1.6)
Amortisation of intangible assets	(1.8)	(1.3)
Adjusted operating profit	5.3	14.3
Share-based payments	(0.7)	(1.8)
Amortisation of acquired intangible assets	(2.4)	(1.2)
Acquisition costs	(0.4)	-
Operating profit	1.8	11.3

Half year ended 31 October:	2013	2012
	£m	£m
Adjusted operating profit	5.3	14.3
Net finance charges	(0.2)	-
Adjusted profit before tax	5.1	14.3
Share-based payments	(0.7)	(1.8)
Amortisation of acquired intangible assets	(2.4)	(1.2)
Acquisition costs	(0.4)	-
Profit from continuing operations before tax	1.6	11.3

Impact of acquisitions

These results reflected the impact of two acquisitions made over the last twelve months:

·      Acquisition in the second half of last financial year of the Propsim Channel Emulator product business ("Propsim") on 31 January 2013 for £26.5m including £1.2m of acquisition and integration costs and £0.3m additional payment agreed in the current period in the finalisation of the completion accounts.  The results for this acquisition are reported within the Handset Testing business unit; in the period under review Propsim contributed £4.7m revenue and £0.7m adjusted operating profit. 

·      Acquisition in the first half of this financial year of Genetel SAS on 1 July 2013 for £1.2m plus acquisition costs of £0.4m.  The results for this acquisition were consolidated for the four months post acquisition and are included within the Network Testing business unit; in the period under review, Genetel contributed £1.0m revenue and £0.2m operating profit.

The results from the acquisitions have been excluded when calculating the underlying organic growth in revenue and profit referred to in this report. 

Currency effects 

The key exchange rates that affect the results were as follows:

Average rates - (primarily impacting income statement)

		Six months ended 31 Oct 2013	Six months ended 31 Oct 2012
Euro strengthened against sterling	6%	1.17	1.25
US dollar strengthened against sterling	1%	1.56	1.58

Period end rates - (primarily impacting balance sheet)

		31 Oct 2013	30 April 2013
Euro strengthened against sterling	2%	1.17	1.19
US dollar weakened against sterling	4%	1.61	1.55

The net effect of these changes on the translation of results from overseas subsidiaries was to increase revenue by £1.0m and operating profit by £0.3m.  Network Testing was the main business impacted by these translational changes as its euro denominated results were converted back into sterling.  These translational impacts have been adjusted for in the calculation of underlying organic revenue and operating profit changes disclosed. 

In addition, the effect of conducting trade in foreign currencies resulted in transaction gains of £0.2m making the total favourable effect of currency fluctuations on profits £0.5m year on year, of which £0.4m was in the Handset Testing business, a net nil effect in Network Testing and £0.1m in the Travel business.

Cost of sales

Cost of sales increased 4% to £26.4m (2012:  £25.3m).  This increase was in contrast to the reduction in Group revenue.  Within cost of sales, variable hardware/third party costs were down 5% to £13.2m (2012: £13.9m), broadly in line with the reduction in revenue.  Other cost of sales, which are predominantly made up of employee costs, increased by 16% to £13.2m (2012: £11.4m) due in part to £0.5m extra cost associated with the Propsim product line staff and also due to the increase in staff and other costs directly associated with supporting the growing number of installed systems in the Handset Testing business.  As a result of the increase in overall cost of sale, the gross profit margin decreased 5% to 54% (2012: 59%). 

Operating expenses

Total operating expenses in the period increased to £29.3m (2012: £24.6m).  A detailed breakdown is given in note 2.3.

Within total operating expenses are one-off and non-cash items not charged to adjusted operating profit and underlying operating expenses that are charged to adjusted operating profit.  The latter, as expected, increased to £25.8m (2012: £21.6m), mainly due to £2.3m increased R&D resource, sales expense and other overheads acquired with the Propsim product line and additional sales costs within both Network Testing and Travel to support their growth.

During the period, unallocated Group corporate costs reduced to £1.0m (2012: £1.4m) due to savings in non-operational properties and Group staff costs.

After the underlying operating expenses, adjusted operating profit fell by 63% to £5.3m (2012: £14.3m).  Adjusted EBITDA also reduced by 45% to £9.5m (2012: £17.2m).  At constant currency and excluding the impact of acquisitions, on an underlying organic basis, adjusted operating profit fell 72%.

