Interim Results

Anite PLC 17 December 2007 For immediate release 17 December 2007 ANITE PLC Interim results for the six months ended 31 October 2007 Anite plc ('Anite' or 'the Company'), the international software and solutions company, today announces its interim results for the six months ended 31 October 2007. Financial Highlights (adjusted)*: • Revenues up 11.1% to £79.1m (2006: £71.2m) • Operating profits of £10.6m (2006: £10.3m) • Operating margins of 13.4% (2006: 14.5%) • First time contribution of £9.4m of revenues and £3.4m of operating profits from network testing (Nemo) • Profit before tax of £9.6m (2006: £10.5m) after net finance charges £1.0m (2006: net income £0.2m) • Net debt of £22.7m (30 April 2007: net debt £22.5m)** • Recommended interim dividend of 0.275 pence per share (2006: 0.25 pence) • Basic earnings per share 2.2p (2006: 2.2p) and diluted earnings per share 2.2p (2006: 2.1p) Statutory results: • Revenue from continuing operations £79.1m (2006: £72.0m) • Profit before tax from continuing operations: £4.4m (2006: £9.7m), including Nevis exit costs of £2.5m • Profit for the period £4.8m (2006: £8.3m) • Basic and diluted earnings per share 1.4p (2006: 2.4p) Operating highlights*: • Orders up 8.5% at £77.7m (2006: £71.6m) • Agreement with Agilent for new strategic partnership • Strong performance from Travel and good overall progress by Public Sector • Pericles losses reduced to £0.3m (2006: loss of £1.9m) • Software licences and recurring revenues up to 65.7% of total revenues (2006: 56.7%) *Continuing operations before own platform development exit costs (£2.5m; 2006: nil) disposed businesses, share based payments (£1.1m; 2006: £0.7m) and amortisation of acquired intangible assets (£1.6m; 2006: nil). See attached income statement and notes for details. For a reconciliation of adjusted results highlights to reported statutory results see note 2.3. **See note 9 for summary of net debt. Commenting, Steve Rowley, Chief Executive said: 'During the last few years we have made significant progress in implementing our strategy to become the leading supplier of industry-specific software solutions in the sectors in which we operate, through a combination of investment in our products, strategic acquisitions to strengthen our position and disposals to sharpen our focus. 'Anite has a robust balance sheet and is in sound financial health. We have, however, been aware for some time that the ownership of several businesses has led to a stock market valuation that reflects a structural discount. We are therefore working actively, with our advisors, to explore a variety of strategic alternatives to remove or at least significantly reduce the scale of this discount. 'Trading, as in previous years, is weighted towards the second half. The Board expects performance for the financial year as a whole to be broadly in line with last year.' For further information, please contact: Anite plc www.anite.com Steve Rowley, Chief Executive 01753 804000 Christopher Humphrey, Group Finance Director Smithfield 020 7360 4900 Reg Hoare/Tania Wild/Will Henderson An analysts' meeting will be held today at 9.15 for 9.30 a.m. at the offices of JP Morgan Cazenove, 20 Moorgate, EC2 Print resolution images are available for the media to view and download from www.vismedia.co.uk Notes to editors Anite is an international software and solutions company whose primary business is the provision of industry-specific solutions based on its deep sector knowledge of the wireless telecoms, public sector, and travel markets. These solutions almost always include at their core the supply of Anite-owned software products. Anite offers a comprehensive service to its customers, including implementation, systems integration, maintenance and managed services, enabling it to maximise customer satisfaction and financial returns. Headquartered in the UK, Anite and its subsidiary companies now employs around 1,200 staff across Europe, America, and Asia Pacific. Anite solutions are recognised as market leaders in their fields: • all the leading global mobile phone manufacturers use Anite software; • more than 400 public sector organisations, including all UK police forces and 75% of local authorities use our solutions; and • around 40% of UK package holiday bookings were made using Anite software and managed services. Wireless Anite provides specialist systems and software for mobile phone handset testing and network testing. Our customers are global technology developers, mobile phone manufacturers, test houses and mobile phone network operators. Handset testing's customers include mobile technology developers who use our systems to test new chipsets and protocol software at a pre- and post-silicon stage of their development process; mobile phone manufacturers who use our systems to test newly-developed handsets before they go into production; test houses who carry out formal 'type approval' tests on phones and devices that have similar technology. Network testing's customers include mobile phone network operators who use our software systems for testing the efficiency of mobile phone networks. Travel Anite is the UK's leading travel technology solution provider for tour operators, air fare consolidators, and cruise, ferry, motor and rail inclusive operators in the UK and Europe. The internet is having an increasing effect on our customers' markets and we are developing our products to help them adapt their market offers. Public Sector Anite is a market leader in software and solutions to key parts of local government, such as local tax collection, benefits payments, housing management and social care solutions - as well as an important supplier of secure information solutions (SIS) to the criminal justice markets. Interim results for the six months ended 31 October 2007 All references to adjusted revenues and profits relate to continuing operations before own platform development exit costs (£2.5m) disposed businesses, share based payments (£1.1m) and amortisation of acquired intangible assets (£1.6m). See attached income statement and notes for details. For a reconciliation of adjusted results highlights to reported statutory results see note 2.3. Chairman's Statement Introduction The half year has seen good results in Travel, Public Sector and Wireless network testing (Nemo) with a disappointing revenue performance from Wireless handset testing that held back the overall performance. Adjusted operating profits rose, benefiting from a strong first time contribution by network testing, offset at the profit before tax level by increased financing costs. The strategic partnership with Agilent Technologies Inc. was announced in November 2007 and is an important milestone for our handset testing business which is expected to enhance significantly its prospects and market position. Our investments in Travel and Public Sector to position these businesses for future growth is producing both a better financial performance and a notable and continuing improvement in the quality of earnings as the proportion of software licences and recurring revenues continues to increase. Further details of the Company's performance are provided in the Chief Executive's Business Review below. Acquisitions and disposals In July 2007 we disposed of our remaining German IT Services business, Anite Deutschland, for a total consideration of £8.0m payable in cash. The disposal represented the Group's last remaining business in the IT services market in Europe and was one of nine transactions completed in the last four years. We will continue to review disposals that both sharpen the focus of our business and deliver shareholder value as well as selective acquisition opportunities that will help achieve our aim of being number one or two in our chosen markets. I am pleased to report that Nemo, the network testing business acquired last year, reported a strong first time contribution with revenues of £9.4m and adjusted operating profits of £3.4m in these results. Results Revenue from continuing operations was £79.1m (2006: £72.0m, including disposed businesses of £0.8m). Adjusted operating profits were £10.6m (2006: £10.3m) and operating margins were 