Half Yearly Report

RNS Number : 5385Y

Anite PLC

02 December 2014

 



Tuesday, 2 December 2014

                                                                                               ANITE PLC

Half year results for the six months ended 31 October 2014

Anite plc ("Anite" or "the Company" or "the Group"), a leading supplier of test and measurement solutions to the international wireless industry, today announces its half year results for the six months ended 31 October 2014.

Financial highlights (adjusted) ¹:

·      Revenue up 3% to £49.0m (2013: £47.4m)

·      Operating profit up 89% to £5.1m (2013: £2.7m)

·      Profit before tax doubled to £5.1m (2013: £2.5m)

·      Diluted earnings per share up 117% to 1.3p (2013: 0.6p)

·      Net cash of £29.8m (31 October 2013: net debt £6.0m; 30 April 2014: net cash £6.1m)

·      Interim dividend up 10% at 0.63p per share (2013: 0.575p per share) 

Statutory results:

·      Revenue from continuing operations of £49.0m (2013: £47.4m)

·      Operating profit from continuing operations of £1.0m (2013: loss of £0.7m), after:

-        Share-based payments charge of £0.3m (2013: £0.6m)

-        amortisation of acquired intangible assets of £2.4m (2013: £2.4m)

-        acquisition costs of £1.4m (2013: £0.4m)

·      Profit from continuing operations before tax of £1.0m (2013: loss of £0.9m)

·      Profit for the period of £32.5m (2013: £0.6m)

-        includes profit from disposed Travel business of £32.0m (2013: £1.9m)

·      Basic earnings per share from continuing operations 0.2p (2013: loss per share of 0.5p); Diluted earnings per share 0.1p (2013: loss per share 0.5p)

Operating highlights:

·      First period of results as a specialist wireless business

-        £45m disposal of Travel completed on 29 May 2014

·      Handset Testing:  revenue and profit growth achieved despite a challenging market backdrop

-        launch of Anite 9000 v2.5 platform

·      Network Testing:  progressive improvement after relatively slow start to year

-        $30m acquisition of Xceed completed on 2 October 2014

·      Group order intake down 5% to £49.4m (2013: £51.8m)

-        closing order book of £34.7m (31 October 2013: £32.9m; 30 April 2014: £32.5m)

-        Handset Testing product orders up 20%

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

Christopher Humphrey, Chief Executive, said:

"After a relatively slow start to the year, we finished the period with encouraging momentum building in both businesses.  Specific sales opportunities are developing well and give us confidence for the year as a whole as we enter this seasonally important trading period."

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/Giles Robinson/Jack Holden

An analysts' meeting will be held today at 9.15 for 9.30am at the London Stock Exchange
10 Paternoster Square, London, EC4M 7LS

Notes to editors:

Anite plc is a leading supplier of test and measurement solutions to the international wireless market. It provides testing, measurement, optimisation and analytics systems based on its specialist sector knowledge and its proprietary software and hardware products. Customers include major manufacturers of mobile devices, chipsets and network equipment, mobile network operators, regulatory authorities, and independent test houses.

Its 500+ staff work from headquarters in the UK and from offices in 14 countries across 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 2014

All references to adjusted profit relate to continuing operations for the period before share-based payments, amortisation of acquired intangible assets and acquisition 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 has been a busy period for Anite, with significant corporate activity transforming the Group into a specialist wireless business.  Underlying trading has been generally encouraging, although not without challenges, with somewhat mixed market conditions and currency headwinds.  Overall trading momentum has improved through the period. 

On 29 May 2014, in line with our long stated strategy, we disposed of our Travel software business.  This has been treated as a discontinued operation in the results for this half year and the comparative period.  The disposal of Travel released capital which considerably strengthened our balance sheet, some of which we subsequently re-invested through the purchase of Xceed Technologies Inc. on 2 October 2014.  This acquisition significantly enhances the data analytics' capabilities of our Network Testing business in a fast growing market segment.  Xceed's results are included in this report for the short period since acquisition and were in line with expectations. 

Market conditions in the wireless industry remain challenging, with pockets of exciting growth and some areas of reduced demand.  Corporate activity continues to impact many of the main industry players and a number of traditional tier one handset manufacturers have reported trading pressure particularly from the growing presence of Chinese competitors.

Against this backdrop, Handset Testing had a reasonable half year, including a strong finish to the period.  Encouraging demand from Asia Pacific offset weaknesses in the other regions whilst, in product terms, there was good demand for Interoperability Testing and Channel Emulators.  Although revenue growth of 6% was slightly below the business' high single digit target, order intake for new product (as opposed to maintenance/support renewals) grew at 20% and supports the business' full year expectations.  Margins were reasonable in the period and fixed costs were lower as a result of the cost control actions taken at the end of the previous year.  This resulted in a 9% operating margin compared to 1% twelve months ago. 

Network Testing had a slow start to the year as stated in the IMS announcement in September.  Subsequently the business has seen a pickup in demand which resulted in organic growth (ie. at constant currency rates and excluding the impact of acquisitions/disposals) in underlying revenue of around 4% compared to last year's very strong first half.  As planned, we have increased the level of investment in product development which we expect to help contribute to future growth, but the impact of this has meant that the business' profitability took a small step backwards in the first half of the year.  In addition, Network Testing's results were affected by the translation impact of a 6% weakening of the Euro against Sterling compared to twelve months ago.

Group results summary

Overall in the first half of the year, the Group reported a 3% increase in revenue to £49.0m (2013:  £47.4m) and an 89% increase in adjusted operating profit to £5.1m (2013: £2.7m) against what were weak comparatives last year.  Organic increases in revenue and adjusted operating profit were 6% and 104% respectively.  The improved profitability came about partly through the reported revenue growth, but mainly because of an overall reduction in fixed costs including the benefit of the cost reduction exercise undertaken in Handset Testing at the last financial year end.  Adjusted diluted earnings per share more than doubled to 1.3p (2013: 0.6p).