One-off and non-cash expenses excluded from adjusted profit calculations totalled £3.5m (2012: £3.0m).  This included amortisation of acquired intangible assets of £2.4m (2012: £1.2m) which increased due to the acquisitions completed over the last twelve months, a share-based payments charge of £0.7m (2012: £1.8m) and acquisition costs of £0.4m (2012: £nil).  The share based payment charge reduced because non-market related performance conditions on certain of the schemes are not expected to be achieved resulting in a credit back of previously recognised charges.    After these non-operational costs, the Group reported an overall operating profit of £1.8m (2012: £11.3m).

Group finance costs

The Group incurred net £0.2m finance charges in the period (2012: £nil).  The increase follows the drawing down of £17.6m of the £20.0m revolving credit facility on 31 January 2013 to finance the Propsim acquisition.

Taxation

The tax charge for the period on continuing operations was £0.9m (2012: £3.1m).  The tax rate on the statutory operating profit was 61.5% (2012: 27.2%), with the high rate mainly reflecting the reduction in the deferred tax asset associated with share based payments and the impact of disallowable expenses (e.g. the £0.4m acquisition costs) on the relatively low absolute profit before tax.  The underlying tax rate on adjusted profit before tax was 26.4% (2012: 27.0 %).  Tax paid in the period was £1.7m (2012: £3.0m).

Earnings per share

After taking account of the factors described above, adjusted basic earnings per share decreased 65% to 1.3p (2012: 3.7p), with adjusted diluted earnings per share similarly decreasing 65% to 1.2p (2012: 3.4p).  The overall basic earnings per share for continuing operations was 0.2p (2012: 2.9p).

Cash flow

Cash generated from operations was £12.3m (2012: £10.7m).  This represented a conversion of 230% of adjusted operating profit (2012: 75%).  The exceptional level of conversion resulted from a £3.1m reduction in working capital in the period as the high levels of working capital in the Handset Testing business built up at the end of last year unwound. 

The net cash outflow on acquisitions was £1.9m, including the purchase of Genetel and the settlement of the completion accounts for Propsim.  Capital expenditure in the period was £4.8m (2012: £2.5m) with the significant increase over the prior year to fund development requirements in Handset Testing.  A further £1.7m was incurred on capitalised development expenditure (2012: £1.6m), which represented the cost of writing conformance and interoperability test cases for Handset Testing and development of the scanner product in Network Testing.

Payments for corporation tax were £1.7m (2012: £3.0m).  Dividends paid in the period were £3.6m (2012: £3.2m) and £3.4m was incurred on buying shares for the Employee Benefit Trust (2012: net purchases of £0.5m).  After these movements and the effect of currency exchange rates, net cash decreased by £5.1m (2012: net cash decrease of £0.1m).

Borrowings and facilities

At 31 October 2013 the Group had net debt of £6.0m (31 October 2012: net cash of £16.8m; 30 April 2013: net debt of £0.9m).  The Group had £17.8m gross borrowings at 31 October 2013 (31 October 2012: £nil; 30 April 2013: £17.6m).  These represent £17.6m drawings against the Group's revolving credit facility of £20.0m and a £0.2m loan acquired with acquisition of Genetel.  The revolving credit facility is available until 31 October 2016.  In addition, the Group has a net overdraft facility of £10.0m (31 October 2012 and 30 April 2013: £5.0m).  The overdraft facility was undrawn at 31 October 2013.

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:

·      Global economic and geo-political risks

·      Competitiveness

·      Technology risks

·      Project delivery risks

·      Reliance on major customers

·      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 2013.  A detailed explanation of these risks is set out on pages 32 to 33 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.  These forward-looking statements should be treated with caution due to the inherent uncertainties, including macro-economic and 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 for the next two financial years.  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 existing 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 has been prepared in accordance with IAS 34;

·      The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board

Richard Amos

Group Finance Director and Company Secretary

8 December 2013

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 2013 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 16.  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 ReviewEngagements (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 it 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 Conduct 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 2013 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 Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