13.4% (2006: 14.5%). Adjusted profits are stated before disposed businesses, share based payments (2007: £1.1m; 2006: £0.7m), own platform development exit costs (2007: £2.5m; 2006: nil) and amortisation of acquired intangible assets of (2007: £1.6m; 2006: nil). The reconciliation of adjusted operating profit to profit before tax from continuing businesses is as follows: 2007 2006 £m £m ------------------------------------- --------- ------ Adjusted operating profit 10.6 10.3 Finance (charges)/income (1.0) 0.2 ------------------------------------- --------- ------ Profit before tax 9.6 10.5 Share-based payments (1.1) (0.7) Own platform development exit costs (2.5) - Amortisation of acquired intangible assets (1.6) - ------------------------------------- --------- ------ Profit before tax from continuing operations before disposed businesses 4.4 9.8 Loss on disposed businesses - (0.1) ------------------------------------- --------- ------ Profit before tax from continuing operations 4.4 9.7 ------------------------------------- --------- ------ Net finance charges in the period were £1.0m (2006: net income £0.2m) following the acquisitions made in the second half of the last financial year. Profit from continuing operations before tax was £4.4m (2006: £9.7m), giving basic earnings per share (after tax) of 0.9p (2006: 2.1p). Profit for the period after tax including discontinued operations was £4.8m (2006: £8.3m). Basic and diluted earnings per share including discontinued operations of 1.4p (2006: 2.4p). Dividend and share buyback The Board has declared an interim dividend of 0.275p pence per share (2006: 0.25p). This dividend will be payable on 28 March 2008 to shareholders on the register on at 7 March 2008. A resolution to renew the authority to buy back shares was approved at the Company's AGM held on 3 October 2007. During the period 2.58m shares were bought back for cancellation at a cost of £1.8m and an average price of 71.4p per share. £3.3m was also spent on buying 4.0m shares for the Company's Employee Share Ownership Plan and 0.2m shares for the Share Incentive Plan. Balance sheet and cash Net debt was £22.7m (30 April 2007: net debt £22.5m; October 2006: net cash £22.7m). This includes the cash consideration of £8.0m from the disposal of Anite Deutschland and reflects the £5.1m expenditure on share buy backs and shares for the employee share ownership and share incentive plans. The increase in net debt compared to the same period last year largely reflects the total initial consideration and costs paid in relation to the acquisitions of Nemo and Invenova of £63.7m. Change of name The name of the Company was changed to 'Anite plc' at the Annual General Meeting held on 3 October 2007. This recognised the changing nature of the business and to enable simplified marketing. People On behalf of the Board, I would like to thank all employees for their contribution, hard work and support during the period. Summary During the last few years we have made significant progress in implementing our strategy to become the leading supplier of industry-specific software solutions in the sectors in which we operate, through a combination of investment in our products, strategic acquisitions to strengthen our position and disposals to sharpen our focus. Anite has a robust balance sheet and is in sound financial health. The Board has, however, been aware for some time that the ownership of several businesses has led to a stock market valuation that reflects a structural discount. It is therefore working actively, with its advisors, to explore a variety of strategic alternatives to remove or at least significantly reduce the scale of this discount. Clay Brendish Chairman Chief Executive's Review Introduction In the first half we improved adjusted operating profit whilst continuing our investment in growth opportunities and there has been continuing progress in terms of improving the quality of our earnings and enhancing and refining the structure of our business. Software licences and recurring revenues for continuing operations have increased to 65.7% of total revenues compared to 56.7% in the first half of 2006, continuing the trend of previous years. Within Wireless, there was a slowdown of activity in handset testing but an excellent performance from network testing. Travel performed strongly and Local Government returned a first half profit for the first time in two years reflecting the initial benefits of the investment made in recent years in its key products, the tight control of costs and a reduction in Pericles losses. SIS profits were down year on year as anticipated. Further details of divisional performance are provided below. In November we announced the agreement with Agilent, a major strategic milestone. This is expected to enhance our handset testing activities whilst reducing third party hardware and development costs and removing the risks inherent in undertaking our own development. This resulted in an exceptional charge of £2.5m being the cost to exit our own development programme. Wireless Anite provides specialist systems and software for mobile phone handset testing and network testing. Our customers are global technology developers, mobile phone manufacturers, test houses and mobile phone network operators. Wireless KPIs 2007 2006 Orders £35.6m £24.3m Revenue £32.3m £26.4m Operating profit* £5.9m £7.3m Operating margin** 18.3% 27.7% R&D - P&L expense £6.5m £3.3m R&D total spend £6.5m £4.2m Headcount 297 194 *continuing operations before disposed businesses, share based payments, amortisation of acquired intangible assets and own platform development exit costs. **operating margin represents adjusted operating profit divided by revenue Despite a strong overall October performance and an excellent first time contribution from network testing, profits in Wireless fell. These results were impacted by a planned increase in development spending in the division (an additional £3.2m was expensed in the Income Statement). The net effect on profits in the period of net capitalised R&D was nil compared to the previous period in which net capitalised R&D improved profits by £0.9m. Capitalised R&D is amortised over three years. The weak US$ reduced Wireless revenues by £0.8m and profits by £0.4m. In addition, sales of third party hardware fell by £2.0m. Software licences and recurring revenues as a percentage of total divisional revenues continued to rise, to 83% from 72%. Handset testing After three years of strong growth this business experienced weakness in demand during the period. This was caused by the technology cycle (2G revenues in long-term decline, 3G revenues peaking and 4G revenues yet to start), budget constraints in key customers in the USA (focussing on higher utilisation of existing test systems rather than purchasing new) and weakness in Japan and Korea. Network testing (Nemo) This business line has performed strongly with good revenue growth and profitability. Since acquisition, our focus has been on expanding the business geographically, both through the opening of new offices such as that serving the Middle East via Dubai, and appointing new distributors. In addition we continue to invest in expanding the product line. The network testing market tends to be very competitive and order book visibility is generally very short but the business is very well placed with excellent products and improved routes to market. Strategic Partnership with Agilent In November, we entered into a strategic partnership with Agilent to deliver market leading test solutions for the design of next generation mobile communications products conforming to the new LTE (4G) standard. The combined solutions, which are anticipated to be market leading, will become available in 2008. In the absence of acceptable alternatives, Anite had previously pursued a strategy of developing its own in house hardware platforms in respect of the standard. The partnership has enabled Anite to cease its in house development on the Nevis platform and will enhance development of best of breed solutions. By bringing together the combined strengths of the two companies, we will provide a comprehensive portfolio