Group order intake in the six month period was down 5% to £49.4m (2013: £51.8m).  Within this, Network Testing order intake was flat year on year, with overall order intake in Handset Testing down 7% following the signature of a number of large multi-year maintenance renewal contracts in the comparative period.  Including orders for Xceed products, the Group's closing order book was up 5% compared to last year at £34.7m (31 October 2013: £32.9m; 30 April 2014: £32.5m), with a greater bias this year towards short-term product orders rather than longer-term maintenance/support contracts. 

Following the disposal of Travel, the Group has significantly increased cash resources. The net proceeds of the disposal offset by the cost of the Xceed acquisition in aggregate increased funds by £20.8m.  Improved working capital levels helped ensure strong operating cash generation in the first half of the year of £11.7m (2013: £12.3m).  Net cash as at 31 October 2014 was £29.8m (30 April 2014: net cash of £6.1m; 31 October 2013: net debt of £6.0m).  The Group retains significant further financial flexibility at the period end in addition to its net cash, with £10.0m of undrawn overdraft facility and £20.0m of undrawn revolving credit facility. 

Dividend

The Board is declaring an interim dividend of 0.63p per share, an increase of 10% on the previous year (2013: 0.575p per share). The increase is in line with the Board's stated dividend policy and reflects a strong balance sheet and improving prospects.  The interim dividend will be paid on 13 February 2015 to shareholders on the register at 30 January 2015.

Outlook 

It has become apparent over the last few financial years that trading in the Handset Testing business has become increasingly biased towards the second half.  Although both businesses have limited pipeline visibility, the Board expects that the Group's second half performance will improve on the first half.

In addition to this seasonality, there are a number of specific factors that are expected to deliver incremental performance improvements in both businesses in the second half.  In Handset Testing these include specific product, technology and customer related revenue catalysts already identified as opportunities in the pipeline of potential new orders.  In Network Testing we expect to see growth from recent new product launches, returns from the increased first half R&D investment and the initial benefit from the Xceed acquisition.   

Given the recent momentum we have seen across the Group and the specific opportunities identified for the second half, the Board remains confident of meeting its full year expectations.

Clay Brendish Chairman                                  Christopher Humphrey Chief Executive

1 December 2014

OPERATING REVIEW

Anite's continuing operations comprise two businesses which both operate in the wireless test and measurement market: Handset Testing and Network Testing.

The results for the Group show a reasonable first half performance with solid revenue growth and significantly improved profitability, specifically in the Handset Testing business which had a weak comparative period.  Underlying revenue grew in the Network Testing business against a strong comparative period although this was offset by the translation impact on its Euro denominated results of that currency weakening 6% against Sterling compared to last year.    

Handset Testing

Handset Testing performed well in the period, with revenue growing 6% compared to last year to £33.6m (2013: £31.8m).  On a constant currency basis the organic revenue increase was 8%.  The operational gearing benefit of the increased revenue, augmented by reduced fixed costs, resulted in a significant increase in adjusted operating profit to £3.2m from £0.5m last year.  Order intake in the period was down 7% to £33.2m (2013: £35.7m) although this was due to the comparative period including a number of multi-year support/maintenance renewals which were not repeated this year.  Excluding the impact of support/maintenance renewals, order intake for products was healthy, reporting around 20% growth compared to last year.

Market conditions for the Handset Testing business remained challenging across the period, with pockets of growth offset by areas of weak demand.  The industry continues to suffer from corporate consolidation with, for example, the takeovers of Nokia and Motorola by Microsoft and Lenovo respectively.  Additionally the market has been adversely impacted by manufacturers exiting the wireless modem market including Broadcom and Ericsson who both announced closures in the period.

Against this backdrop, the revenue increase achieved by the business was a reasonable performance.  Asia Pacific experienced strong demand, with successes both supporting tier one international manufacturers supplying the Chinese market and also supporting the export aspirations of domestic Chinese manufacturers.  The strength in Asia Pacific was offset by continued weaker demand in the US and Europe.  From a product perspective, good growth was achieved in Interoperability Testing ("IOT") and also with the Propsim Channel Emulator product acquired in 2013.

Margins were reasonable across the period with only limited impact due to the challenging market conditions.  The net revenue percentage (revenue less third party hardware costs, as a percentage of revenue) was a healthy 72%, three percentage points down on the corresponding period last year.  Margins continue to be supported by a strong level of maintenance revenue which increased 10% to £14.4m (2013: £13.1m). 

One of the main features of the first half was the launch in July of the new version of the Anite 9000 test platform on which our Handset Testing products are all based.  This launch was the culmination of significant R&D effort and investment over the last twelve months and represents a step-change in Anite's hardware offering, providing, for the first time, a single box containing multiple Radio Access technologies (2G, 3G and LTE 4G).  Additional product developments in the period included enhancements to the Channel Emulator product offering, especially progressing "Virtual Drive Testing" ("VDT") capabilities.

Within fixed costs, we continue to invest in R&D, with a charge to the income statement of £7.4m (2013: £7.8m), including £0.9m amortisation of previously capitalised costs (2013: £1.3m).  An additional £1.2m of development cost was capitalised in the period (2013: £1.4m) reflecting investment incurred in maintaining market leadership in conformance and interoperability test scripts. 

Other fixed costs in Handset Testing decreased from £15.4m last year to £13.7m.  This is partly following the cost reduction programme that was implemented at the end of the last year, with further incremental savings achieved through the period.  After these, the net operating margin in Handset Testing was 9% (2013: 1%).  Total headcount in Handset Testing at 31 October 2014, including contractors, was 336 (2013: 355). 

Looking forward, the Board believes that Handset Testing should see continued growth over the medium term with opportunities being driven by technological change, customer developments and specific Anite initiatives aimed at expanding our addressable market and gaining market share.  

Growth in mobile data traffic continues unabated and network operators are deploying ever more complex solutions to cope with the increased demand.   The requirements for testing of devices grow with the complexity of the networks that they are connected to and that provides continued opportunity for Anite.  Specifically the business is currently seeing opportunities in VoLTE (Voice over LTE), and in the technical innovations supporting LTE-Advanced such as MIMO (Multiple Input Multiple Output) and Carrier Aggregation.   

