Interim Results

Anite Group PLC 07 December 2004 For immediate release Tuesday, 7 December 2004 ANITE GROUP PLC Interim results for the six months ended 31 October 2004 Anite Group plc ('Anite' or 'the Group'), the worldwide IT solutions and services company, today announces its unaudited interim results for the six months ended 31 October 2004. Highlights: •Underlying profit before tax* of £8.5m (2003: £5.5m) on revenues* of £92.9m (2003: £85.2m) •Total reported profit before tax of £9.5m (2003: loss £14.3m) on total revenues of £96.5m (2003: £95.6m) •Underlying basic earnings per share* 1.7p (2003: 1.1p); basic earnings per share 1.9p (2003: loss per share 4.4p) •Underlying operating margin* improved to 9.6% (2003: 7.5%) •Net funds of £7.3m (2003: net debt £10.8m; 30 April 2004: net funds £5.0m) •Order intake of £94.5m up 8.4% on last year giving book to bill ratio of 1.0 •Recent disposals of Anite Space, Calculus and Transport in line with strategic review *Ongoing businesses (before exceptional items and restructuring costs, amortisation and impairment of goodwill and closed businesses and utilisation of provisions). For a reconciliation to reported profit before tax, see attached tables - Segmental information and Earnings/(loss) per ordinary share. Commenting on today's results, Steve Rowley, Anite's Chief Executive, stated: 'These interim results demonstrate the satisfactory progress made in the current financial year to date. Since the half year end, the Group's performance has continued to be in line with the Board's expectations and ahead of last year (excluding the impact of disposals). 'We are confident in the progress of Anite's recovery and as a result the Board remains cautiously optimistic about future prospects.' For further information, please contact: www.anite.com Anite Group plc 01753 804000 Steve Rowley, Chief Executive Christopher Humphrey, Group Finance Director Smithfield 020 7360 4900 Reg Hoare/Sara Musgrave/Tehsin Nayani Print resolution images are available for the media to view and download from www.vismedia.co.uk Interim results for the six months ended 31 October 2004 Chairman's Statement Introduction Anite is an international IT company that provides software, systems integration, consultancy and managed services across the travel, telecoms and public sector markets. Headquartered in the UK, the Group employs around 1700 staff in 12 countries across Europe, America, Asia and Australasia. Anite solutions are recognised as market leaders in their fields: •the top 10 global mobile phone handset manufacturers all use Anite testing technology •3 out of 4 UK Local Authorities use Anite applications •around 40% of UK package holiday bookings were made using Anite systems last year. A year of recovery Anite is in much better shape following the significant period of consolidation and transition undergone by the Group over the last two years as it resolved a number of legacy issues. In the current financial year our emphasis has changed and the Board is focused both on boosting the recovery in the Group's underlying performance as well as increasing the momentum of strategic change by means of disposals of non-core activities and the pursuit of growth opportunities. These interim results demonstrate that we have made satisfactory progress to date and are in line with our expectations. In respect of our priorities, we have achieved a small profit in Public Sector (before utilisation of contract provisions) and good growth in Telecoms and Travel, and as expected there are no exceptional items (save those related to disposals) or goodwill impairment. Overall, the Group has seen good order intake and sales growth on the back of improving market conditions, and the benefits from its cost cutting in prior years is coming through. Results Underlying profit before tax (of ongoing businesses, before exceptional items and restructuring costs, amortisation and impairment of goodwill and utilisation of contract provisions) rose to £8.5m (2003: £5.5m). All divisions were profitable in the period, with a strong turnaround in profitability in Public Sector and good growth being reported by Telecoms and Travel, although both the latter businesses did benefit from some one off product and hardware sales in the first half. The Group has benefited from lower interest charges as a result of continued cash control. However, there was an increase in the Group's long standing property provision of £0.6m reflecting the decision to consolidate Telecoms' five Fleet sites into one location together with the costs of other Group property consolidation particularly in Public Sector. Operating profits for the ongoing businesses (before goodwill and exceptional items and before utilisation of provisions) rose to £8.9m (2003: £6.4m) and operating margins were 9.6% (2003: 7.5%). The reported pre-tax profit (after amortisation and exceptional items) of £9.5m (2003: loss £14.3m) is the Group's first reported profit in any period for over two years. As well as the underlying improvement in the Group's performance, this also reflects the absence of the significant exceptional items and goodwill impairment incurred in recent reporting periods as the Group resolved its legacy issues, although we have accelerated the goodwill amortisation of the April 2001 acquisition of the government applications business of ICL. A £6.2m profit on the disposal of Anite Space is included, together with the expected utilisation of £3.0m of contract provisions in respect of Pericles and the State of Victoria ('SoV') contract. Adjusted underlying basic earnings per share (ongoing businesses, before goodwill amortisation, exceptional items and before utilisation of contract provisions) were 1.7p (2003: 1.1p). Basic earnings per share after goodwill amortisation and exceptional items were 1.9p (2003: loss per share 4.4p). Turnover (of ongoing businesses) rose 9% in the first half, almost entirely due to growth in Telecoms and Travel, with Public Sector and International sales broadly in line with the same period last year. The Group's order intake totalled £94.5m, up 8.4% compared with last year giving a book to bill ratio of 1.0. Balance sheet and cash The Group has paid out £4.3m of earnout commitments during the period. Remaining earnout payments total £4.6m in cash/loan notes and £0.3m in shares, of which £3.6m in cash is payable in the second half. Reflecting the benefit of the £7.0m net disposal proceeds of Anite Space, net funds at the half year end stood at £7.3m (2003: net debt £10.8m; 30 April 2004: net funds £5.0m). Net interest payable fell to £0.4m (2003: £0.9m) reflecting the reduction in debt and was 22 times covered (2003: 7 times) by underlying operating profits before goodwill amortisation and exceptionals and before utilisation