of solutions that address the entire R&D lifecycle, from early development through interoperability test. This entails combined development activity, adoption of each other's software and hardware, the sharing of know how benefiting the customers of both companies, many of whom are the same and who will benefit from the combined resource and common platform. Wireless outlook We are committed to ensuring that the Agilent partnership will result in improved revenue opportunities and reduced research and development and third party costs for Anite. The principal financial benefits of the agreement are expected to be derived in Anite's financial year commencing 1 May 2008 and are expected to be ongoing. We are managing the business assuming the weakness in the handset testing market continues with second half revenues in the handset area expected to be lower than the second half last year. Consequently we have taken some cost reduction actions, which together with the financial benefits of the Agilent partnership should mitigate some of the likely financial impact in the second half. Looking ahead to next year, we anticipate LTE (4G) revenues building up and returning the division to overall growth. Travel Anite is a leading travel technology solution provider for tour operators, air fare consolidators, and cruise, ferry, motor and rail inclusive operators in the UK and Europe. Our new @com suite of products is helping our customers respond to the challenges and opportunities of the internet. Travel KPIs 2007 2006 Orders £18.6m £21.7m Revenue* £16.6m £13.8m Operating profit* £4.1m £3.0m Operating margin** 24.7% 21.7% R&D - P&L expense and total spend £0.1m £0.3m Headcount 247 228 *continuing operations before disposed businesses and share based payments **operating margin represents underlying operating profit divided by revenue Travel performed strongly in the half year with good revenue and operating profit growth compared to last year. This reflected ongoing delivery of the division's healthy order book and a strong performance by the managed services operations. Multi million pound orders were received from TUI Germany (initial contract with further orders anticipated in the second half), Finnair (@com contract extension) and Norwich Union (managed services for financial products). International revenues as a percentage of Travel's total revenues continue to rise, to 18.7% in this period (2006: 14.5%). Delivering the existing order book and completion of the @com development work are the key to the success of the division in the second half of the financial year and over the next 18 months. This is at a time when consolidation amongst UK customers has been a feature with the recent mergers of MyTravel with Thomas Cook, whose contractual arrangements continue for the next four years, and First Choice with TUI, whose contractual arrangements continue for between 12 and 24 months. Our marketing focus remains on international opportunities, particularly in Germany and Northern Europe. Travel outlook In Travel we anticipate continuing progress, as it focuses on delivery of its strong order book and the investment in @com development. Public Sector Anite is a market leader in software and solutions to key parts of local government, such as local tax collection, benefits payments, housing management and social care solutions - as well as an important supplier of secure information solutions (SIS) to the criminal justice markets. More than 400 public sector organisations, including all UK police forces and 75% of local authorities use our solutions. Public Sector KPIs 2007 2006 Orders £23.5m £25.6m Revenue £30.2m £31.0m Operating profit* £1.7m £1.2m Operating margin** 5.6% 3.9% R&D P&L expense £1.9m £2.6m R&D total spend £1.6m £3.7m Headcount 640 688 *continuing operations before disposed businesses and share based payments **operating margin represents underlying operating profit divided by revenue Total Public Sector Public Sector benefited from the continuing reduction in Pericles losses, down £1.6m to £0.3m, and tight cost control, resulting in a good increase in first half profits and continuing sequential progress. Although total revenues fell by £0.8m, this included a fall of £1.1m in sales of third party hardware and the end of VME revenues (£0.9m below last year). Net capitalised R&D in the period reduced profits by £0.3m (net of amortisation), compared to last year when net capitalised R&D improved profits by £1.1m. Capitalised R&D is amortised over three years. Profits were also affected by the reduction in VME profits (down £0.5m). Software licences and recurring revenues rose to 57% of revenues compared to 48% in the same period last year, reflecting the continuing improvement of the quality of divisional earnings. We are pleased with progress made with our two main objectives in this division, namely the ongoing investment in new products targeted at future growth opportunities, and improving profitability at time of considerable change within the public sector marketplace. Local Government In Local Government, which reported a first half profit for the first time in two years, our investment in new products has been focused in the areas where we are strongest and believe that the opportunities are greatest. These include social care, where a more nationally based approach from government and the fact that we have products that now address the children/adults split in social services, are beginning to bear fruit. We continue to make good progress with Pericles and believe that it will prove to be a successful product that will generate profits in the future as a core part of our Local Government business, and as a result there was no increase in the contract provision related to it. Secure Information Solutions (SIS) SIS profits were down year on year as anticipated, the business having had a strong first half last year that benefited from a disproportionately high level of software license sales and a high professional services utilisation. In October, SIS was awarded a three year £3.6m contract to support the national Automatic Number Plate Recognition (ANPR) system which secures Anite's position as a major supplier of national police information systems. Anite's ANPR solution takes reads from roadside traffic cameras and stores them in a secure database enabling police to deny criminals the use of the UK road network. The UK is ahead of the rest of world in respect of sophisticated forensic and police information systems and we are currently exploring opportunities to secure international business. Public Sector outlook We expect Local Government's improved sequential performance to continue, boosted by a recovery in social care and a further reduction in Pericles losses. For SIS, we also anticipate an improved second half performance with a good pipeline of new business and no major bid costs to cover. Summary Trading, as in previous years, is weighted towards the second half. The Board expects performance for the financial year as a whole to be broadly in line with last year. Steve Rowley Chief Executive Key risks and uncertainties and Statement of Director's Responsibilities Risks and uncertainties Forward looking statements Any forward looking statements made within this interim half year report have been made in good faith by the directors based on the information made available up to the date of the Directors approval of this report, and these forward looking statements should be treated with caution due to the inherent uncertainties, including macro economic, and IT service and solution market uncertainties, and business risk factors which may affect the outcome. Strategic and operational risks Wireless The seasonal nature of our customer buying patterns in handset testing could have an effect on the outcome for the financial year consistent with previous years. The sales activity in the second half therefore will be an important factor in achieving the overall results for the year. Given the international nature of the business it can also be affected by fluctuations in the currency markets. The development aspects of the partnership with Agilent are in their early