We continue to work closely with both existing and potential customers on developing IOT scripts specifically addressing testing challenges applicable to their networks.  These are expected to contribute to second half growth, as are certain of the opportunities for expansion of our addressable market. 

Network Testing

Network Testing performed well over the half with a relatively slow start to the year offset by a stronger second quarter.  Reported revenue for the period was essentially flat on the prior year at £15.4m (2013: £15.6m).  Order intake was also unchanged at £16.2m (2013: £16.1m).  Increased investment, largely in product development, meant that reported adjusted operating profit was down 13% at £2.8m (2013: £3.2m).  The results were impacted by both acquisition activity and adverse currency translation variances.  Adjusting for these factors, underlying organic revenue growth was 4%, with the underlying organic adjusted operating profit reduction 5%. 

Market conditions for the Network Testing business have been reasonable overall, with a relatively high level of activity towards the latter part of the period following a slow start.  Demand has been particularly strong in Asia Pacific which offset some weakness in North America specifically in the early months of the year.  There has been good demand for products across the range, with those servicing the indoor testing segment particularly strong, including the newly launched Nemo Walker Air product that allows indoor benchmarking. 

Margins in the business were also strong with the net revenue margin increasing to 73% (2013:  69%).  The increase was mainly due to changes in the product mix with more software and a shift towards the in-house scanner product compared to the high levels of third party scanners sold last year.

The increase in net revenue generated was offset by increased fixed costs as we accelerated investment in the business to drive future growth aspirations.  The income statement charge for investment in R&D in Network Testing increased to £2.5m (2013: £2.1m) including £0.2m amortisation of previously capitalised costs (2013: £0.1m) and the first month's R&D cost from Xceed.  In addition, £1.4m of R&D costs (2013: £0.3m) were capitalised in the period, largely in relation to development of a new benchmarking product, Nemo Invex II, which was launched in November and provides support for the latest standards including LTE-Advanced and VoLTE. 

Other fixed costs in Network Testing were also up by £0.5m, of which £0.2m were costs associated with the first month's trading post acquisition of the Xceed business and £0.3m were additional sales and support costs.  The net operating margin in Network Testing was 18% (2013: 21%).  Following the 54 staff and 13 contractors taken on with Xceed, total headcount in Network Testing at 31 October 2014 was 215 (31 October 2013: 129).

Following the recent investment we have been making in the Network Testing business, we anticipate a strong second half performance.  Additionally, the acquisition of Xceed materially strengthens our data analytics capability.  This is of increasing value to our customers as they seek to interpret network performance data from a wider range of sources to ensure that they are delivering optimal customer experience and network performance.  We believe the combination of Xceed with Anite's existing product portfolio and global sales channel will help support sustainable growth in the Network Testing business. 

FINANCIAL REVIEW

Impact of acquisitions and disposals

These results are impacted by two acquisitions and one disposal made over the last two financial years:

·      Disposal in the first half of this financial year on 29 May 2014 of Anite Travel Ltd ("Travel") and its wholly owned subsidiary Anite Travel Pty Ltd that previously comprised the Travel division.  The business was sold for £45.0m, of which £1.7m was placed in escrow pending the resolution of certain commercial considerations.  The gain on sale of £31.7m and the profit after tax from Travel for the one month until disposal of £0.3m are included within profit from discontinued operations.  Comparative numbers in the income statement are similarly adjusted.  Travel's underlying assets and liabilities are included as held for sale on the balance sheet at 30 April 2014 but remain disclosed within individual line items at 31 October 2013. 

·      Acquisition in the first half of this financial year on 2 October 2014 of Xceed Technologies Inc. ("Xceed") for $30.0m plus further deferred consideration of up to $5.0m depending on the business' performance over the period to 30 April 2016.  Acquisition and integration costs were $2.4m.  The results for this acquisition are included within the Network Testing business unit for the one month since acquisition during which time it broke even with revenue of £0.4m. 

·      Acquisition in the first half of the last financial year of Genetel SAS on 1 July 2013 for £1.2m plus acquisition costs of £0.4m.  The results for this acquisition are included within the Network Testing business unit.  In the comparative period they were included for the four months post acquisition.  In the current period Genetel contributed £0.7m revenue and £0.1m operating profit.   

The results from the acquisitions and disposal have been excluded when calculating the underlying organic growth in revenue and profit referred to throughout 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 2014	Six months ended 31 Oct 2013
Euro weakened against Sterling	6%	1.25	1.17
US Dollar weakened against Sterling	7%	1.67	1.56

Period end rates - (primarily impacting balance sheet)

		31 Oct 2014	30 April 2014
Euro weakened against Sterling	4%	1.27	1.22
US Dollar strengthened against Sterling	5%	1.60	1.68

The net effect of these changes on the translation of results from overseas subsidiaries was to decrease revenue by £1.6m 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 a transaction loss of £0.6m making the total adverse effect of currency fluctuations on profits £0.9m year on year, of which £0.7m was in the Handset Testing business and £0.2m in Network Testing.

Revenue

Revenue from continuing operations was up 3% at £49.0m (2013: £47.4m).  Adjusting for the impact of acquisitions and at constant currency, on an organic basis, revenue increased by 6%.  Geographically, revenue by destination was: Europe, Middle East & Africa (including UK) 24% (2013: 25%); the Americas 27% (2013: 31%); and Asia & Rest of World 49% (2013: 44%).  The changes in split reflected the continued trend in both businesses of demand moving to Asia Pacific at the expense of particularly North America.