8 December 2013

Condensed consolidated income statement

		Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Continuing operations
Revenue	2.1	57,473	61,184	132,509
Cost of sales		(26,411)	(25,265)	(51,199)
Gross profit		31,062	35,919	81,310
Distribution costs		(7,261)	(5,987)	(13,345)
Research and development		(11,019)	(8,578)	(18,501)
Administrative expenses		(11,012)	(10,023)	(22,642)
Operating expenses	2.3	(29,292)	(24,588)	(54,488)
Operating profit before share-based payments, amortisation of acquired intangible assets and restructuring costs		5,274	14,303	34,435
Share-based payments	4	(670)	(1,766)	(3,437)
Amortisation of acquired intangible assets		(2,436)	(1,206)	(3,014)
Restructuring costs	3	(398)	-	(1,162)
Operating profit		1,770	11,331	26,822
Finance income	5	31	59	161
Finance charges	5	(249)	(104)	(330)
Profit from continuing operations before tax		1,552	11,286	26,653
Tax expense	6	(954)	(3,070)	(7,321)
Profit for the period - attributable to equity holders of the parent		598	8,216	19,332
Continuing operations
Earnings per share - basic	7	0.2p	2.9p	6.8p
- diluted		0.2p	2.7p	6.3p

Condensed consolidated statement of comprehensive income

		Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Retained profit for the period		598	8,216	19,332
Exchange differences arising on translation of foreign operations		1,230	(697)	2,566
Tax (charge) / credit taken directly to other comprehensive income	6	(119)	31	298
Total comprehensive income		1,709	7,550	22,196

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 2012 Changes in equity for the period to 31 October 2012	33,702	25,628	(9,982)	722	2,741	(11,488)	50,778	92,101
Total comprehensive income for the period	-	-	-	-	-	(666)	8,216	7,550
Issue of share capital	25	31	-	-	-	-	-	56
Purchase of own shares into employee benefit trust	-	-	(874)	-	-	-	-	(874)
Gain on sale of shares from employee benefit trust	-	-	1,506	-	-	-	(1,159)	347
Recognition of equity-settled share-based payments after tax	-	-	-	-	-	-	1,713	1,713
Dividend paid	-	-	-	-	-	-	(3,233)	(3,233)
Balance at 31 October 2012 (unaudited)	33,727	25,659	(9,350)	722	2,741	(12,154)	56,315	97,660
Changes in equity for the period to 30 April 2013
Total comprehensive income for the period	-	-	-	-	-	3,530	11,116	14,646
Issue of share capital	117	242	-	-	-	-	-	359
Purchase of own shares into employee benefit trust	-	-	(3,083)	-	-	-	-	(3,083)
Gain on sale of shares from employee benefit trust	-	-	76	-	-	-	(52)	24
Transfer of SIP shares to employees	-	-	693	-	-	-	(693)	-
Recognition of equity-settled share-based payments after tax	-	-	-	-	-	-	1,254	1,254
Dividend paid	-	-	-	-	-	-	(1,648)	(1,648)
Balance at 30 April 2013 (audited)	33,844	25,901	(11,664)	722	2,741	(8,624)	66,292	109,212
Changes in equity for the period to 31 October 2013
Total comprehensive income for the period	-	-	-	-	-	1,111	598	1,709
Issue of share capital	25	91	-	-	-	-	-	116
Purchase of own shares into employee benefit trust	-	-	(3,398)	-	-	-	-	(3,398)
Gain on sale of shares from employee benefit trust	-	-	2,114	-	-	-	(2,113)	1
Recognition of equity-settled share-based payments after tax	-	-	-	-	-	-	(596)	(596)
Dividend paid	-	-	-	-	-	-	(3,624)	(3,624)
Balance at 31 October 2013 (unaudited)	33,869	25,992	(12,948)	722	2,741	(7,513)	60,557	103,420

Condensed consolidated balance sheet

		31 October 2013	31 October 2012	30 April 2013
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Non-current assets
Goodwill		62,941	53,699	61,777
Other intangible assets		36,810	15,114	36,943
Property, plant and equipment		14,876	11,962	12,834
Deferred tax assets		3,033	4,898	4,837
		117,660	85,673	116,391
Current assets
Inventories		13,884	10,321	11,975
Trade and other receivables	9	39,253	35,389	47,626
Derivative financial assets		84	53	30
Current tax assets		91	232	846
Cash and cash equivalents	11	11,748	16,832	16,658
		65,060	62,827	77,135
Total assets		182,720	148,500	193,526
Current liabilities
Trade and other payables	10	(43,145)	(36,425)	(46,637)
Bank borrowings	11	(153)	-	(17,559)
Current tax payable		(6,484)	(7,793)	(8,549)
Derivative financial liabilities		-	(22)	-
Provisions		(4,202)	(3,457)	(4,266)
		(53,984)	(47,697)	(77,011)
Non-current liabilities
Bank borrowings	11	(17,641)	-	-
Deferred tax liabilities		(6,435)	(2,095)	(6,243)
Provisions		(1,240)	(1,048)	(1,060)
		(25,316)	(3,143)	(7,303)
Total liabilities		(79,300)	(50,840)	(84,314)
Net assets		103,420	97,660	109,212
Equity
Issued share capital	12	33,869	33,727	33,844
Share premium account		25,992	25,659	25,901
Own shares		(12,948)	(9,350)	(11,664)
Merger reserve		722	722	722
Capital redemption reserve		2,741	2,741	2,741
Other reserves		(7,513)	(12,154)	(8,624)
Retained earnings		60,557	56,315	66,292
Total equity		103,420	97,660	109,212