stages but we expect to make good progress in the remainder of the current year. Travel The successful outcome for the year for our Travel business relies on the continued successful completion and delivery of large development projects within budget, cost, and specifications. As with all large IT projects the delivery of these projects is subject to certain technical, commercial, and economic risks, and also an effective relationship with the customer. Public sector The outcome for our Public Sector business is subject to the normal seasonal back end loading of orders from Local government departments who can be affected by budgetary constraints and also as a result of the Governments priority on spending tied in with the Government's financial year. The division will continue to invest in products for which demand is driven by regulation and other market changes. Financial risks The Company recognises that through the continued change in the Company's portfolio, its expanding geographic reach and the financing of recent acquisitions by debt, that there are additional risks in terms of currency and interest rate exposure. The Company has taken steps to mitigate these risks by hedging its interest rate and currency exposure within policies approved by the Board. Against the background of changing market dynamics, the Company continues its policy of re-forecasting the outturn for the financial year on a monthly 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; and • the financial highlights and review of business performance includes a fair review of the information required by Disclosure and Transparency Rules (DTR) of the Financial Services Authority, paragraph DTR 4.2.7 and DTR 4.2.8. By order of the Board Christopher Humphrey, Group Finance Director 16 December 2007 Condensed consolidated income statement Six months ended 31 October 2007 Note Six months Six months Year ended ended 31 ended 31 30 April October 2007 October 2006 2007 (unaudited) (unaudited) (audited) (restated) (restated) £000 £000 £000 ------------------------------- ------ --------- --------- -------- Continuing operations Revenue 2.1 79,131 72,010 161,478 Cost of sales (38,452) (36,755) (77,742) ------------------------------- ------ --------- --------- -------- Gross profit 40,679 35,255 83,736 Distribution costs (7,718) (5,034) (12,764) Research & Development (11,551) (6,252) (15,581) Administrative expenses (15,990) (14,425) (30,157) ------------------------------- ------ --------- --------- -------- Operating costs 2.5 (35,259) (25,711) (58,502) ------------------------------- ------ --------- --------- -------- ------------------------------- ------ --------- --------- -------- Operating profit before share based payments, exceptional items and amortisation of acquired intangible assets 10,580 10,250 28,336 Share-based payments (1,080) (706) (1,825) Own platform development exit costs 2.6 (2,441) - - Amortisation of acquired intangible assets (1,639) - (1,277) ------------------------------- ------ --------- --------- -------- Operating profit 5,420 9,544 25,234 Other gains and losses 3a - - (1,136) Finance income 1,139 426 1,319 Finance charges (2,119) (227) (2,081) ------------------------------- ------ --------- --------- -------- Profit from continuing operations before tax 4,440 9,743 23,336 Tax expense 4 (1,204) (2,560) (7,009) ------------------------------- ------ --------- --------- -------- Profit from continuing operations 3,236 7,183 16,327 Profit from discontinued operations 3b 1,609 1,147 3,944 ------------------------------- ------ --------- --------- -------- Profit for the period 4,845 8,330 20,271 ------------------------------- ------ --------- --------- -------- Profit attributable to equity holders of the parent 4,845 8,330 20,271 ------------------------------- ------ --------- --------- -------- Continuing and discontinued operations Earnings per share - basic 5 1.4p 2.4p 5.8p -diluted 1.4p 2.4p 5.7p Continuing operations Earnings per share -basic 5 0.9p 2.1p 4.7p -diluted 0.9p 2.0p 4.6p Condensed consolidated balance sheet 31 October 2007 Note Six months Six months Year ended ended 31 ended 31 30 April October 2007 October 2006 2007 (unaudited) (unaudited) (audited) (restated) £000 £000 £000 ------------------------------- ------ --------- --------- -------- Non-current assets Goodwill 77,178 34,119 83,233 Other intangible assets 30,679 6,900 32,431 Property, plant and equipment 11,761 12,751 12,754 Deferred tax assets 2,400 2,183 1,895 Derivative financial assets 67 - 121 Trade and other receivables 7 - - 934 ------------------------------- ------ --------- --------- -------- 122,085 55,953 131,368 ------------------------------- ------ --------- --------- -------- Current assets Inventories 6 3,683 2,926 4,509 Trade and other receivables 7 47,696 46,195 58,327 Current tax assets 967 2,058 195 Cash deposit held in escrow 8 8,380 - 8,197 Cash and cash equivalents 18,480 22,747 18,665 ------------------------------- ------ --------- --------- -------- 79,206 73,926 89,893 Assets classified as held for sale - 327 - ------------------------------- ------ --------- --------- -------- 79,206 74,253 89,893 ------------------------------- ------ --------- --------- -------- Total assets 201,291 130,206 221,261 ------------------------------- ------ --------- --------- -------- Current liabilities Trade and other payables 10 (49,546) (53,696) (65,996) Bank borrowings (4,964) - (4,829) Current tax payable (12,663) (13,981) (12,354) Provisions (10,456) (2,502) (14,443) ------------------------------- ------ --------- --------- -------- (77,629) (70,179) (97,622) Liabilities directly associated with assets classified as held for sale - (455) - ------------------------------- ------ --------- --------- -------- (77,629) (70,634) (97,622) ------------------------------- ------ --------- --------- -------- Non-current liabilities Bank borrowings (44,676) - (44,610) Other payables - (38) - Deferred tax liabilities (7,681) - (6,481) Derivative financial liabilities (3,296) - (1,722) Provisions (4,198) (8,563) (5,884) ------------------------------- ------ --------- --------- -------- (59,851) (8,601) (58,697) ------------------------------- ------ --------- --------- -------- Total liabilities (137,480) (79,235) (156,319) ------------------------------- ------ --------- --------- -------- Net assets 63,811 50,971 64,942 ------------------------------- ------ --------- --------- -------- Equity Issued share capital 11 35,174 35,186 35,325 Share premium account 25,333 24,496 25,010 Own shares (4,348) (898) (1,019) Merger reserve 6,538 6,538 6,538 Capital redemption reserve 1,117 859 859 Other reserves 670 164 (7) Retained earnings (673) (15,374) (1,764) ------------------------------- ------ --------- --------- -------- Total equity 63,811 50,971 64,942 ------------------------------- ------ --------- --------- -------- The accompanying notes are an integral part of this consolidated balance sheet. Condensed consolidated statement of changes in equity for the six months ended 31 October 2007 Share Share Own Merger Capital Other Retained Total capital premium shares reserve redemption reserve earnings* account reserve £000 £000 £000 £000 £000 £000 £000 £000 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Balance at 1 May 2006 35,186 24,303 (715) 6,538 773 - (22,120) 43,965 Changes in equity for the period to 31 October 2006 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Exchange differences arising on translation of foreign operations - - - - - 164 - 164 Net income recognised directly in equity - - - - - 164 - 164 Profit for the period - - - - - - 8,330 8,330 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Total recognised income and expense for the period - - - - - 164 8,330 8,494 Issue of share capital 86 193 - - - - - 279 Purchase of own shares into treasury - - (183) - - - - (183) Share buy back and cancellation (86) - - - 86 - (613) (613) Dividend payable (note 13) - - - - - - (1,753) (1,753) Recognition of share-based payments (before tax) - - - - - - 693 693 Deferred tax related to share-based payments - - - - - - 89 89 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Balance