Reconciliations of Adjusted and Statutory Profits

Reconciliations of adjusted EBITDA of £9.2m to the operating profit of £1.0m and adjusted operating profit of £5.1m to the reported profit before tax for the period from continuing operations of £1.0m 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:	2014	2013
	£m	£m
Adjusted EBITDA	9.2	6.8
Depreciation	(2.6)	(2.3)
Amortisation of intangible assets	(1.5)	(1.8)
Adjusted operating profit	5.1	2.7
Share-based payments	(0.3)	(0.6)
Amortisation of acquired intangible assets	(2.4)	(2.4)
Acquisition costs	(1.4)	(0.4)
Operating profit / (loss)	1.0	(0.7)

Half year ended 31 October:	2014	2013
	£m	£m
Adjusted operating profit	5.1	2.7
Net finance charges	-	(0.2)
Adjusted profit before tax	5.1	2.5
Share-based payments	(0.3)	(0.6)
Amortisation of acquired intangible assets	(2.4)	(2.4)
Acquisition costs	(1.4)	(0.4)
Profit / (loss) from continuing operations before tax	1.0	(0.9)

Cost of sales

Cost of sales increased 2% to £21.7m (2013:  £21.3m).  Within cost of sales, variable hardware/third party costs increased 3% to £13.4m (2013: £13.0m), broadly in line with the increase in revenue.  Other costs of sales, which are predominantly fixed and made up of employee costs, were essentially unchanged at £8.3m (2013:  £8.4m)  The gross profit margin was also essentially unchanged at 56% (2013: 55%). 

Operating expenses

Total operating expenses in the period reduced to £26.3m (2013: £26.7m).  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, reduced to £22.2m (2013: £23.3m), mainly due to cost reduction actions taken in the Handset Testing business in response to the lower trading volumes experienced last year.

During the period, unallocated Group corporate costs reduced slightly to £0.9m (2013: £1.0m) due to lower Group staff costs.

After the underlying operating expenses, adjusted operating profit increased 89% to £5.1m (2013: £2.7m).  On an organic basis, adjusted operating profit increased 104%. Adjusted EBITDA also grew by 35% to £9.2m (2013: £6.8m).

One-off and non-cash expenses excluded from adjusted profit calculations totalled £4.1m (2013: £3.4m).  This comprised amortisation of acquired intangible assets of £2.4m (2013: £2.4m), a share-based payments charge of £0.3m (2013: £0.6m) and acquisition costs of £1.4m (2013: £0.4m).  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 write-back of previously recognised charges.  After these non-operational costs, the Group reported an overall operating profit from continuing operations of £1.0m (2013: loss of £0.7m).

Group finance costs

There was no net finance charge/income in the period (2013: net charge of £0.2m).  The reduction reflects the payback of the Group's drawn debt following the disposal of Travel.

Taxation

The tax charge for the period on continuing operations was £0.5m (2013: £0.4m).  The tax rate on the statutory operating profit was 53.9% (2013: (42.4)%) with the high rate reflecting the impact of disallowable expenses e.g. £1.4m acquisition costs.  The underlying tax rate on adjusted profit before tax was 22.7% (2013: 31.0 %).  

Earnings per share

After taking account of the factors described above, adjusted basic earnings per share for continuing activities increased 133% to 1.4p (2013: 0.6p), with adjusted diluted earnings per share similarly increasing to 1.3p (2013: 0.6p).  The overall basic earnings per share for continuing operations were 0.2p (2013: loss per share of 0.5p).

Balance sheet

The majority of movements in the balance sheet from 30 April 2014 to 31 October 2014 result from the disposal of Travel and the subsequent acquisition of Xceed.  In particular this is the main driver behind the increase in non-current assets from £103.6m to £127.3m. 

Within current assets, inventory decreased by £1.5m from £10.1m to £8.6m, primarily due to a reclassification to fixed assets of previously classified inventory that is loaned to customers for collaboration purposes.

Provisions have increased from £5.0m at 30 April 2014 to £7.1m at 31 October 2014 due to the inclusion of £2.2m of potential deferred consideration on the Xceed acquisition.  The total potential payment is $5.0m (£3.1m) and is due for final settlement by 30 June 2016 at the latest.       

Cash flow

Cash generation in the period was strong.  Cash generated from operations (continuing and discontinued) was £11.7m (2013: £12.3m), with the reduction due partly to Travel only being included for one month this year and partly because the comparative period included an exceptionally high opening working capital position that unwound through that six months. 

The net cash inflow from acquisitions/disposals was £20.8m, including the sale of Travel and the purchase of Xceed.  Capital expenditure in the period was £0.9m (2013: £4.8m) with last year seeing significant purchases to support development requirements in Handset Testing.  A further £2.6m was incurred on capitalised development expenditure (2013: £1.7m), which represented the cost of writing conformance and interoperability test cases for Handset Testing and development of the benchmarking product in Network Testing.

Payments for corporation tax were £2.0m (2013: £1.7m) and dividends paid in the period were £3.7m (2013: £3.6m).  After these movements, net cash increased by £23.7m (2013: decrease of £5.1m).

Borrowings and facilities

At 31 October 2014 the Group had net cash of £29.8m (31 October 2013: net debt of £6.0m; 30 April 2014: net cash of £6.1m).  The Group had no gross borrowings at 31 October 2014 (31 October 2013: £17.8m; 30 April 2014: £10.9m).  The Group retains a revolving credit facility of £20.0m available until 31 October 2016.  In addition, the Group has a net overdraft facility of £10.0m (31 October 2013 and 30 April 2014: £10.0m).  The overdraft facility was undrawn at 31 October 2014.

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 2014.  A detailed explanation of these risks is set out on pages 29-31 of that 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, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4R;

·      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

Neil Bass

Company Secretary

1 December 2014

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 2014 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 18.  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 2014 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

1 December 2014

Condensed consolidated income statement

		Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Continuing operations
Revenue	2.1	48,984	47,418	109,216
Variable cost of sales		(13,416)	(12,961)	(29,504)
Net revenue		35,568	34,457	79,712
Fixed cost of sales		(8,285)	(8,411)	(16,866)
Gross profit		27,283	26,046	62,846
Distribution costs		(6,214)	(6,668)	(13,120)
Research and development		(11,028)	(11,062)	(21,865)
Administrative expenses		(9,065)	(8,993)	(18,545)
Operating expenses	2.3	(26,307)	(26,723)	(53,530)
Operating profit before share-based payments, amortisation of acquired intangible assets and restructuring costs		5,057	2,708	15,324
Share-based payments	5	(297)	(551)	(188)
Amortisation of acquired intangible assets		(2,435)	(2,436)	(4,832)
Acquisition and restructuring costs	3	(1,349)	(398)	(988)
Operating profit / (loss)		976	(677)	9,316
Finance income	6	84	13	25
Finance charges	6	(97)	(249)	(469)
Profit / (loss) from continuing operations before tax		963	(913)	8,872
Tax expense	7	(519)	(392)	(1,090)
Profit / (loss) from continuing operations		444	(1,305)	7,782
Profit from discontinued operations	4	32,013	1,903	4,489
Profit for the period - attributable to equity holders of the parent		32,457	598	12,271
Continuing operations
Earnings per share - basic	8	0.2p	(0.5)p	2.7p
- diluted		0.1p	(0.5)p	2.6p