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

Condensed consolidated cash flow statement

		Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Profit for the period
Continuing operations		598	8,216	19,332
Discontinued operations		-	-	-
		598	8,216	19,332
Adjustments for:
Tax charge - continuing and discontinued	6	954	3,070	7,321
Net finance charges	5	218	45	169
Depreciation property, plant and equipment		2,396	1,547	3,407
Amortisation of intangible assets		1,798	1,337	2,673
Amortisation of acquired intangible assets		2,436	1,206	3,014
Loss on disposal of property, plant and equipment		2	-	17
Share-based payments charge	4	670	1,766	3,437
Increase/(decrease) in provisions		93	(1,356)	(1,941)
Operating cash flows before movements in working capital		9,165	15,831	37,429
Increase in inventories		(1,866)	(126)	(736)
Decrease/(increase) in receivables		10,166	(2,534)	(10,148)
(Decrease)/increase in payables		(5,150)	(2,457)	4,459
Movements in working capital		3,150	(5,117)	(6,425)
Cash generated from operations		12,315	10,714	31,004
Interest received		7	47	100
Interest paid		(271)	(89)	(168)
Income taxes paid		(1,713)	(3,033)	(7,120)
Net cash generated from operating activities		10,338	7,639	23,816
Cash flow from investing activities
Acquisition of subsidiary undertakings		(2,774)	-	(26,562)
Net cash acquired with subsidiary undertakings	8	905	-	1,555
Purchase of property, plant and equipment		(4,491)	(2,207)	(4,439)
Purchase of software licences		(334)	(319)	(1,024)
Expenditure on capitalised product development		(1,692)	(1,604)	(3,382)
Net cash used in investing activities		(8,386)	(4,130)	(33,852)
Cash flow from financing activities
Issue of ordinary share capital		116	56	415
Purchase of own shares into employee benefit trust		(3,398)	(874)	(3,957)
Proceeds from employee SAYE scheme to purchase shares from employee benefit trust		1	347	371
Dividend paid to Company's shareholders	13	(3,624)	(3,233)	(4,881)
(Repayment)/drawdown of bank loans		(13)	-	17,559
Net cash used in financing activities		(6,918)	(3,704)	9,507
Net decrease in cash and cash equivalents		(4,966)	(195)	(529)
Effect of exchange rate changes		56	80	240
Cash and cash equivalents at beginning of period		16,658	16,947	16,947
Cash and cash equivalents at end of period	11	11,748	16,832	16,658

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 2013 as available on our website www.anite.com.

1.1  Information regarding future accounting standards

The following standards or improvements to existing standards are mandatory for the first time in the Group's accounting period beginning on 1 May 2013. No other new standards have been early adopted. The Group's October 2013 Interim Report has adopted the following new standards and amendments to existing standards with no significant impact on the Group's financial performance or position:

Amendments to IFRS 7 "Offsetting financial assets and financial liabilities"

IFRS 13 "Fair value measurement"

IAS 19 (revised 2011) "Employee benefits"

1.2  Other information

The financial information contained in this Interim Report does not constitute statutory accounts within the meaning of Section 434 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 2013 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 2013 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 8 December 2013, 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 2013	Six months ended  31 October 2012	Year  ended  30 April 2013
	Note	£000	£000	£000
Own product software licences		20,353	26,588	60,234
Hardware and other third-party product		13,368	14,112	29,184
Bespoke services, systems integration and implementation of software products		3,666	3,131	6,741
Managed services		2,542	2,451	4,915
Software maintenance and support		17,544	14,902	31,435
Revenue from operations	2.2	57,473	61,184	132,509
Finance income	5	31	59	161
Total revenue		57,504	61,243	132,670