at 31 October 2006 35,186 24,496 (898) 6,538 859 164 (15,374) 50,971 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Balance at 1 May 2007 35,325 25,010 (1,019) 6,538 859 (7) (1,764) 64,942 Changes in equity for the period to 31 October 2007 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Exchange differences arising on translation of foreign operations - - - - - 89 - 89 Cash flow hedges taken to equity - - - - - (55) - (55) Fair value gains on net investment hedges (net of foreign exchange and tax) - - - - - 643 - 643 Net income recognised directly in equity - - - - - 677 - 677 Profit for the period - - - - - - 4,845 4,845 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Total recognised income and expense for the period - - - - - 677 4,845 5,522 Issue of share capital 107 323 - - - - - 430 Purchase of own shares into treasury - - (3,329) - - - - (3,329) Dividend paid (note 13) - - - - - - (877) (877) Dividend payable (note 13) - - - - - - (1,927) (1,927) Share buy back and cancellation (258) - - - 258 - (1,842) (1,842) Recognition of share-based payments (before tax) - - - - - - 1,103 1,103 Deferred tax related to share-based payments - - - - - - (211) (211) ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- Balance at 31 October 2007 35,174 25,333 (4,348) 6,538 1,117 670 (673) 63,811 ------------------------------ ------- ------- ------- ------- -------- ------- -------- ------- *The retained earnings at 31 October 2006 have been restated to include dividend payable of £1,753,000 (see note 10 below). Condensed Consolidated cash flow statement For the six months ended 31 October 2007 Note Six months Six months Year ended ended 31 ended 31 30 April October 2007 October 2006 2007 (unaudited) (unaudited) (audited) £000 £000 £000 ----------------------------- ------ --------- --------- -------- Profit for the period Continuing 3,236 7,183 16,327 Discontinued 1,609 1,147 3,944 ----------------------------- ------ --------- --------- -------- 4,845 8,330 20,271 Adjustments for: Tax expense - continuing and discontinued 4 1,849 1,827 3,237 (Profit)/loss before tax on disposal of discontinued operations 3(b) (2,179) 100 467 Loss before tax on disposal of disposed businesses - - 1,136 Finance charges/(income) - continuing and discontinued 980 (209) 745 Depreciation of property, plant and equipment 2,611 2,223 4,604 Amortisation of intangible assets 2,942 1,348 3,513 Amortisation of acquired intangible assets 1,639 - 1,277 Loss on disposal of property, plant and equipment 175 170 74 Share-based payments 1,103 693 1,916 Decrease in provisions (268) (14,523) (14,709) ----------------------------- ------ --------- --------- -------- Operating cash flows before movements in working capital 13,697 (41) 22,531 Decrease/(increase) in inventories 826 (110) (1,424) Decrease in receivables 8,909 9,322 118 Decrease in payables (16,740) (13,991) (1,392) ----------------------------- ------ --------- --------- -------- Movements in working capital (7,005) (4,779) (2,698) ----------------------------- ------ --------- --------- -------- Cash generated from operations before exceptional cash payments 6,692 8,637 33,456 Cash payments - for SoV contract and onerous property lease1 - (13,457) (13,623) ----------------------------- ------ --------- --------- -------- Cash generated from/(used in) operations 6,692 (4,820) 19,833 Interest received 1,247 437 1,591 Interest paid (1,895) (117) (2,362) Income taxes paid (1,663) (2,219) (2,510) ----------------------------- ------ --------- --------- -------- Net cash generated from/ (used in) operating activities 4,381 (6,719) 16,552 ----------------------------- ------ --------- --------- -------- Cash flow from investing activities Purchase of subsidiary undertakings - - (63,738) Net bank balance acquired with subsidiary undertakings - - 717 Proceeds from disposal of subsidiary undertakings 7,358 - 76 Net bank balance disposed with subsidiary undertakings (397) - (372) Increase in cash held in escrow related to acquisitions - - (8,097) Deferred consideration paid (1,986) - - Purchase of property, plant and equipment (1,506) (2,129) (3,007) Proceeds from disposal of property, plant and equipment 42 - 32 Purchase of software licences (695) (311) (687) Expenditure on capitalised product development (1,836) (3,187) (6,077) ----------------------------- ------ --------- --------- -------- Net cash generated from/ (used in) investing activities 980 (5,627) (81,153) ----------------------------- ------ --------- --------- -------- Cashflow from financing activities Issue of ordinary share capital 430 279 932 Share buy back for cancellation (1,842) (606) (613) Purchase of own shares into treasury (3,329) (183) (304) Dividend paid to Company's shareholders (877) - (1,753) Increase in bank loans - - 49,439 Redemption of vendor loan note instruments - (478) (478) ----------------------------- ------ --------- --------- -------- Net cash (used in)/generated from financing activities (5,618) (988) 47,223 ----------------------------- ------ --------- --------- -------- Net decrease in cash and cash equivalents (257) (13,334) (17,378) Effect of exchange rate changes 72 (182) (220) Cash and cash equivalents at beginning of period 18,665 36,263 36,263 ----------------------------- ------ --------- --------- -------- Cash and cash equivalents at end of period 18,480 22,747 18,665 ----------------------------- ------ --------- --------- -------- 1 The exceptional cash payments of £13.6m in April 2007 (October 2006:£13.5m) relate to closure of the SoV contract (£11.4m) and settlement of an onerous property lease contract (£2.2m). Notes to the condensed set of financial statements 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 in 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 consolidated financial statements are consistent with those followed in preparation of the Group's annual financial statements for the year ended 30 April 2007 as available on our website www.anite.com and restated as described below: (i) The half year October 2006 and full year April 2007 results have been restated to show research and development separately and to show the amortisation of acquired intangible assets in the relevant headings, either in distribution costs or research & development costs (see note 2.5 below). (ii) The balance sheet at 31 October 2006 has been restated to include a final dividend payable of £1,753,000, since the dividend was approved at the Company's AGM on 3 October 2006 and was not paid until 17 November 2006. Information regarding future accounting standards The IFRIC interpretations, amendments to existing standards and new standards that are mandatory and relevant for the Group's accounting periods beginning on or after 1 May 2007 have been adopted in the Group's October 2007 Interim Report except for the Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures and IFRS 7, Financial Instruments: Disclosures. As these are disclosure standards, there is no impact of these changes in accounting policies on the half yearly financial report. Full details of these changes will be disclosed in our Annual Report for the year ending 30 April 2008. The financial information contained in this Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. 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 2007 are based upon the Group's audited accounts prepared under IFRS. The statutory accounts for the year ended 30 April 2007 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under Section 237 (2) or 237(3) of the Companies Act 1985. This unaudited Interim Financial Report has been approved by the Board of Directors on 16 December 2007. 