Condensed consolidated statement of comprehensive income

		Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Retained profit for the period		32,457	598	12,271
Exchange differences arising on translation of foreign operations		(3,458)	1,230	(2,554)
Tax (charge) / credit taken directly to other comprehensive income	7	185	(119)	721
Total comprehensive income		29,184	1,709	10,438

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 2013 Changes in equity for the period to 31 October 2013	33,844	25,901	(11,664)	722	2,741	(8,624)	66,292	109,212
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	-	-	2,092	-	-	-	(2,091)	1
Transfer of SIP shares to employees	-	-	22	-	-	-	(22)	-
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
Changes in equity for the period to 30 April 2014
Total comprehensive income for the period	-	-	-	-	-	(2,944)	11,673	8,729
Issue of share capital	4	15	-	-	-	-	-	19
Redemption of preference shares	(50)	-	-	-	50	-	-	-
Purchase of own shares into employee benefit trust	-	-	(71)	-	-	-	-	(71)
Gain on sale of shares from employee benefit trust	-	-	39	-	-	-	(40)	(1)
Transfer of SIP shares to employees	-	-	19	-	-	-	(19)	-
Recognition of equity-settled share-based payments after tax	-	-	-	-	-	-	797	797
Dividend paid	-	-	-	-	-	-	(1,648)	(1,648)
Balance at 30 April 2014 (audited)	33,823	26,007	(12,961)	722	2,791	(10,457)	71,320	111,245
Changes in equity for the period to 31 October 2014
Total comprehensive income for the period	-	-	-	-	-	(3,273)	32,457	29,184
Issue of share capital	30	100	-	-	-	-	-	130
Purchase of own shares into employee benefit trust	-	-	(47)	-	-	-	-	(47)
Gain on sale of shares from employee benefit trust	-	-	2,462	-	-	-	(2,024)	438
Transfer of SIP shares to employees	-	-	482	-	-	-	(482)	-
Recognition of equity-settled share-based payments after tax	-	-	-	-	-	-	593	593
Dividend paid	-	-	-	-	-	-	(3,665)	(3,665)
Balance at 31 October 2014 (unaudited)	33,853	26,107	(10,064)	722	2,791	(13,730)	98,199	137,878

Condensed consolidated balance sheet

		31 October 2014	31 October 2013	30 April 2014
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Non-current assets
Goodwill		63,232	62,941	54,496
Other intangible assets		48,268	36,810	34,048
Property, plant and equipment		12,818	14,876	12,841
Deferred tax assets		2,968	3,033	2,198
		127,286	117,660	103,583
Current assets
Inventories		8,597	13,884	10,096
Trade and other receivables	10	37,839	39,253	41,627
Derivative financial assets		-	84	53
Current tax assets		1,756	91	1,463
Cash and cash equivalents	12	29,792	11,748	16,993
Assets classified as held for sale		-	-	13,499
		77,984	65,060	83,731
Total assets		205,270	182,720	187,314
Current liabilities
Trade and other payables	11	(42,505)	(40,630)	(42,084)
Bank borrowings	12	-	(153)	(10,938)
Current tax payable		(6,056)	(6,484)	(6,555)
Derivative financial liabilities		(175)	-	-
Provisions	13	(7,105)	(6,643)	(4,978)
Liabilities directly associated with assets classified as held for sale		-	-	(6,292)
		(55,841)	(53,910)	(70,847)
Non-current liabilities
Bank borrowings	12	-	(17,641)	-
Deferred tax liabilities		(11,253)	(6,435)	(4,915)
Provisions	13	(298)	(1,314)	(307)
		(11,551)	(25,390)	(5,222)
Total liabilities		(67,392)	(79,300)	(76,069)
Net assets		137,878	103,420	111,245
Equity
Issued share capital	14	33,853	33,869	33,823
Share premium account		26,107	25,992	26,007
Own shares		(10,064)	(12,948)	(12,961)
Merger reserve		722	722	722
Capital redemption reserve		2,791	2,741	2,791
Other reserves		(13,730)	(7,513)	(10,457)
Retained earnings		98,199	60,557	71,320
Total equity		137,878	103,420	111,245