of contract provisions. Disposals During the current financial year, we have continued to review certain non-core, peripheral businesses, either by geography or vertical market, in line with our strategy to focus better on our three core vertical markets. This has resulted in three recent disposals being made, and we hope to announce further developments by our financial year end in April 2005. In September, we sold our Space consultancy business based in Darmstadt, Germany, to Vega Group plc for a total consideration of £7.5m. In November, following the half year end, we sold the trade and assets of Calculus, our Telecoms billing systems business, to Azure Solutions Limited for a consideration of £0.75m, and of Transport, our solutions, services and consultancy business focussed on the passenger transport industry, to Trapeze Inc. for £0.9m. The consideration proceeds are being used to benefit the Group's cash position and provide greater financial flexibility for the Group to pursue growth opportunities. The Board As previously announced, we have made further board changes during the period. We appointed two new non-executive directors, Peter Bertram and David Hurst-Brown, respectively replacing David Thorpe who stepped down in August, and Graham Caleb, who retired at the AGM in September. We thank both for their significant contribution and commitment and welcome Peter and David. With Steve Rowley, as Chief Executive, and the rest of the new board now appointed, we stated at the AGM that the Group has engaged headhunters to identify my successor as Chairman and once this appointment is confirmed, I will step down. People On behalf of the Board I would like to thank all employees for their contribution, hard work and support during this year of significant change. Dividend policy Following resolution of the earnout commitments and reflecting the Group's strong financial platform, the Board continues to review its dividend policy. Summary We are confident in the progress of Anite's recovery and as a result the Board remains cautiously optimistic about future prospects. Alec Daly Chairman Chief Executive's Operating Review Strategic update As previously stated, our aim is to be number one or two in each of the markets we serve. The strategic review of the Group, undertaken earlier in the year, identified that the long term prospects for our three core vertical markets of public sector, telecoms and travel are excellent and that within these we are already market leaders in many of our chosen areas of focus. We aim to build on these market leading positions by investment in growth opportunities. In businesses which are less strong, within our Public Sector, Travel and Telecoms divisions, our objective is to build up their critical mass and market position. If this is not possible, within a reasonable timeframe and cost, we will consider other strategic options, such as disposal. Over time we therefore aim only to operate where we can establish and maintain critical mass and market leading positions. In line with the above, the recent disposals of Space, Calculus and Transport, three non-core, peripheral businesses, enable us to focus better on our three core vertical markets whilst reinvesting the proceeds in growth opportunities. Divisional performance Divisional performance* before unallocated Group central costs and property provision of £1.5m and interest of £0.4m was: •Public Sector: turnover £33.1m, operating profit £0.1m, margin 0.3% •Travel: turnover £16.0m, operating profits £3.1m, margin 19.4% •Telecoms: turnover £21.8m, operating profits £5.2m, margin 23.8% •International: turnover £22.0m, operating profits £2.0m, margin 9.1% *ongoing businesses before goodwill amortisation and impairment, exceptional items and utilisation of contract provisions. Public Sector Anite is a market leader in applications for key parts of local government - such as local tax collection, benefits payments, housing management and social care solutions - as well as an important supplier into the central government and police markets. Strategy In line with the Group's strategy, our objective is to identify those Public Sector offerings which can sustain number one or two market positions and to pursue growth opportunities therein, whilst disposing of those offerings which do not meet these criteria (as indicated by the recent disposal of Transport). Financial performance Public Sector's improved operating performance has continued into the current financial year and it was profitable in the period (before and after utilisation of contract provisions of £3.0m, split equally between Pericles and SoV), benefiting from the cost cutting of prior periods and better margins. Excluding Pericles and SoV, all areas of Public Sector's business were profitable in the first half. The contract provisions carried forward total £9.7m, of which £6.9m relates to SoV and the balance Pericles, in line with expectations. Although we continue to focus on resolving these two long term legacy issues, and are making progress in line with our current expectations, implementation risks remain. Pericles Pericles is our Local Government product for revenues and benefits administration. The problematic Pericles Benefits module has now gone live at seven customer sites (compared to two at the last year end), with a number of other major clients due to go live in the second half of the current financial year. Implementation of our previously contracted Pericles Benefits' customers is not due until our financial year ending April 2006. Our regular review of these contracts has resulted in additional costs of £0.3m being added to the provision and expensed during the period. The scale, number and complexity of these and other Pericles module implementations continues to be a risk to the business. We have also accelerated the amortisation of the goodwill relating to the April 2001 acquisition of ICL's government applications business, which included Pericles. State of Victoria The State of Victoria contract, where completion is due by April 2007, continues to be the subject of management focus. Progress has been made in reducing the risk of the project with the majority of development work now taking place in Australia close to the customer. Implementation of the first phase of the software is planned for early in our financial year ending April 2006 and successful completion of this milestone would signal significantly reduced risk for the project overall. Operational review Our operating focus is on restructuring our 'go to market' model in line with customer practice and the evolving public sector market place. We have also made additional management appointments to strengthen our individual offerings and are performing well in areas such as Health & Social