2. Revenue and segmental information 2.1 Analysis of Group's revenue 2007 2006 £000 £000 ------------------------------------- ------ ------ IT consultancy 1,378 1,604 Own product software licences 23,417 16,076 Bespoke services, systems integration and implementation of software products 14,740 15,311 Managed services (includes software maintenance and support) 28,608 24,340 Originating from third parties 10,988 13,928 ------------------------------------ ------- ------- Continuing operations (excluding disposed businesses) 79,131 71,259 Disposed businesses - 751 ------------------------------------ ------- ------- Revenue from continuing operations 79,131 72,010 Finance income 1,139 426 ------------------------------------ ------- ------- Total revenue from continuing operations 80,270 72,436 Discontinued operations: Revenue 2,052 6,716 Finance income - 10 ------------------------------------ ------- ------- 82,322 79,162 ------------------------------------ ------- ------- 2.2 Business segments - primary basis The Group is organised into three business segments: Wireless, Public Sector and Travel. These three business segments are the Group's primary reporting format for segment information. During the period, Anite Deutschland Management GmbH and its subsidiaries ('Anite Deutschland'), the remaining part of the International Consultancy operation was sold. Its results are included as a discontinued operation and details are disclosed in note 3. Segment information under the primary reporting format is as disclosed in the table below: Wireless Public Sector Travel International Total Consultancy 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 ---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Revenue - continuing businesses1 32,328 26,412 30,253 31,085 16,790 14,155 - - 79,371 71,652 -inter-segment revenue2 (8) - (38) (49) (194) (344) - - (240) (393) ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- 32,320 26,412 30,215 31,036 16,596 13,811 - - 79,131 71,259 - disposed businesses - - - - - 751 - - - 751 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Revenue - continuing operations 32,320 26,412 30,215 31,036 16,596 14,562 - - 79,131 72,010 - discontinued operations - - - - - - 2,052 6,716 2,052 6,716 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Total revenue 32,320 26,412 30,215 31,036 16,596 14,562 2,052 6,716 81,183 78,726 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Continuing operations Segment profit before amortisation and exceptional items - continuing businesses1 5,512 7,152 1,559 1,144 3,982 2,984 - - 11,053 11,280 - disposed businesses3 - - - - - (49) - - - (49) ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- - continuing operations 5,512 7,152 1,559 1,144 3,982 2,935 - - 11,053 11,231 Unallocated corporate costs (after recharges) (1,553) (1,687) ------------------ ------- ------- ------- ------- ------- ------ ------ ------- ------- ------- Operating profit for continuing operations before amortisation and exceptional items 9,500 9,544 Amortisation of acquired intangible assets (1,639) - - - - - - - (1,639) - Own platform development exit costs (2,441) - - - - - - - (2,441) - ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Segment operating profit 1,432 7,152 1,559 1,144 3,982 2,935 - - Operating profit 5,420 9,544 Finance (charges)/ income (980) 199 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit from continuing operations before tax 4,440 9,743 Tax expense (1,204) (2,560) ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit from continuing operations 3,236 7,183 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Discontinued operations Operating profit from discontinued operations (note 3b) 75 504 75 504 Profit/(loss) on disposal of businesses 2,179 (100) 2,179 (100) Finance income - 10 - 10 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit from discontinued operations before tax 2,254 414 2,254 414 Tax (charge)/credit (645) 733 (645) 733 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit from discontinued operations 1,609 1,147 1,609 1,147 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit for the period 4,845 8,330 ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Profit for the period is stated after: Capitalisation of internally generated intangible assets ('IGIA') 1,289 1,733 547 1,454 - - - - 1,836 3,187 Impairment of IGIA (included in own platform development exit costs) (475) - - - - - - - (475) - Amortisation of IGIA (1,313) (825) (798) (372) - - - - (2,111) (1,197) ------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Net (reduction)/ capitalisation of IGIA (499) 908 (251) 1,082 - - - - (750) 1,990 --------------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- 1 continuing businesses comprise operating results of continuing operations before the operating results of disposed businesses. 2 inter-segment sales are charged at prevailing market rates. 3 Disposed businesses comprise the operating results of continuing operations which have ceased during the period and which do not meet the definition of discontinued operations under IFRS 5. Discontinued operations are all within the International Consultancy operation. 2.3 Business segments - continuing operations Wireless Public Sector Travel Total 2007 2006 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000 £000 £000 ----------------- ------ ------ ------ ------ ------ ------ ------ ------ Revenue - continuing before disposed businesses 32,320 26,412 30,215 31,036 16,596 13,811 79,131 71,259 Segment profit* 5,875 7,256 1,731 1,210 4,094 3,057 11,700 11,523 Unallocated corporate costs (1,120) (1,224) ---------- ------- ------- ------- ------- ------- ------- ------- ------- Adjusted operating profit* 10,580 10,299 Net finance (charges)/inco me (980) 199 ----------- ------- ------- ------- ------- ------- ------- ------- ------- Adjusted profit* before tax 9,600 10,498 Share-based payments - corporate charge (433) (463) - business segment (363) (104) (172) (66) (112) (73) (647) (243) Amortisation of acquired intangible assets (1,639) - - - - - (1,639) - Own platform development exit costs (2,441) - - - - - (2,441) - ---------- ------- ------- ------- ------- ------- ------- Segment operating profit before disposed businesses 1,432 7,152 1,559 1,144 3,982 2,984 ---------- ------- ------- ------- ------- ------- ------- ------- ------- Profit before disposed businesses and tax 4,440 9,792 - disposed businesses - - - - - (49) - (49) ---------- ------- ------- ------- ------- ------- ------- ------- ------- Profit from continuing operations before tax 4,440 9,743 ---------- ------- ------- ------- ------- ------- ------- ------- ------- *continuing operations before disposed businesses, share based payments, amortisation of acquired intangible assets and own platform development exit costs This additional information has been disclosed to give a clearer understanding of the results of the business segments before and after share-based payments, exceptional items, intangible assets and disposed businesses. 2.4 Public Sector continuing businesses Local Pericles Subtotal Local Secure Total Public government development government Information Sector Solutions 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 ---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Revenue on continuing operations 19,008 18,904 1,717 2,526 20,725 21,430 9,490 9,606 30,215 31,036 ---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Segment profit/(loss)1 - before share-based payments 1,328 1,659 (340) (1,932) 988 (273) 743 1,483 1,731 1,210 Share-based payments (134) (47) - - (134) (47) (38) (19) (172) (66) --------- ------- ------- ------ ------- ------- ------- ------ ------ ------- ------- Segment profit/(loss)1 1,194 1,612 (340) (1,932) 854 (320) 705 1,464 1,559 1,144 --------- ------- ------- ------ ------- ------- ------- ------ ------ ------- ------- This additional information has been disclosed to give a clearer understanding of the results of the core Public Sector continuing businesses. 1 After utilisation of contract provisions made for the Pericles development £104,000 (2006: £403,000) and SoV contract £32,000 (2006: £11,226,000). 