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

Condensed consolidated cash flow statement

		Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Profit/(loss) for the period
Continuing operations		444	(1,305)	7,782
Discontinued operations	4	32,013	1,903	4,489
		32,457	598	12,271
Adjustments for:
Tax charge - continuing and discontinued		593	954	2,355
Net finance charges	6	12	218	416
Profit on disposal of subsidiary		(31,732)	-	-
Charged to operations discontinued in a prior period		-	-	34
Depreciation property, plant and equipment		2,602	2,396	5,387
Amortisation of intangible assets		1,492	1,798	3,575
Amortisation of acquired intangible assets		2,435	2,436	4,832
Loss on disposal of property, plant and equipment		-	2	46
Share-based payments charge	5	297	670	435
Increase/(decrease) in provisions - continuing		(68)	93	(1,436)
Decrease in provisions - discontinued		-	-	(500)
Operating cash flows before movements in working capital		8,088	9,165	27,415
Decrease/(increase) in inventories		44	(1,866)	1,922
Decrease in receivables		4,251	10,166	1,468
(Decrease)/increase in payables		(671)	(5,150)	2,164
Movements in working capital		3,624	3,150	5,554
Cash generated from operations		11,712	12,315	32,969
Interest received		74	7	12
Interest paid		(49)	(271)	(550)
Income taxes paid		(1,969)	(1,713)	(3,616)
Net cash generated from operating activities		9,768	10,338	28,815
Cash flow from investing activities
Acquisition and disposal of subsidiary undertakings		21,874	(2,774)	(2,774)
Net cash (disposed)/acquired with subsidiary undertakings		(1,035)	905	905
Purchase of property, plant and equipment		(855)	(4,491)	(6,372)
Purchase of software licences		(68)	(334)	(885)
Expenditure on capitalised product development		(2,560)	(1,692)	(3,802)
Net cash generated from/(used in) investing activities		17,356	(8,386)	(12,928)
Cash flow from financing activities
Issue of ordinary share capital		130	116	135
Purchase of own shares into employee benefit trust		(47)	(3,398)	(3,470)
Proceeds from employee SAYE scheme to purchase shares from employee benefit trust		438	1	-
Dividend paid to Company's shareholders	15	(3,665)	(3,624)	(5,272)
Repayment of bank loans		(10,938)	(13)	(6,668)
Net cash used in financing activities		(14,082)	(6,918)	(15,275)
Net increase/(decrease) in cash and cash equivalents		13,042	(4,966)	612
Effect of exchange rate changes		(243)	56	(277)
Cash and cash equivalents at beginning of period		16,993	16,658	16,658
Cash and cash equivalents at end of period	12	29,792	11,748	16,993

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 2014 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 2014. No other new standards have been early adopted. The Group's October 2014 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:

Annual improvements (2011/13) "Amendments to IFRS 1, IFRS 3, IFRS 13 & IAS 40"

IFRS 14 "Regulatory deferral accounts"

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 2014 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 2014 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 1 December 2014, 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 2014	Six months ended  31 October 2013	Year  ended  30 April 2014
	Note	£000	£000	£000
Own product software licences		18,885	19,338	47,757
Hardware and other third-party product		13,420	12,938	29,906
Software maintenance and support		16,679	15,142	31,553
Revenue from continuing operations		48,984	47,418	109,216
Finance income	6	84	13	25
Total revenue from continuing operations		49,068	47,431	109,241
Revenue from discontinued operations
Revenue	4	1,570	10,055	20,542
Finance income	6	1	18	28
Total revenue from discontinued operations		1,571	10,073	20,570
Total revenue		50,639	57,504	129,811

2.2 Operating segments - primary basis

The Group is organised into three operating segments: Handset Testing; Network Testing and Group. With the exception of Group, which performs the head office function, the operating segments derive their revenue from the sale and support of products, mainly software, relating to their relevant industry sectors.

Discontinued operations relate to the Travel business segment that was disposed on 29 May 2014.

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

	Handset Testing	Network Testing	Total Wireless	Group	Total
Six months ended 31 October 2014	£000	£000	£000	£000	£000
External revenue	33,580	15,404	48,984	-	48,984
Internal revenue	-	-	-	758	758
Total segment revenue	33,580	15,404	48,984	758	49,742
Segment adjusted 1 profit / (loss) before tax	3,165	2,754	5,919	(875)	5,044
Net finance charges	-	-	-	13	13
Segment adjusted 1 operating profit / (loss)	3,165	2,754	5,919	(862)	5,057
Share-based payments	(73)	(11)	(84)	(213)	(297)
Amortisation of acquired intangible assets	(1,039)	(1,396)	(2,435)	-	(2,435)
Acquisition and restructuring costs	-	-	-	(1,349)	(1,349)
Segment operating profit / (loss)	2,053	1,347	3,400	(2,424)	976
Finance income					84
Finance charges					(97)
Profit from continuing operations before tax					963
Tax expense					(519)
Profit from continuing operations					444
Profit from discontinued operations					32,013
Profit for the period					32,457
Segment total assets	65,785	99,143	164,928	40,342	205,270

¹ Profit / (loss) from operations before share-based payments, amortisation of acquired intangible assets and acquisition and restructuring costs

	Handset Testing	Network Testing		Total Wireless	Group	Total
Six months ended 31 October 2013	£000	£000		£000	£000	£000
External revenue	31,801	15,617		47,418	-	47,418
Internal revenue	-	-		-	988	988
Total segment revenue	31,801	15,617		47,418	988	48,406
Segment adjusted 1 profit / (loss) before tax	469	3,257		3,726	(1,254)	2,472
Net finance charges	-	-		-	236	236
Segment adjusted 1 operating profit / (loss)	469	3,257		3,726	(1,018)	2,708
Share-based payments	(139)	(86)		(225)	(326)	(551)
Amortisation of acquired intangible assets	(1,110)	(1,326)		(2,436)	-	(2,436)
Acquisition and restructuring costs	-	-		-	(398)	(398)
Segment operating (loss) / profit	(780)	1,845		1,065	(1,742)	(677)
Finance income						13
Finance charges						(249)
Loss from continuing operations before tax						(913)
Tax expense						(392)
Loss from continuing operations						(1,305)
Profit from discontinued operations						1,903
Profit for the period						598
Segment total assets	81,484	75,865		157,349	13,198	170,547

¹ Profit / (loss) from operations before share-based payments, amortisation of acquired intangible assets and acquisition and restructuring costs

	Handset Testing	Network Testing	Total Wireless	Group	Total
Year ended 30 April 2014	£000	£000	£000	£000	£000
External revenue	77,353	31,863	109,216	-	109,216
Internal revenue	-	-	-	1,696	1,696
Total segment revenue	77,353	31,863	109,216	1,696	110,912
Segment adjusted 1 profit / (loss) before tax	10,804	6,007	16,811	(1,931)	14,880
Net finance charges	-	-	-	444	444
Segment adjusted 1 operating profit / (loss)	10,804	6,007	16,811	(1,487)	15,324
Share-based payments	(118)	(173)	(291)	103	(188)
Amortisation of acquired intangible assets	(2,191)	(2,641)	(4,832)	-	(4,832)
Acquisition and restructuring costs	(484)	-	(484)	(504)	(988)
Segment operating profit / (loss)	8,011	3,193	11,204	(1,888)	9,316
Finance income					25
Finance charges					(469)
Profit from continuing operations before tax					8,872
Tax expense					(1,090)
Profit from continuing operations					7,782
Profit from discontinued operations					4,489
Profit for the period					12,271
Segment total assets	74,983	72,896	147,879	25,936	173,815