Care and Document Management with good contract wins during the period under review. Overall order intake was below last year, which included the benefit of the £12.3m IPCC contract win. Travel Anite is one of the leading reservation systems and e-commerce providers to tour, cruise, ferry and rail operators worldwide, providing mission critical managed services and solutions. Recovery in the travel market has fuelled increased demand for Travel's products and services from existing, and most encouragingly, new customers during the first half. Good growth in order intake was underpinned by significant development and long term managed services contracts with STA Travel for £5.0m, Center Parcs for £2.2m and MyTravel for £5.0m (including additional hardware and software and a three year extension of the managed services contract), respectively. The growth in first half revenue was enhanced partly due to the inclusion of this hardware business, which is one off in nature, which resulted in margins being constrained. Changes in the travel market, whereby customers are seeking to select the individual components of a holiday separately, known as 'Dynamic Packaging', is creating demand for systems capable of offering these features. The Anite @comRes system is intended to meet these requirements and we are already seeing increasing interest in this new product suite. Telecoms Anite provides specialist systems and software for mobile phone network simulation and handset testing around the globe for a growing, global Tier 1 client base. A good first half performance, with both revenues and profits rising, reflects the improving although still competitive sector outlook, and recent 3G launches. The market has responded well to our Agilent-based 2G systems, and we are seeing steady development of 3G business and strong interest in HSDPA (High Speed Downlink Packet Access) solutions ('3.5G'). Order intake and profit was also boosted by significant orders for Type Approval systems (which are not expected to be repeated in the second half). In addition the business benefited from its expansion into the Far East (especially in China and Taiwan) and the US West Coast, together with a strengthening of the management team. As expected we increased research and development spending on our 2G products, as well as 3G and 3.5G, to take advantage of the current market opportunities. In August we exchanged contracts on the purchase of a freehold property in Fleet, Hampshire, with the intention of consolidating the activities of the Telecoms division into this one site. The total cost of the property, including fit out, is expected to be in the region of £5.25m, with occupation expected in Spring 2005. This consolidation is expected to provide both long-term property cost savings and efficiencies, scope for future expansion, as well as benefits to the management and operation of the Telecoms business. International International brings together Anite's remaining European consultancy businesses, focusing on IT consultancy and systems integration in a range of vertical markets including finance, telecoms and public sector. As previously indicated, market conditions continue to be difficult in the International businesses, with performance under pressure. France is, as reported in July, performing slightly better, partly offsetting the continued weakness in Austria and Germany. Order Book The Group has seen satisfactory order intake of £94.5m, up 8.4% compared with last year on a like for like basis, giving an overall Group book to bill ratio of 1.0 (2003: 1.0). Divisional order intake was: •Public Sector - an order intake to revenue ratio of 0.9 •Travel - an order intake to revenue ratio of 1.4 •Telecoms - an order intake to revenue ratio of 1.2 •International - an order intake to revenue ratio of 0.7 Outlook These interim results demonstrate the satisfactory progress made in the current financial year to date. Since the half year end, the Group's performance has continued to be in line with the Board's expectations and ahead of last year (excluding the impact of disposals). Overall the business is in much better shape, with lower costs, a stronger financial foundation and a growing order book, with more benign market conditions in evidence. For the year as a whole, we expect continued growth in Telecoms and Travel and a further fall in sales and profits in the International businesses (excluding disposals). In Public Sector, whilst much has been achieved to return the business to profitability (before contract provision utilisation), order intake and sales require an injection of impetus in the second half to maintain this progress. Steve Rowley Chief Executive Anite Group plc Consolidated profit and loss account for the six months ended 31 October 2004 Goodwill amortisation, Ongoing exceptional businesses items and before goodwill results from Unaudited six Unaudited six Audited 12 amortisation disposed/ months to months to months to exceptional closed 31 October 31 October 30 April and items businesses 2004 2003 2004 Notes (Restated) (Restated) £'000 £'000 £'000 £'000 £'000 ------ ------- ------- ------- ------ ------- Turnover ========================== ====== ======= ======= ======= ====== ======= Ongoing businesses 92,927 - 92,927 85,210 179,459 Disposed/closed businesses - continuing operations - 3,545 3,545 10,413 16,773 ========================== ====== ======= ======= ======= ====== ======= Turnover - continuing operations 2 92,927 3,545 96,472 95,623 196,232 Cost of sales ========================== ====== ======= ======= ======= ====== ======= Cost of sales before exceptional items (59,018) (2,104) (61,122) (55,322) (114,307) Redundancy costs 3 - - - (1,124) (1,147) Contract and purchasing provisions 3 - - - - (14,194) Utilisation of contract provisions 2 3,000 - 3,000 - 4,284 ========================== ====== ======= ======= ======= ====== ======= Cost of sales (56,018) (2,104) (58,122) (56,446) (125,364) -------------------------- ------ ------- ------- ------- ------ ------- Gross profit 36,909 1,441 38,350 39,177 70,868 Net operating costs ========================== ====== ======= ======= ======= ====== ======= Goodwill amortisation - (8,404) (8,404) (8,437) (16,558) Goodwill impairment - - - (8,750) (18,480) Redundancy and restructuring costs 3 - - - (3,306) (5,033) Aborted acquisition costs - recovery 3 - - - 379 379 Other operating costs (24,984) (1,232) (26,216) (32,576) (64,025) ========================== ====== ======= ======= ======= ====== ======= Net operating costs (24,984) (9,636) (34,620) (52,690) (103,717) -------------------------- ------ ------- ------- ------- ------ ------- Operating profit/(loss) ========================== ====== ======= ======= ======= ====== ======= - Ongoing businesses before utilisation