2.5 Operating expenses Six months ended Six months ended Year ended 30 31 October 2007 31 October 2006 April 2007 (restated) (restated) £000 £000 £000 Distribution costs - amortisation of acquired intangible assets 1,043 - 745 - others 6,675 5,034 12,019 ----------------------------- ---------- ---------- -------- 7,718 5,034 12,764 ----------------------------- ---------- ---------- -------- Research & Development - amortisation of acquired intangible assets 596 - 532 - amortisation of internally generated assets 2,111 1,197 3,016 - own platform development exit costs 2,441 - - - others 6,403 5,055 12,033 ----------------------------- ---------- ---------- -------- 11,551 6,252 15,581 ----------------------------- ---------- ---------- -------- Administrative expenses - others 15,990 14,425 30,157 ----------------------------- ---------- ---------- -------- Total operating expenses 35,259 25,711 58,502 ----------------------------- ---------- ---------- -------- Analysed as: - amortisation of acquired intangible assets 1,639 - 1,277 - amortisation of internally generated assets 2,111 1,197 3,016 - own platform development exit costs 2,441 - - - others 29,068 24,514 54,209 ----------------------------- ---------- ---------- -------- 35,259 25,711 58,502 ----------------------------- ---------- ---------- -------- Restatement of April 2007 and October 2006 operating expenses. Amortisation of acquired intangible assets (April 2007: £1,277,000, October 2006: £nil) and research and development costs/amortisation of internally generated assets (April 2007: £15,049,000, October 2006: £6,252,000) which had been previously reported under administrative expenses have been reclassified to distribution costs in April 2007 (£745,000) and October 2006 (£nil) and research and development costs in April 2007 (£15,581,000) and October 2006 (£6,252,000), respectively. 2.6 Own platform development exit costs In the absence of acceptable alternatives being available in the marketplace, Anite has pursued a strategy of developing its own in-house hardware platform, Nevis, in respect of the LTE standard. On 12 November 2007, Anite Wireless announced a strategic partnership with Agilent to deliver test solutions for the design of next generation mobile communications products conforming to the new 3GPP Long Term Evolution (LTE) standard. The new strategic partnership with Agilent will enhance development of best of breed solutions, making a clear business case for Anite to cease its in-house development. The impact of asset write downs and cash settlement of exiting the current Nevis development contract is £2,441,000, as set out below. £'000 Impairment of inventories 298 Impairment of tangible fixed assets 442 Impairment of capitalised Nevis development costs 475 Other exit costs including inventory commitments 1,226 ------- 2,441 ------- 3. Disposed businesses/discontinued operations a) Other gains and losses The other gains and losses for the year ended 30 April 2007 relate to the loss on the disposed business of Anite Opentur S.r.l. within the Travel business segment. b) Discontinued operations The Group has now completed its disposal of the non-core businesses within the International Consultancy Division with the sale of its 100% interest in the ordinary share capital of Anite Deutschland on the 9 July 2007. The operating profit up to the date of disposal was £86,000 (2006: £516,000; April 2007: £699,000) and this is included below in the results from discontinued operations: Six months Six months ended Year ended ended 31 31 October 30 April October 2006 2007 2007 £000 £000 £000 ----------------------------------- -------- -------- ------- Profit after tax for the period from discontinued operations Revenue 2,052 6,716 12,384 Cost of sales (1,618) (5,141) (9,780) ----------------------------------- -------- -------- ------- Gross Profit 434 1,575 2,604 Operating expenses (359) (1,071) (1,982) ----------------------------------- -------- -------- ------- Operating profit before interest 75 504 622 Investment income - 10 17 ----------------------------------- -------- -------- ------- Profit before tax 75 514 639 Tax credit /(loss) - 2 (28) ----------------------------------- -------- -------- ------- Profit after tax 75 516 611 ----------------------------------- -------- -------- ------- Profit after tax on sale of discontinued operations Net movement in provision in relation to previously disposed businesses1 723 (100) (417) Loss on disposal of previously disposed businesses - - (50) Profit on disposal of Anite Deutschland 1,456 - - ----------------------------------- -------- -------- ------- Net profit/(loss) before tax on sale of discontinued operations 2,179 (100) (467) Tax (charge)/credit relating to activities discontinued in prior years (645) 731 3,800 ----------------------------------- -------- -------- ------- Profit after tax on sale of discontinued operations 1,534 631 3,333 ----------------------------------- -------- -------- ------- Profit from discontinued operations 1,609 1,147 3,944 ----------------------------------- -------- -------- ------- 1 Following the settlement in November 2007 of the warranty claim in respect of a previously disposed business, the remaining £0.7m of this warranty provision which is no longer required has been released. c) Sale of discontinued operations The net assets disposed of and the related profit on disposal of Anite Deutschland were as follows: Six months Six months Year ended ended 31 ended 31 30 April October October 2007 2007 2006 £000 £000 £000 Deutschland GMO MC --------------------------------- ----------- -------- -------- Goodwill 4,000 - - Intangible assets 91 - - Property, plant and equipment 87 - 21 Current assets 2,710 - 306 Current tax assets 6 - - Cash and cash equivalents 397 - 195 Current liabilities (1,220) - (455) Provisions (169) - - --------------------------------- ----------- -------- -------- Net assets 5,902 - 67 Profit/(loss) on disposal 1,456 - (50) --------------------------------- ----------- -------- -------- Net consideration 7,358 - 17 --------------------------------- ----------- -------- -------- Relating to: Cash consideration 8,000 - 68 Disposal costs (642) - (51) --------------------------------- ----------- -------- -------- Net consideration 7,358 - 17 --------------------------------- ----------- -------- -------- Net cash flows in respect of the disposal of operations are as follows: Cash received (net of disposal costs paid) 7,358 - 17 Cash and cash equivalents sold (397) - (195) --------------------------------- ----------- -------- -------- 6,961 - (178) --------------------------------- ----------- -------- -------- 4. Tax expense Six months ended Six months ended Year ended 30 31 October 2007 31 October 2006 April 2007 £000 £000 £000 ---------------------------- ------- -------- ------- Continuing operations Current tax UK corporation tax 1,296 1,944 5,528 Foreign tax 468 450 1,621 ---------------------------- ------- -------- ------- 1,764 2,394 7,149 ---------------------------- ------- -------- ------- Adjustments in respect of prior years - UK corporation tax 156 (178) (307) - foreign tax - - (184) ---------------------------- ------- -------- ------- 156 (178) (491) ---------------------------- ------- -------- ------- Total current tax expense 1,920 2,216 6,658 ---------------------------- ------- -------- ------- Deferred tax UK (716) 344 785 Foreign - - (434) ---------------------------- ------- -------- ------- Total deferred tax (credit)/expense (716) 344 351 ---------------------------- ------- -------- ------- ---------------------------- ------- -------- ------- Total tax expense - continuing operations 1,204 2,560 7,009 ---------------------------- ------- -------- ------- Income tax on continuing operations for the interim period is charged at 27.1% (October 2006: 24.9%), representing the weighted average of the estimated annual effective income tax rate expected for the full year in each jurisdiction and major category of income within continuing operations. Discontinued operations Current tax Foreign tax - (2) (2) Adjustments in respect of prior years - UK corporation tax (555) (731) (3,800) - foreign tax - - 30 ---------------------------- ------- -------- ------- Total current tax expense (555) (733) (3,772) ---------------------------- ------- -------- ------- Deferred tax Foreign 1,200 - - ---------------------------- ------- -------- ------- Total deferred tax expense 1,200 - - ---------------------------- ------- -------- ------- ---------------------------- ------- -------- ------- Total tax expense - discontinued operations 645 (733) (3,772) ---------------------------- ------- -------- ------- The