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 products, mainly software, 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 2013	£000	£000	£000	£000	£000	£000
External revenue	31,801	15,617	47,418	10,055	-	57,473
Internal revenue	-	-	-	-	988	988
Total revenue	31,801	15,617	47,418	10,055	988	58,461
Segment adjusted a profit / (loss) before tax	469	3,257	3,726	2,558	(1,228)	5,056
Net finance charges	-	-	-	-	218	218
Segment adjusted a operating profit / (loss)	469	3,257	3,726	2,558	(1,010)	5,274
Share-based payments	(139)	(86)	(225)	(119)	(326)	(670)
Amortisation of acquired intangible assets	(1,110)	(1,326)	(2,436)	-	-	(2,436)
Restructuring costs	-	-	-	-	(398)	(398)
Segment operating profit / (loss)	(780)	1,845	1,065	2,439	(1,734)	1,770
Finance income	-	-	-	-	31	31
Finance charges	-	-	-	-	(249)	(249)
Profit / (loss) from continuing operations before tax	(780)	1,845	1,065	2,439	(1,952)	1,552
Tax expense	-	-	-	-	(954)	(954)
Profit / (loss) for the period	(780)	1,845	1,065	2,439	(2,906)	598
Segment total assets	81,484	75,865	157,349	12,173	13,198	182,720

^a Profit / (loss) from operations before share-based payments, amortisation of acquired intangible assets and restructuring costs

2.2 Operating segments - primary basis (continued)

	Handset Testing	Network Testing	Total Wireless	Travel	Group	Total
Six months ended 31 October 2012	£000	£000	£000	£000	£000	£000
External revenue	40,491	11,802	52,293	8,891	-	61,184
Internal revenue	-	-	-	-	1,027	1,027
Total revenue	40,491	11,802	52,293	8,891	1,027	62,211
Segment adjusted a profit / (loss) before tax	11,435	2,561	13,996	1,661	(1,399)	14,258
Net finance charges	-	-	-	-	45	45
Segment adjusted a operating profit / (loss)	11,435	2,561	13,996	1,661	(1,354)	14,303
Share-based payments	(408)	(100)	(508)	(146)	(1,112)	(1,766)
Amortisation of acquired intangible assets	-	(1,206)	(1,206)	-	-	(1,206)
Segment operating profit / (loss)	11,027	1,255	12,282	1,515	(2,466)	11,331
Finance income	-	-	-	-	59	59
Finance charges	-	-	-	-	(104)	(104)
Profit / (loss) from continuing operations before tax	11,027	1,255	12,282	1,515	(2,511)	11,286
Tax expense	-	-	-	-	(3,070)	(3,070)
Profit / (loss) for the period	11,027	1,255	12,282	1,515	(5,581)	8,216
Segment total assets	41,294	69,805	111,099	14,725	22,676	148,500

^a Profit / (loss) from operations before share-based payments and amortisation of acquired intangible assets

2.2 Operating segments - primary basis (continued)

	Handset Testing	Network Testing	Total Wireless	Travel	Group	Total
Year ended 30 April 2013	£000	£000	£000	£000	£000	£000
External revenue	87,031	26,082	113,113	19,396	-	132,509
Internal revenue	-	-	-	-	2,129	2,129
Total revenue	87,031	26,082	113,113	19,396	2,129	134,638
Segment adjusted a profit / (loss) before tax	26,315	5,567	31,882	4,775	(2,391)	34,266
Net finance charges	-	-	-	-	169	169
Segment adjusted a operating profit / (loss)	26,315	5,567	31,882	4,775	(2,222)	34,435
Share-based payments	(800)	(50)	(850)	(237)	(2,350)	(3,437)
Amortisation of acquired intangible assets	(554)	(2,460)	(3,014)	-	-	(3,014)
Restructuring costs	-	-	-	-	(1,162)	(1,162)
Segment operating profit / (loss)	24,961	3,057	28,018	4,538	(5,734)	26,822
Finance income	-	-	-	-	161	161
Finance charges	-	-	-	-	(330)	(330)
Profit / (loss) from continuing operations before tax	24,961	3,057	28,018	4,538	(5,903)	26,653
Tax expense	-	-	-	-	(7,321)	(7,321)
Profit / (loss) for the period	24,961	3,057	28,018	4,538	(13,224)	19,332
Segment total assets	84,998	73,721	158,719	12,078	22,729	193,526