¹ Profit / (loss) from operations before share-based payments, amortisation of acquired intangible assets and acquisition and restructuring costs

2.3 Operating expenses - continuing operations

	Six months ended  31 October 2014	Six months ended  31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Distribution costs
- amortisation of acquired intangible assets	1,303	1,304	2,679
- other underlying operating expenses	4,911	5,364	10,441
	6,214	6,668	13,120
Research and development
- amortisation of internally generated assets	1,065	1,381	2,679
- other underlying operating expenses	8,831	8,549	17,033
	9,896	9,930	19,712
- amortisation of acquired intangible assets	1,132	1,132	2,153
	11,028	11,062	21,865
Administrative expenses
- share-based payments	297	551	188
- acquisition and restructuring costs	1,349	398	988
- other underlying operating expenses	7,419	8,044	17,369
	9,065	8,993	18,545
Total operating expenses	26,307	26,723	53,530
Analysed as:
- amortisation of acquired intangible assets	2,435	2,436	4,832
- acquisition and restructuring costs	1,349	398	988
- share-based payments	297	551	188
One-off and non-trading operating expenses excluded from adjusted profit	4,081	3,385	6,008
- amortisation of internally generated assets	1,065	1,381	2,679
- other underlying operating expenses	21,161	21,957	44,843
Total operating expenses	26,307	26,723	53,530

3 acquisition and Restructuring costs

Acquisition and restructuring costs incurred in the period primarily relate to the costs incurred on the acquisition of Xceed Technologies Inc.

The costs incurred in the prior period relate to the costs incurred on the acquisition of Genetel SAS and its integration into the Network Testing business.

	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Costs incurred on the acquisition and integration of Xceed	1,349	-	-
Costs incurred on the acquisition and integration of Genetel	-	398	492
Costs incurred on the acquisition and integration of Propsim	-	-	12
Reorganisation and redundancy costs	-	-	484
Acquisition and restructuring costs	1,349	398	988

4 discontinued operations

4(a) Accounting treatment

On 29 May 2014, the Group completed its disposal of the Anite Travel division with the sale of its 100% interest in the ordinary share capital of Anite Travel Limited and its subsidiary Anite Travel Systems Pty Limited.

The results of the Travel division, including the results from businesses discontinued in prior periods, are shown below:

4(b) Profit after tax relating to discontinued operations

	Period 1 May to 29 May 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Profit after tax for the period from Anite Travel
Revenue	1,570	10,055	20,542
Cost of sales	(852)	(5,036)	(10,130)
Gross profit	718	5,019	10,412
Operating expenses	(364)	(2,453)	(4,905)
Adjusted operating profit	354	2,566	5,507
Share-based payments	-	(119)	(247)
Operating profit	354	2,447	5,260
Net finance income	1	18	28
Profit before tax	355	2,465	5,288
Tax expense	(74)	(562)	(1,265)
Profit after tax from Anite Travel	281	1,903	4,023
Release of provision in relation to other previously discontinued operations	-	-	500
Charge in respect of other previously discontinued operations	-	-	(34)
Profit on sale of Anite Travel	31,732	-	-
Profit after tax for the period from discontinued operations	32,013	1,903	4,489

The Travel business was disposed of on 29 May 2014 for £45.0m of which £1.7m was held in escrow pending the resolution of certain commercial considerations.  These are due to be resolved by 30 April 2015.  The calculation of profit on sale of subsidiary has currently used net proceeds of £43.3m.  This will be reviewed once the final escrow release is known.

5 SHARE-BASED PAYMENTS

	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Equity settled	284	551	1,338
Cash settled	13	-	(1,150)
Share-based payment charge on continuing operations	297	551	188
Discontinued operations	-	119	247
Share-based payments charge	297	670	435

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.

6 Net finance charge

	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Finance income
Interest receivable and similar income	78	7	11
Interest on short-term deposits	6	6	14
Total finance income	84	13	25
Finance charges
Bank loans and overdrafts	(20)	(207)	(387)
Other loans/commitment fees	(77)	(37)	(74)
Other interest	-	(5)	(8)
Total finance charges	(97)	(249)	(469)
Net finance charge - continuing operations	(13)	(236)	(444)
Finance income - discontinued operations	1	18	28
Net finance charge - continuing and discontinued operations	(12)	(218)	(416)

7 tax expense

Continuing operations	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Current tax
UK corporation tax	408	(286)	775
Foreign tax	1,006	863	1,660
	1,414	577	2,435
Adjustments in respect of prior years
UK corporation tax	-	-	(61)
Foreign tax	-	-	5
	-	-	(56)
Total current tax expense	1,414	577	2,379
Deferred tax
UK	(772)	211	465
Foreign	(123)	(396)	(1,754)
Total deferred tax credit	(895)	(185)	(1,289)
Total income tax expense	519	392	1,090

Income tax for the interim period is charged at 22.7% (October 2013: 31.0%), 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 53.9% (October 2013: (42.4)%).

Tax charge / (credit) taken to equity	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April 2014
	£000	£000	£000
Deferred tax relating to the translation adjustment to amortisation of acquired intangible assets	(185)	119	(135)
UK corporation tax relating to foreign exchange	-	-	(586)
Income tax relating to components of other comprehensive income	(185)	119	(721)
Deferred tax relating to share-based payments	2	1,593	1,825
Current tax relating to share-based payments	(311)	(327)	(441)
Total tax charge / (credit) taken directly to equity	(494)	1,385	663