deferred tax charge on discontinued operations arises from the disposal of Anite Deutschland. ---------------------------- ------- -------- ------- Total tax expense - continuing and discontinued operations 1,849 1,827 3,237 ---------------------------- ------- -------- ------- 5. Earnings per share The calculations of earnings per share are based on the Group profit for the period, underlying profit1 and weighted average number of shares in issue: EPS summary Six months ended 31 Six months ended 31 Year ended 30 October 2007 October 2006 April 2007 --------------------- -------- -------- ------- Basic EPS 1.4p 2.4p 5.8p Basic EPS for continuing operations 0.9p 2.1p 4.7p Adjusted EPS2 2.2p 2.2p 5.7p --------------------- -------- -------- ------- Six months Six months Year ended Six months Six months Year ended ended 31 ended 31 30 April ended 31 ended 31 30 April October 2007 October 2006 2007 October 2007 October 2006 2007 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Pence per Pence per Pence per £000 £000 £000 share share share --------------- --------- --------- -------- --------- --------- -------- Profit for the period 1.4 2.4 5.8 4,845 8,330 20,271 Profit from discontinued operations (0.5) (0.3) (1.1) (1,609) (1,147) (3,944) --------------- --------- --------- -------- --------- --------- -------- Profit for the period on continuing operations 0.9 2.1 4.7 3,236 7,183 16,327 --------------- --------- --------- -------- --------- --------- -------- Reconciliation to adjusted profit: Other gains and losses - - 0.3 - - 1,136 Own platform development exit costs 0.7 - - 2,441 - - Acquired intangible assets amortisation (net of tax) 0.4 - 0.3 1,308 - 894 Share-based payments (net of tax) 0.2 0.1 0.4 799 344 1,542 --------------- --------- --------- -------- --------- --------- -------- Adjusted profit1 2.2 2.2 5.7 7,784 7,527 19,899 --------------- --------- --------- -------- --------- --------- -------- 1 Profit from continuing businesses before disposed businesses, share-based payments, acquired intangible assets amortisation and own platform development exit costs. 2 Earnings per share on adjusted profit1 have been included to give a clearer understanding of the results of the continuing businesses. Diluted EPS for profit for the period is 1.4p per share (2006: 2.4p; April 2007: 5.7p) Diluted EPS for profit for the period from continuing operations is 0.9p per share (2006: 2.0p; April 2007: 4.6p) Basic and diluted EPS for discontinued operations is 0.5p per share (2006: 0.3p; April 2007: 1.1p) Diluted EPS for adjusted profit is 2.2p per share (2006: 2.1p; April 2007: 5.6p) Number of shares (000) Six months Six months Year ended ended 31 ended 31 30 April October 2007 October 2006 2007 --------------------------------- ------- --------- ------- Weighted average number of shares in issue - used to calculate basic earnings per share 349,461 350,066 350,163 Effect of dilutive ordinary shares - SAYE and share option schemes 4,291 4,321 4,565 -------------------------------------- -------- -------- -------- Number of shares used to calculate diluted earnings per share 353,752 354,387 354,728 -------------------------------------- -------- -------- -------- 6 Inventories Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £000 £000 £000 -------------------------- --------- -------- ------- Inventories 3,264 2,307 4,146 Work in progress 360 391 164 Finished goods 59 228 199 -------------------------- --------- -------- ------- 3,683 2,926 4,509 -------------------------- --------- -------- ------- 7. Trade and other receivables Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £000 £000 £000 ---------------------------- --------- -------- ------- Current assets Trade receivables 32,673 33,063 46,249 Less: provision for impairment of trade receivables (1,196) (1,170) (670) ---------------------------- --------- -------- ------- Trade receivables net of provision 31,477 31,893 45,579 Other receivables 1,432 2,113 2,082 Prepayments 4,778 5,017 4,382 Amount due from construction contract customers 687 353 353 Accrued income 9,322 6,819 5,931 ---------------------------- --------- -------- ------- 47,696 46,195 58,327 ---------------------------- --------- -------- ------- Non-current assets Accrued income - - 934 ---------------------------- --------- -------- ------- 47,696 46,195 59,261 ---------------------------- --------- -------- ------- 8. Cash deposit held in escrow Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £000 £000 £000 ---------------------------- --------- -------- ------- Cash deposit held in escrow 8,380 - 8,197 ---------------------------- --------- -------- ------- The cash deposit of £8.4m (€12m) is held in an escrow account for the purpose of meeting the maximum contingent consideration payable to the vendors of the Nemo business purchased in November 2006, upon the satisfaction of consideration conditions as set out in the sale and purchase agreement. The contingent consideration period ends on 31 December 2007 and the consideration amount is payable within 90 days from this date. The management's latest estimate of the contingent consideration is that no more than £2.7m (€4m) will be payable, as a result, a further £2.7m (€4m) of consideration provision was released during this period. 9. Net (debt)/cash Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £000 £000 £000 ----------------------------- -------- -------- ------- Cash deposit held in escrow 8,380 - 8,197 Cash and cash equivalent 18,480 22,747 18,665 Bank borrowings - current (4,964) - (4,829) Bank borrowings - non-current (44,676) - (44,610) Interest rate swaps and caps(excluding accrued interest) 67 - 121 ----------------------------- -------- -------- ------- Net (debt)/cash (22,713) 22,747 (22,456) ----------------------------- -------- -------- ------- 10. Trade and other payables Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £000 £000 £000 (restated) ----------------------------- -------- -------- ------- Trade payables 7,630 8,030 12,017 Other taxes and social security 2,962 3,577 6,330 Amount due to construction contract customers 978 - 475 Payments received on account 4,279 5,638 6,561 Deferred income 19,684 19,862 25,174 Accruals 10,844 13,475 13,585 Dividend payable (note 13) 1,927 1,753 - Other payables 1,242 1,361 1,854 ----------------------------- -------- -------- ------- 49,546 53,696 65,996 ----------------------------- -------- -------- ------- 11. Share capital Issued Ordinary Shares Deferred Redeemable Total shares of 10p each of £1 each Number £'000 Number £'000 £'000 -------------------- --------- --------- -------- -------- ------- Allotted, issued and fully paid: At 1 May 2007 352,748,160 35,275 50,000 50 35,325 Issued during the period 1,071,131 107 - - 107 Cancelled during the period (2,580,700) (258) - - (258) -------------------- --------- --------- -------- -------- ------- At 31 October 2007 351,238,591 35,124 50,000 50 35,174 -------------------- --------- --------- -------- -------- ------- The number of shares cancelled during the period was 2.58 million shares at an average price of 71.4p, as part of the Group's share buy back programme. 12. Contingent liabilities There are contingent Group liabilities that arise in the normal course of the 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 gain or loss to the Group. There has been no change in the Directors' assumptions in regard to contingent liabilities since the year ended 30 April 2007. 13. Dividends The Company resumed the payment of an interim dividend of 0.25p per share totalling £877,000 which was paid on 16 May 2007. A final dividend payable for the year ended 30 April 2007 of 0.55p (April 2006: 0.5p) per share, totalling £1,927,000 (April 2006: £1,753,000) was approved at the Company's AGM on 3 October 2007 and was paid on 16 November 2007. INDEPENDENT REVIEW REPORT TO ANITE PLC We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Deloitte & Touche LLP Chartered Accountants and Registered Auditor 16 December 2007 London This information is provided by RNS The company news service from the London Stock Exchange

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