^a Profit / (loss) from operations before share-based payments, amortisation of acquired intangible assets and restructuring costs

2.3 Operating expenses

	Six months ended  31 October 2013	Six months ended  31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Distribution costs
- amortisation of acquired intangible assets	1,347	1,041	2,223
- other underlying operating expenses	5,914	4,946	11,122
	7,261	5,987	13,345
Research and development
- amortisation of internally generated assets	1,381	1,074	2,161
- other underlying operating expenses	8,549	7,339	15,549
	9,930	8,413	17,710
- amortisation of acquired intangible assets	1,089	165	791
	11,019	8,578	18,501
Administrative expenses
- share-based payments	670	1,766	3,437
- restructuring costs	398	-	1,162
- other underlying operating expenses	9,944	8,257	18,043
	11,012	10,023	22,642
Total operating expenses	29,292	24,588	54,488
Analysed as:
- amortisation of acquired intangible assets	2,436	1,206	3,014
- restructuring costs	398	-	1,162
- share-based payments	670	1,766	3,437
One-off and non-trading operating expenses excluded from adjusted profit	3,504	2,972	7,613
- amortisation of internally generated assets	1,381	1,074	2,161
- other underlying operating expenses	24,407	20,542	44,714
Total operating expenses	29,292	24,588	54,488

3 Restructuring costs

Restructuring costs incurred in the year primarily relate to the costs incurred on acquisition of Genetel SAS.

The restructuring costs incurred in the prior period primarily relate to the costs incurred on acquisition of the Propsim business and its integration into the Handset Testing division.

	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Costs incurred on acquisition of subsidiaries	398	-	1,154
Net property provision established	-	-	8
Restructuring costs	398	-	1,162

4 SHARE-BASED PAYMENTS

	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Equity settled	670	1,176	2,211
Cash settled	-	590	1,226
Share-based payments charge	670	1,766	3,437

The Group does not operate separate cash-settled share-based payment arrangements; however, the employer's NIC liability arising on the outstanding awards is treated as such an arrangement for accounting purposes.

5 Net finance charge

	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Finance income
Interest receivable and similar income	8	1	26
Interest on short-term deposits	6	24	76
Interest on extended payment terms	17	34	59
Total finance income	31	59	161
Finance charges
Bank loans and overdrafts	(207)	-	(151)
Other loans/commitment fees	(37)	(83)	(149)
Other interest	(5)	-	(6)
Unwinding of discount on provisions a	-	(21)	(24)
Total finance charges	(249)	(104)	(330)
Net finance charge	(218)	(45)	(169)

a  The unwinding of discount on provisions relates to property provisions.

6 tax expense

Continuing operations	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Current tax
UK corporation tax	276	2,128	4,522
Foreign tax	863	1,391	3,467
	1,139	3,519	7,989
Adjustments in respect of prior years
UK corporation tax	-	-	328
Foreign tax	-	-	33
	-	-	361
Total current tax expense	1,139	3,519	8,350
Deferred tax
UK	211	(48)	(308)
Foreign	(396)	(401)	(721)
Total deferred tax credit	(185)	(449)	(1,029)
Total income tax expense	954	3,070	7,321

Income tax for the interim period is charged at 26.4% (October 2012: 27.0%), representing the weighted average of the estimated annual effective income tax rate expected to apply to adjusted profit for the full year in each jurisdiction and major category of income within continuing operations.  The equivalent weighted average rate on the statutory profit is 61.5% (October 2012: 27.2%).

Tax charge / (credit) taken to equity	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	£000	£000	£000
Deferred tax relating to the translation adjustment to amortisation of acquired intangible assets	119	(31)	19
UK corporation tax relating to foreign exchange	-	-	(317)
Income tax relating to components of other comprehensive income	119	(31)	(298)
Deferred tax relating to share-based payments	1,593	(536)	(40)
Current tax relating to share-based payments	(327)	-	(715)
Total tax charge / (credit) taken directly to equity	1,385	(567)	(1,053)