8 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 2014	Six months  ended 31 October 2013	Year  ended 30 April  2014	Six months ended 31 October  2014	Six months  ended 31 October 2013	Year  ended 30 April  2014
EPS summary
EPS for continuing and discontinued operations	11.3p	0.2p	4.3p	10.9p	0.2p	4.1p
EPS for discontinued operations	11.1p	0.7p	1.6p	10.7p	0.6p	1.5p
EPS for continuing operations	0.2p	(0.5)p	2.7p	0.1p	(0.5)p	2.6p
Adjusted EPS 2	1.4p	0.6p	4.0p	1.3p	0.6p	3.9p
	Six months ended 31 October  2014	Six months  ended 31 October  2013	Year  ended 30 April  2014	Six months ended 31 October 2014	Six months ended 31 October  2013	Year  ended 30 April 2014
	Pence per share	Pence per share	Pence per share	£000	£000	£000
Profit for the period	11.3	0.2	4.3	32,457	598	12,271
Profit from discontinued operations	(11.1)	(0.7)	(1.6)	(32,013)	(1,903)	(4,489)
Profit / (loss) from continuing operations	0.2	(0.5)	2.7	444	(1,305)	7,782
Reconciliation to adjusted profit:
Amortisation of acquired intangible assets (net of tax)	0.7	0.7	0.9	1,914	1,834	2,517
Share-based payments (net of tax)	0.1	0.3	0.1	308	772	375
Acquisition and restructuring costs (net of tax)	0.4	0.1	0.3	1,234	398	856
Adjusted profit 1	1.4	0.6	4.0	3,900	1,699	11,530

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

2  Earnings per share on adjusted profit ¹ have been included to give a clearer understanding of the results of the continuing businesses.

Number of shares ('000)	Six months ended 31 October 2014	Six months ended 31 October 2013	Year  ended 30 April  2014
Weighted average number of shares in issue - used to calculate basic earnings per share	287,898	285,328	285,390
Effect of potentially dilutive ordinary shares
- SAYE and share option schemes	10,147	13,067	13,132
Number of shares used to calculate diluted earnings per share	298,045	298,395	298,522

9 acquisitions

On 2 October 2014, Anite plc acquired 100% control of Xceed Technologies Inc. ("Xceed"), a leading provider of wireless network optimisation and performance management products. The acquisition will allow Anite to broaden its product portfolio in the analytics and post-processing market, an area of significant operator focus and growth.

The consideration for the acquisition was $30.0m in cash on completion plus a potential further deferred consideration of up to $5.0m dependent on the achievement of performance targets for the years to 30 April 2015 and 2016.  $3.5m (£2.2m) of this potential deferred consideration has been provided for in these accounts, being the amount potentially due to the vendor shareholders. The remaining $1.5m is due to employees and will be recognised as employment costs within acquisition and restructuring costs in the Income Statement over the earnout period.  Adjustment to both amounts will be reassessed according to the expectation of the achievement of the performance conditions.

Goodwill represents the potential for Anite to sell its existing products into Xceed's customer base, none of which is deductible for income tax purposes.

Provisional recognition of assets acquired and liabilities assumed are:

	Fair value
	£000
Goodwill	10,795
Intangible assets - marketing-related	964
Intangible assets - customer-related	1,718
Intangible assets - technology-based	13,849
Fixed assets	300
Trade and other receivables	530
Provision for doubtful receivables	(68)
Cash	1,035
Trade and other payables	(1,118)
Provisions due within one year	(56)
Deferred tax liability	(6,647)
Total	21,302
Consideration
Cash1	19,138
Contingent consideration	2,164
Total Consideration	21,302

¹ The cash consideration paid includes $30.0m purchase price plus $0.9m working capital adjustment.

Xceed contributed £446,000 of revenue and broke even during the period 3 October 2014 to 31 October 2014.

Acquisition costs of £1,349,000 have been expensed in the consolidated income statement of Anite plc during the period.

10 trade and other receivables

	31 October 2014	31 October 2013	30 April 2014
	£000	£000	£000
Trade receivables	32,654	31,114	36,011
Less: provision for impairment of trade receivables	(1,677)	(936)	(1,864)
Trade receivables net of provision	30,977	30,178	34,147
Other receivables	2,775	2,308	1,694
Prepayments	3,182	4,421	3,624
Accrued income	905	2,346	2,162
	37,839	39,253	41,627

11 trade and other payables

	31 October 2014	31 October 2013	30 April 2014
	£000	£000	£000
Trade creditors	8,914	8,102	9,296
Other taxes and social security	512	1,722	827
Deferred income	25,023	20,862	23,383
Accruals	7,615	9,340	8,058
Other creditors	441	604	520
	42,505	40,630	42,084

12 Net CASH / (debt)

	31 October 2014	31 October 2013	30 April 2014
	£000	£000	£000
Cash and cash equivalents	29,792	11,748	16,993
Bank borrowings - current	-	(153)	(10,938)
Bank borrowings - non-current	-	(17,641)	-
Net cash / (debt)	29,792	(6,046)	6,055

13 provisions

	NI on options	Contingent consideration	Warranties	Property provision	Other	Total
	£000	£000	£000	£000	£000	£000
At 1 May 2014	1,358	-	2,710	183	1,034	5,285
Transferred from accruals	-	-	-	-	407	407
Release of provision	-	-	-	-	(172)	(172)
Established during the period	13	-	-	-	93	106
Utilised during the period	(120)	-	-	-	(277)	(397)
Acquisition of subsidiary	-	2,147	-	-	56	2,203
Foreign exchange	-	11	-	-	(40)	(29)
At 31 October 2014	1,251	2,158	2,710	183	1,101	7,403

14 share capital

	Ordinary shares of 11.25p each
	Number	£000
Allotted, issued and fully paid:
At 1 May 2014	300,645,388	33,823
Issued during the period	267,500	30
At 31 October 2014	300,912,888	33,853

At 31 October 2014, 11,545,690 shares were held in the Company's Employee Benefit Trust, which are non-participating and are excluded from the calculation of basic earnings per share.

15 Dividends

The Company paid a final dividend of 1.265p (2013: 1.265p) per share totalling £3,665,442 (2013: £3,623,745) on 24 October 2014.

16 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 2014.

Following the disposal of the Travel business, Anite plc will continue to guarantee performance obligations of Travel for a specific on-going implementation. This guarantee will expire on 30 April 2016 and the maximum contingent liability under it is £5.0m.

17 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.

18 post balance sheet events

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

 

END

 

 

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