of contract provisions 8,925 (8,404) 521 (14,814) (38,821) - Ongoing businesses - utilisation of contract provisions 2 3,000 - 3,000 - 4,284 -------------------------- ------ ------- ------- ------- ------ ------- - Ongoing businesses 11,925 (8,404) 3,521 (14,814) (34,537) - Disposed/closed businesses - continuing operations - 209 209 1,301 1,688 ========================== ====== ======= ======= ======= ====== ======= Operating profit /(loss) for continuing businesses 11,925 (8,195) 3,730 (13,513) (32,849) Profit on disposal/closure of businesses 3 - 6,209 6,209 77 4,407 -------------------------- ------ ------- ------- ------- ------ ------- Profit/(loss) on ordinary activities before finance charges 11,925 (1,986) 9,939 (13,436) (28,442) Profit on sale of fixed asset investment - - - 57 57 Finance charges - net (400) - (400) (954) (512) -------------------------- ------ ------- ------- ------- ------ ------- Profit/(loss) on ordinary activities before tax 11,525 (1,986) 9,539 (14,333) (28,897) ========================== ====== ======= ======= ======= ====== ======= Tax on profit/(loss) on ordinary activities 4 (2,131) (130) (2,261) (1,097) (2,220) (Charge)/credit in respect of deferred tax 4 (417) - (417) 140 345 Release of prior years' tax provisions 4 - - - - 829 ========================== ====== ======= ======= ======= ====== ======= Tax charge on profit/(loss) on ordinary activities (2,548) (130) (2,678) (957) (1,046) -------------------------- ------ ------- ------- ------- ------ ------- -------------------------- ------ ------- ------- ------- ------ ------- Profit/(loss) for the period 8,977 (2,116) 6,861 (15,290) (29,943) -------------------------- ------ ------- ------- ------- ------ ------- Earnings/(loss) per share - Basic 5 1.9p (4.4)p (8.6)p - Diluted 5 1.9p (4.4)p (8.6)p Adjusted earnings per share based on ongoing operations excluding amortisation of goodwill and exceptional items a) Before utilisation of contract provisions - Basic 5 1.7p 1.1p 2.9p - Diluted 5 1.7p 1.1p 2.9p b) After utilisation of contract provisions - Basic 5 2.5p 1.1p 4.2p - Diluted 5 2.5p 1.1p 4.1p Anite Group plc Consolidated balance sheet as at 31 October 2004 Unaudited Unaudited Audited 31 October 31 October 30 April Notes 2004 2003 2004 £'000 £'000 £'000 ------------------------------ ------ ------- ------ ------ Fixed assets Goodwill 55,120 82,356 63,523 Other intangible assets 21 201 52 ------------------------------ ------ ------- ------ ------ Intangible assets 55,141 82,557 63,575 Tangible assets 10,356 9,597 7,741 Investments - 4 1 ------------------------------ ------ ------- ------ ------ 65,497 92,158 71,317 Current assets Stocks 3,350 8,065 4,111 Debtors 6 55,074 49,696 57,729 Current asset - - 170 investments Short-term deposits 953 1,039 1,095 Cash at bank and in hand 10,407 11,662 11,353 ------------------------------ ------ ------- ------ ------ 69,784 70,462 74,458 Creditors: Amounts falling due within one year 7 (80,648) (95,432) (94,103) ------------------------------ ------ ------- ------ ------ Net current liabilities (10,864) (24,970) (19,645) ------------------------------ ------ ------- ------ ------ Total assets less current liabilities 54,633 67,188 51,672 Creditors: Amounts falling due after more than one year 8 (153) (1,865) (681) Provisions for liabilities and charges 9 (18,988) (21,992) (22,680) ------------------------------ ------ ------- ------ ------ Net assets 35,492 43,331 28,311 ------------------------------ ------ ------- ------ ------ Capital and reserves Called-up share capital 35,359 35,040 35,239 Share premium account 11 23,273 22,482 22,856 Merger reserve 11 12,572 22,173 14,227 Shares to be issued 11 295 575 800 Profit and loss account 11 (36,007) (36,939) (44,811) ------------------------------ ------ ------- ------ ------ Shareholders' funds 35,492 43,331 28,311 ------------------------------ ------ ------- ------ ------ Shareholders' funds are analysed as: 2004 2003 2004 £'000 £'000 £'000 ------------------------------ ------ ------- ------ ------ Equity interests 35,442 43,281 28,261 Non-equity interests 50 50 50 ------------------------------ ------ ------- ------ ------ 35,492 43,331 28,311 ------------------------------ ------ ------- ------ ------ Anite Group plc Consolidated cash flow statement for the six months ended 31 October 2004 Unaudited Unaudited Audited 12 six months to six months to months to 31 October 31 October 30 April 2004 2003 2004 (Restated) (Restated) £'000 £'000 £'000 ----------------------------------------- ----- ----- ----- Net cash inflow from operating activities 922 11,346 30,080 ----------------------------------------- ----- ----- ----- Returns on investments and servicing of finance Interest received 61 193 203 Interest paid (362) (997) (1,688) Interest element of finance lease rental payments (33) (60) (100) ----------------------------------------- ----- ----- ----- Net cash outflow from returns on investments and servicing of finance (334) (864) (1,585) ----------------------------------------- ----- ----- ----- Taxation Foreign taxation refunded/(paid) 261 - (788) UK corporation tax refunded/(paid) 142 409 (43) ----------------------------------------- ----- ----- ----- Net cash inflow/(outflow) from taxation 403 409 (831) ----------------------------------------- ----- ----- ----- Capital expenditure and financial investment Purchase of tangible fixed assets (4,415) (1,190) (3,205) Sale of tangible fixed assets 2 17 1,513 ----------------------------------------- ----- ----- ----- Net cash outflow from capital expenditure and financial investment (4,413) (1,173) (1,692) ----------------------------------------- ----- ----- ----- Acquisitions and disposals Sale of subsidiary undertakings 7,302 - 811 Net bank balance of businesses sold (260) - (743) Disposal of current asset investment 170 75 75 Proceeds from previously closed businesses - 77 766 Recovery in respect of aborted acquisition costs - 379 379 Deferred consideration paid for current and previous years' acquisitions (1,037) (375) (1,304) ----------------------------------------- ----- ----- ----- Net cash inflow/(outflow) from acquisitions and disposals 6,175 156 (16) ----------------------------------------- ----- ----- ----- Cash inflow before management of liquid resources and financing 2,753 9,874 25,956 ----------------------------------------- ----- ----- ----- Management of liquid resources Decrease in short term deposits 142 1,009 953 ----------------------------------------- ----- ----- ----- Net cash inflow from management of liquid resources 142 1,009 953 ----------------------------------------- ----- ----- ----- Financing Issue of ordinary share capital 110 10 558 Decrease in bank loans - (1,092) (15,191) Capital element of finance lease rental payments (476) (495) (1,085) Redemption of vendor loan note instruments (3,299) (7,525) (9,686) Proceeds from sale of own shares - 314 314 ----------------------------------------- ----- ----- ----- Net cash outflow from financing (3,665) (8,788) (25,090) ----------------------------------------- ----- ----- ----- (Decrease)/increase in cash in the period (770) 2,095 1,819 ----------------------------------------- ----- ----- ----- Reconciliation of movements in consolidated shareholders' funds for the six months ended 31 October 2004 Unaudited Unaudited Audited 12 six months to six months to months to 31 October 31 October 30 April 2004 2003 2004 (Restated) (Restated) £'000 £'000 £'000 ----------------------------------------- ------ ------ ------ Profit/(loss) for the period 6,861 (15,290) (29,943) Other recognised gains/(losses) relating to period (net) 210 (291) (1,622) Amounts recovered from own shares - 134 134 Share capital issued 615 8,001 8,740 Shares to be issued (net) (505) (8,607) (8,382) ----------------------------------------- ------ ------ ------ Net increase/(reduction) in shareholders' funds 7,181 (16,053) (31,073) Opening shareholders' funds 28,311 59,384 59,384 ----------------------------------------- ------ ------ ------ Closing shareholders' funds 35,492 43,331 28,311 ----------------------------------------- ------ ------ ------ Consolidated statement of total recognised gains and losses for the six months ended 31 October 2004 Unaudited Unaudited Audited 12 six months to six months to months to 31 October 31 October 30 April 2004 2003 2004 (Restated) (Restated) £'000 £'000 £'000 ----------------------------------------- ------ ------ ------ Profit/(loss) for the period as previously stated 6,861 (15,156) (20,809) Prior period adjustment - amounts recovered from own shares - (134) (134) ----------------------------------------- ------ ------ ------ Profit/(loss) for the period as restated 6,861 (15,290) (20,943) Net gain/(loss) on foreign currency translation 210 (291) (1,622) ----------------------------------------- ------ ------ ------ Total recognised gains and losses since last annual report and financial statements 7,071 (15,581) (22,565) ----------------------------------------- ------ ------ ------ Reconciliation of operating profit/(loss) to net cash inflow from operating activities for the six months ended 31 October 2004 Unaudited Unaudited Audited 12 six months to six months to months to 31 October 31 October 30 April 2004 2003 2004 £'000 £'000 £'000 ----------------------------------------- ------ ------ ------ Operating profit/(loss) for the period 3,730 (13,513) (32,849) Depreciation 2,301 3,576 6,988 Amortisation of software licences 31 59 94 Goodwill amortisation 8,404 8,437 16,558 Goodwill impairment - 8,750 18,480 Decrease/(increase) in stock 526 (215) 1,749 Decrease in debtors 1,158 19,695 9,536 Decrease in creditors (12,135) (13,197) (226) (Decrease)/increase in provisions (3,070) (2,377) 9,537 (Profit)/loss on disposal of fixed assets (23) 510 592 Recovery of aborted acquisition costs - (379) (379) ----------------------------------------- ------ ------ ------ Net cash inflow from operating activities 922 11,346 30,080 ----------------------------------------- ------ ------ ------ Analysis and reconciliation of net funds for the six months ended 31 October 2004 Notes Audited Cash Non-cash Exchange Unaudited 1 May 2004 flow items movement 31 October 2004 £'000 £'000 £'000 £'000 £'000 -------------------------- ----- ----- ----- ----- ----- ----- Cash at bank and in hand 11,353 (770) - (176) 10,407 Finance leases (906) 476 (29) - (459) Current asset investments 170 (170) - - - Short- term deposits 1,095 (142) - - 953 -------------------------- ----- ----- ----- ----- ----- ----- Net funds excluding loan notes 11,712 (606) (29) (176) 10,901 Vendor loan notes due within one year 7 (6,750) 3,299 (165) - (3,616) -------------------------- ----- ----- ----- ----- ----- ----- Net funds 10 4,962 2,693 (194) (176) 7,285 -------------------------- ----- ----- ----- ----- ----- ----- Anite Group plc Notes to the accounts 1. Introduction This interim report was approved by the Board of Directors on 6 December 2004 and follows the accounting policies adopted in the 2004 annual report except as noted below. The company has adopted UITF abstract 38 'Accounting for ESOP trusts' and has accordingly restated prior period results to show the amounts recovered from own shares through the statement of total recognised gains and losses and cash receipts within financing in the consolidated cashflow statement. The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The comparative information is based on the interim results for the six months ended 31 October 2003. The figures for the year ended 30 April 2004 are an abridged statement from the Group's audited accounts at that date, which have been delivered to the Registrar of Companies as adjusted for the adoption of UITF 38. 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. 2. Segmental Information Ongoing businesses before goodwill and exceptional items for the six months ended 31 October 2004 Public Sector Travel Telecoms International Total Consultancy 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Turnover on ongoing businesses 33,111 32,748 16,033 13,705 21,786 16,793 21,997 21,964 92,927 85,210 Ongoing profit* - before utilisation of provisions 86 (2,070) 3,058 2,992 5,179 4,130 2,047 2,243 10,370 7,295 Contract provisions utilised** 3,000 - - - - - - - 3,000 - ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Operating profit * 3,086 (2,070) 3,058 2,992 5,179 4,130 2,047 2,243 13,370 7,295 ---------------- ------ ----- ------ ------ ------ ----- ------ ------ Unallocated corporate costs (1,445) (871) Finance charges (net) (400) (954) ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Profit before taxation* 11,525 5,470 ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Profit before taxation* - before contract provisions 8,525 5,470 - contract provisions utilised ** 3,000 - ------ ------ 11,525 5,470 ------ ------ Ongoing businesses before goodwill and exceptional items for the year ended 30 April 2004 Public Sector Travel Telecoms International Total Consultancy 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Turnover on ongoing businesses 72,216 72,993 28,304 32,014 34,346 33,679 44,593 50,245 179,459 188,931 Ongoing profit* - before utilisation of provisions (477) 205 6,158 6,832 8,726 6,845 4,123 8,087 18,530 21,969 Contract provisions utilised** 4,284 - - - - - - - 4,284 - ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Operating profit * 3,807 205 6,158 6,832 8,726 6,845 4,123 8,087 22,814 21,969 Unallocated corporate costs (2,318) (2,868) Finance charges (net) (1,594) (2,359) ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Profit before taxation* 18,902 16,742 ---------------- ------ ----- ------ ------ ------ ----- ------ ------ ------ ------ Profit before taxation* - before contract provisions 14,618 16,742 - contract provisions utilised** 4,284 - ------ ------ 18,902 16,742 ------ ------ This information is provided to show comparison on a consistent basis. * Ongoing businesses before goodwill and exceptional items. **Contract provisions relate to the utilisation of the contract provisions made for the State of Victoria and Pericles contracts. 