7 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 2013	Six months ended 31 October 2012	Year  ended 30 April 2013	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
EPS summary
Basic EPS	0.2p	2.9p	6.8p	0.2p	2.7p	6.3p
Adjusted EPS b	1.3p	3.7p	8.9p	1.2p	3.4p	8.3p
	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April 2013
	Pence per share	Pence per share	Pence per share	£000	£000	£000
Profit for the period	0.2	2.9	6.8	598	8,216	19,332
Reconciliation to adjusted profit:
Amortisation of acquired intangible assets (net of tax)	0.7	0.3	0.7	1,835	763	2,108
Share-based payments (net of tax)	0.3	0.5	1.0	891	1,425	2,742
Restructuring costs (net of tax)	0.1	-	0.4	398	-	1,162
Adjusted profit a	1.3	3.7	8.9	3,722	10,404	25,344

a  Profit from continuing businesses before amortisation of acquired intangible assets, share-based payments and restructuring costs.

b  Earnings per share on adjusted profit ^a have been included to give a clearer understanding of the results of the continuing businesses.

Number of shares ('000)	Six months ended 31 October 2013	Six months ended 31 October 2012	Year  ended 30 April  2013
Weighted average number of shares in issue - used to calculate basic earnings per share	285,328	284,009	285,488
Effect of potentially dilutive ordinary shares
- SAYE and share option schemes	13,067	24,034	20,389
Number of shares used to calculate diluted earnings per share	298,395	308,043	305,877

8 acquisitions

On 1 July 2013, Anite plc acquired 100% control of Genetel SAS, a full service distributor of network testing products to French-speaking markets. The acquisition will enable Anite plc to strengthen its position in the French network testing market as LTE 4G networks roll-out across Europe.

Provisional recognition of assets acquired and liabilities assumed are:

	Fair value
	£000
Intangible assets - customer-related	1,438
Intangible assets - other	165
Fixed assets	32
Inventory	43
Trade and other receivables	1,793
Net cash	905
Trade and other payables	(1,861)
Deferred tax liability	(479)
Total	2,036
Consideration
Cash	2,036

Genetel contributed £1.0m to Group revenue and £0.2m to Group operating profit for the period between 1 July 2013 and the balance sheet date.

The total amount paid in the period, disclosed in the cash flow statement under the heading of "acquisition of subsidiary undertakings", includes both the £2,036,000 consideration paid for the acquisition of Genetel and £738,000 purchase price adjustment relating to the acquisition of the Propsim Channel Emulation business that completed on 31 January 2013. The initial accounting for the Propsim acquisition is now complete.

9 trade and other receivables

	31 October 2013	31 October 2012	30 April 2013
	£000	£000	£000
Trade receivables	31,114	28,217	37,939
Less: provision for impairment of trade receivables	(936)	(698)	(526)
Trade receivables net of provision	30,178	27,519	37,413
Other receivables	2,308	901	1,561
Prepayments	4,421	2,917	3,013
Accrued income	2,346	4,052	5,639
	39,253	35,389	47,626

10 trade and other payables

	31 October 2013	31 October 2012	30 April 2013
	£000	£000	£000
Trade creditors	8,102	6,436	8,268
Other taxes and social security	1,722	1,456	2,026
Deferred income	20,862	18,117	21,644
Accruals	11,855	10,012	13,755
Other creditors	604	404	944
	43,145	36,425	46,637

11 Net debt

	31 October 2013	31 October 2012	30 April 2013
	£000	£000	£000
Cash and cash equivalents	11,748	16,832	16,658
Bank borrowings - current	(153)	-	(17,559)
Bank borrowings - non-current	(17,641)	-	-
Net (debt) / cash	(6,046)	16,832	(901)

£17,641,000 of bank borrowings at 31 October 2013, drawn under the terms of the revolving credit facility, are not repayable until October 2016 other than at the Company's discretion.  Due to current trading this amount has been re-classified in the period as non-current as there is no certainty of early repayment.

12 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 2013	300,395,476	33,794	50,000	50
Issued during the period	217,412	25	-	-
At 31 October 2013	300,612,888	33,819	50,000	50

13 Dividends

The Company paid a final dividend of 1.265p (2012: 1.125p) per share totalling £3,623,745 (2012: £3,233,342) on 29 October 2013.

14 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 consider 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 30 April 2013.

15 RELATED PARTIES

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.  There have been no material related party transactions in the period.

16 POST BALANCE SHEET EVENTS

There have been no material events post the balance sheet date that require disclosure.

 

END

 

 

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