2. Segmental information continued Group analysis including goodwill and exceptional costs for the six months ended 31 October 2004 Public Sector Travel Telecoms International Total Consultancy 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 (Restated) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover - Ongoing businesses 33,111 32,748 16,033 13,705 21,786 16,793 21,997 21,964 92,927 85,210 - - Disposed/closed businesses 823 793 - - 1,234 1,738 1,488 7,882 3,545 10,413 ---------------- ------ ----- ----- ------ ------ ----- ------ ------ ------ ------ Turnover - continuing operations 33,934 33,541 16,033 13,705 23,020 18,531 23,485 29,846 96,472 95,623 ---------------- ------ ----- ----- ------ ------ ----- ------ ------ ------ ------ Segment profit - ongoing businesses 3,086 (2,070) 3,058 2,992 5,179 4,130 2,047 2,243 13,370 7,295 - Common corporate costs ( after recharges) (1,445) (871) ------ ------ - ongoing businesses 11,925 6,424 - - Disposed/closed businesses 92 (126) - - 163 588 (46) 839 209 1,301 - Goodwill amortisation (3,802) (2,260) (998) (997) - - (3,604) (5,180) (8,404) (8,437) ---------------- ------ ----- ----- ------ ------ ----- ------ ------ Operating profit/ (loss) before exceptional costs and unallocated corporate costs (624) (4,456) 2,060 1,995 5,342 4,718 (1,603) (2,098) ------ ------ Operating profit / (loss) before exceptional costs 3,730 (712) - Goodwill impairment - - - - - - - (8,750) - (8,750) - Other exceptional costs (note 3) - (2,814) - 726 - (119) - (373) - (2,580) - Exceptional corporate costs (note 3) - - - - - - - - - (1,471) ---------------- ------ ----- ----- ------ ------ ----- ------ ------ ------ ------ Operating profit/(loss) before unallocated corporate costs (624) (7,270) 2,060 2,721 5,342 4,599 (1,603) (11,221) ---------------- ------ ----- ----- ------ ------ ----- ------ ------ ---------------- ------ ----- ----- ------ ------ ----- ------ ------ Operating profit/ (loss) before exceptional costs 3,730 (13,513) Exceptional items - non operating (note 3) 6,209 77 Profit on sale of fixed asset investment - 57 Finance charges (net) (400) (954) ------ ------ Profit / (loss) on ordinary activities before tax 9,539 (14,333) ------ ------ Segment net assets 32,532 44,972 2,962 4,161 6,605 5,710 28,525 31,059 70,624 85,902 ------ ----- ----- ------ ------ ----- ------ ------ Non-operating liabilities (42,417) (31,771) Net funds/(debt) (excluding current asset investments) 7,285 (10,800) ------ ------ Net assets 35,492 43,331 ------ ------ Disposed/closed businesses comprise the turnover and operating results of continuing operations which have ceased during the year and which do not meet the definition of discontinued operations under FRS 3. Ongoing businesses comprise the turnover and operating results of continuing operations less the turnover and operating results of disposed/closed businesses. 2. Segmental information continued Group analysis including goodwill and exceptional costs for the year ended 30 April 2004 Public Sector Travel Telecoms International Total Consultancy 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 (Restated) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ---------------- ------- ------ ----- ----- ----- ----- ------ ------ ------ ------ Turnover - Ongoing businesses 72,216 72,993 28,304 32,014 34,346 33,679 44,593 50,245 179,459 188,931 - Disposed/closed businesses 1,688 1,922 - - 2,938 5,948 12,147 19,535 16,773 27,405 ---------------- ------- ------ ----- ----- ----- ----- ------ ------ ------ ------ Turnover - continuing operations 73,904 74,915 28,304 32,014 37,284 39,627 56,740 69,780 196,232 216,336 ---------------- ------- ------ ----- ----- ----- ----- ------ ------ ------ ------ Segment profit - ongoing businesses 3,807 205 6,158 6,832 8,726 6,845 4,123 8,087 22,814 21,969 - Common corporate costs (after recharges) (2,318) (2,868) ------ ------ - ongoing businesses 20,496 19,101 - Disposed/closed businesses (26) (1,004) - - 318 (227) 1,396 (1,239) 1,688 (2,470) - Goodwill amortisation (4,455) (6,887) (1,997) (2,455) (193) (2,624) (9,913) (12,329) (16,558) (24,295) ---------------- ------- ------ ----- ----- ----- ----- ------ ------ Operating (loss) / profit before exceptional costs and unallocated corporate costs (674) (7,686) 4,161 4,377 8,851 3,994 (4,394) (5,481) ------ ------ Operating profit/(loss) before exceptional costs 5,626 (7,664) - Goodwill impairment (3,558) (12,953) - (9,060) - (29,723) (14,922) (22,942) (18,480) (74,678) - Other exceptional costs (note 3) (18,655) (5,412) 622 (763) (119) (1,100) (241) (728) (18,393) (8,003) - Exceptional corporate costs (note 3) - - - - - - - - (1,602) (1,770) ---------------- ------- ------ ----- ----- ----- ----- ------ ------ ------ ------ Operating (loss)/profit before unallocated corporate costs (22,887) (26,051) 4,783 (5,446) 8,732 (26,829) (19,557) (29,151) ---------------- ------- ------ ----- ----- ----- ----- ------ ------ ---------------- ------- ------ ----- ----- ----- ----- ------ ------ Operating loss (32,849) (92,115) Exceptional items - non operating(note 3) 4,407 (17,042) Amounts recovered/(wri tten off) investments and own shares - (964) Profit on sale of fixed asset investment 57 - Finance charges (net) (512) (2,359) ------ ------ Loss on ordinary activities before tax (28,897) (112,480) ------ ------ Segment net assets 21,659 47,450 2,580 5,235 3,390 3,837 24,939 34,122 52,568 90,644 ------- ------ ----- ----- ----- ----- ------ ------ Non operating liabilities (29,049) (14,927) Net funds/(debt) (excluding current asset investments) 4,792 (16,333) ------ ------ Net assets 28,311 59,384 ------ ------ Disposed/closed businesses comprise the turnover and operating results of continuing operations which have ceased during the year and which do not meet the definition of discontinued operations under FRS 3. Ongoing businesses comprise the turnover and operating results of continuing operations less the turnover and operating results of disposed/closed businesses. 2. Segmental information continued Additional analysis of Public Sector business for the six months ended 31 October 2004 Public Sector** Pericles State of Total Victoria 2004 2003 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover - Ongoing businesses 30,686 29,904 1,338 1,445 1,087 1,399 33,111 32,748 - Closed businesses 823 793 - - - - 823 793 ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Turnover - continuing operations 31,509 30,697 1,338 1,445 1,087 1,399 33,934 33,541 ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Segment profit (loss) - Ongoing businesses 5,698 1,778 (4,132) (2,401) (1,480) (1,447) 86 (2,070) - Closed businesses 92 (126) - - - - 92 (126) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Segment profit/(loss) before utilisation of contract provisions 5,790 1,652 (4,132) (2,401) (1,480) (1,447) 178 (2,196) Utilisation of contract provisions - - 1,473 - 1,527 - 3,000 - ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Segment profit/(loss) after utilisation of contract provisions 5,790 1,652 (2,659) (2,401) 47 (1,447) 3,178 (2,196) Goodwill amortisation (1,603) (1,631) (2,199) (629) - - (3,802) (2,260) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Operating loss before exceptional costs 4,187 21 (4,858) (3,030) 47 (1,447) (624) (4,456) Exceptional costs - Other exceptional costs (note 3) - (2,814) - - - - - (2,814) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Exceptional costs - (2,814) - - - - - (2,814) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Operating loss 4,187 (2,793) (4,858) (3,030) 47 (1,447) (624) (7,270) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Additional analysis of Public Sector business for the year ended 30 April 2004 Public Sector** Pericles State of Total Victoria 2004 2003 2004 2003 2004 2003 2004 2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover - Ongoing businesses 67,198 68,372 2,888 2,664 2,130 1,957 72,216 72,993 - Closed businesses 1,688 1,922 - - - - 1,688 1,922 ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Turnover - continuing operations 68,886 70,294 2,888 2,664 2,130 1,957 73,904 74,915 -------------------- ----- ----- ----- ------ ------ ----- ------ ------ ------ ----- Segment (loss)/ profit - Ongoing businesses 8,788 5,945 (5,079) (3,841) (4,186) (1,899) (477) 205 - Closed businesses (26) (1,004) - - - - (26) (1,004) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Segment loss before utilisation of contract 8,762 4,941 (5,079) (3,841) (4,186) (1,899) (503) (799) Provisions Utilisation of contract provisions - - 98 - 4,186 - 4,284 - ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Segment profit/(loss) after utilisation of contract provisions 8,762 4,941 (4,981) (3,841) - (1,899) 3,781 (799) Goodwill amortisation (3,448) (5,880) (1,007) (1,007) - - (4,455) (6,887) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Operating loss before exceptional costs 5,314 (939) (5,988) (4,848) - (1,899) (674) (7,686) Exceptional costs - Goodwill impairment (note 3) 250 (12,953) (3,808) - - - (3,558) (12,953) - Other exceptional costs (note 3) (4,462) (2,912) (4,028) - (10,165) (2,500) (18,655) (5,412) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Exceptional costs (4,212) (15,865) (7,836) - (10,165) (2,500) (22,213) (18,365) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- Operating loss 1,102 (16,804) (13,824) (4,848) (10,165) (4,399) (22,887) (26,051) ------------------------------ ------ ------ ------ ----- ------ ------ ------ ----- This additional information has been given to give a clearer understanding of the results of the underlying Public Sector businesses. ** Public Sector businesses excluding Pericles and State of Victoria. 2. Segmental information continued Additional analysis of turnover -------------------- Unaudited Unaudited Audited six months to six months to 12 months to 30 31 October 2004 31 October 2003 April 2004 £'000 £'000 £'000 ------------------------------------------------ ------ ------ ------- IT Consultancy 9,745 10,121 18,995 Own product software licences 13,702 12,883 29,588 Bespoke services, systems integration and implementation of software products 31,492 35,722 75,147 Managed services (includes software maintenance and support) 24,985 24,060 49,020 Originating from third party 16,548 12,837 23,482 ------------------------------------------------ ------ ------ ------- 96,472 95,623 196,232 ------------------------------------------------ ------ ------ ------- This information is given to show the main areas from which the group's turnover is derived. Geographic analysis of turnover ---------- Origin------------------- ----------- Destination --------- Unaudited Unaudited Audited Unaudited Unaudited Audited six months six months 12 months six months six months 12 months to to to to to to 31 October 31 October 30 April 31 October 31 October 30 April 2004 2003 2004 2004 2003 2004 £'000 £'000 £'000 £'000 £'000 £'000 ---------------------------- ------ ------ ------- ------ ------ ------- Europe - United Kingdom 63,739 62,972 122,954 47,733 46,340 101,370 Europe - Other 23,653 30,763 57,908 32,220 37,089 72,314 North America 4,214 112 8,025 4,390 4,907 8,141 Rest of the World 4,866 1,776 7,345 12,129 7,287 14,407 ---------------------------- ------ ------ ------- ------ ------ ------- 96,472 95,623 196,232 96,472 95,623 196,232 ---------------------------- ------ ------ ------- ------ ------ ------- Geographical analysis of profit/(loss) on ordinary activities before taxation and net assets Unaudited Unaudited Audited six months to six months to 12 months to 31 October 2004 31 October 2003 30 April 2004 Profit Net assets Loss before Net assets Loss before Net assets before taxation taxation taxation (Restated) (Restated) £'000 £'000 £'000 £'000 £'000 £'000 ---------------------------- ------ ------ ------ ------ ------ ------ Europe - United Kingdom 9,637 716 134 21,563 11,912 1,222 Europe - Other 7,670 42,563 2,668 21,609 3,110 35,283 North America (169) 897 13 82 754 1,128 Rest of the World 805 (8,684) 39 77 (9,635) (9,322) ---------------------------- ------ ------ ------ ------ ------ ------ Profit on ordinary activities before goodwill amortisation and impairment 17,943 35,492 2,854 43,331 6,141 28,311 Less: goodwill amortisation and impairment (8,404) - (17,187) - (35,038) - ---------------------------- ------ ------ ------ ------ ------ ------ Total 9,539 35,492 (14,333) 43,331 (28,897) 28,311 ---------------------------- ------ ------ ------ ------ ------ ------ 3. Exceptional items Exceptional items (excluding goodwill) reported before operating profit Unaudited Unaudited Audited six months to six months to 12 months to 31 October 31 October 30 April 2004 2003 2004 £'000 £'000 £'000 ----------------------------------------------- ------- ------- ------ Redundancy and restructuring costs - 1,124 1,147 Contract and purchasing provisions - - 14,194 ----------------------------------------------- ------- ------- ------ Charged to cost of sales - 1,124 15,341 ----------------------------------------------- ------- ------- ------ Redundancy and restructuring costs - 3,306 5,033 Aborted acquisition costs - recovery - (379) (379) ----------------------------------------------- ------- ------- ------ Charged to net operating costs - 2,927 4,654 ----------------------------------------------- ------- ------- ------ Total operating exceptional items - 4,051 19,995 ----------------------------------------------- ------- ------- ------ In addition, in prior years, exceptional goodwill impairment of £8,750,000 was charged in October 2003, and £18,480,000 in April 2004. Included within net finance charges at 30 April 2004 is an exceptional exchange gain of £1,082,000 on foreign currency intercompany financing. Unaudited Unaudited Audited six months to six months to 12 months to 31 October 31 October 30 April Exceptional items reported after operating 2004 2003 2004 profit: £'000 £'000 £'000 ----------------------------------------------- ------- ------- ------ Closed businesses: Loss on disposal of Anite Benelux BV - - (1,102) Net profit on disposal of Anite Space 6,209 - - Discontinued businesses: Consideration received in respect of previously disposed businesses - 77 1,287 Write back of tax warranty and earnout provisions no longer required on previously disposed businesses - - 4,222 ----------------------------------------------- ------- ------- ------ Profit on disposal/closure of businesses 6,209 77 4,407 ----------------------------------------------- ------- ------- ------ 4. Tax charge on profit/(loss) on ordinary activities The tax charge is made up as follows: Unaudited Unaudited Audited six months to six months to 12 months to 31 October 31 October 30 April 2004 2003 2004 £'000 £'000 £'000 ----------------------------------------------- ------- ------- ------ Current tax ----------------------------------------------- ------- ------- ------ UK corporation tax 1,780 770 1,452 Foreign tax 481 327 768 ----------------------------------------------- ------- ------- ------ 2,261 1,097 2,220 ----------------------------------------------- ------- ------- ------ Adjustments in respect of prior years - UK corporation tax - - 10 - Foreign tax - - (839) ----------------------------------------------- ------- ------- ------ - - (829) ----------------------------------------------- ------- ------- ------ Total current tax charge 2,261 1,097 1,391 ----------------------------------------------- ------- ------- ------ Deferred tax UK 114 (344) (252) Foreign 303 204 (93) ----------------------------------------------- ------- ------- ------ Total deferred tax 417 (140) (345) ----------------------------------------------- ------- ------- ------ Total tax on profit/(loss) on ordinary activities 2,678 957 1,046 ----------------------------------------------- ------- ------- ------ 5. Earnings/(loss) per ordinary share The calculations of profit and adjusted earnings per share are based on the following profit and adjusted profit and number of shares: Unaudited Unaudited Audited Unaudited Unaudited Audited six months six months 12 months six months six months 12 months to to to to to to 31 October 31 October 30 April 31 October 31 October 30 April 2004 2003 2004 2004 2003 2004 (Restated) (Restated) Pence per Pence per Pence per share share share £'000 £'000 £'000 ---------------------------- ------ ------ ------- ------ ------ ------- Profit/(loss) for the period - basic 1.9 (4.4) (8.6) 6,861 (15,290) (29,943) ---------------------------- ------ ------ ------- ------ ------ ------- Reconciliation to adjust earnings: - Goodwill amortisation 2.5 2.4 4.8 8,404 8,437 16,558 Exceptional items - Goodwill impairment - 2.5 5.3 - 8,750 18,480 - Other (note 3) - 1.2 5.7 - 4,051 19,995 - Profit on sale of fixed asset investment - - - - (57) (57) - Exchange gain on net foreign currency borrowings - - (0.3) - - (1,082) - Profit on disposal / closure of businesses (1.8) - (1.3) (6,209) (77) (4,407) - Release of prior year tax provisions and tax credit - (0.2) (0.9) 130 (556) (3,340) on exceptional operating items Profit from closed businesses (0.1) (0.4) (0.5) (209) (1,301) (1,688) ---------------------------- ------ ------ ------- ------ ------ ------- Adjusted earnings - Profit for the period on ongoing businesses 2.5 1.1 4.2 8,977 3,957 14,516 before goodwill amortisation, impairment, closed businesses and exceptional items - basic ---------------------------- ------ ------ ------- ------ ------ ------- - Ongoing businesses - utilisation of contract provisions (0.8) - (1.3) (3,000) - (4,284) ---------------------------- ------ ------ ------- ------ ------ ------- Adjusted earnings (as above) before utilisation of contract provisions - basic 1.7 1.1 2.9 5,977 3,957 10,232 ---------------------------- ------ ------ ------- ------ ------ ------- Number of shares ('000) Weighted average number of shares in issue - used to calculate basic earnings per share 352,554 345,771 348,340 ---------------------------- ------ ------ ------- ------ ------ ------- Effect of dilutive ordinary shares - SAYE and share option schemes 5,383 102 4,342 - Contingent consideration 234 595 1,128 ---------------------------- ------ ------ ------- ------ ------ ------- Number of shares used to calculate diluted earnings per share 358,171 346,468 353,810 ---------------------------- ------ ------ ------- ------ ------ ------- Adjusted earnings per share on ongoing businesses excluding goodwill amortisation, impairment, closed businesses and exceptional items have also been included as the directors consider that this figure provides a meaningful measure of the underlying business. 6. Debtors Unaudited Unaudited Audited six months to six months to 12 months to 30 31 October 2004 31 October 2003 April 2004 £'000 £'000 £'000 ----------------------------------------- -------- -------- ------- Trade debtors 39,759 36,335 45,175 Deferred tax asset 1,511 1,890 1,928 Other debtors 1,115 - 798 Prepayments 5,621 6,661 5,128 Accrued income 7,068 4,810 4,700 ----------------------------------------- -------- -------- ------- 55,074 49,696 57,729 ----------------------------------------- -------- -------- ------- 7. Creditors - Amounts falling due within one year Unaudited Unaudited Audited six months to six months to 12 months to 30 31 October 2004 31 October 2003 April 2004 £'000 £'000 £'000 ----------------------------------------- -------- -------- ------- Bank loans and overdrafts - 12,850 - Obligations under finance leases and hire purchase arrangements 392 899 696 Vendor loan notes 3,616 7,959 6,750 Trade creditors 11,492 10,903 13,811 Corporation and overseas tax 12,628 10,698 9,997 Other taxes and social security 7,171 9,742 12,996 Other creditors 2,757 750 2,548 Payments received on account 1,671 6,647 3,878 Accruals and deferred income 40,921 34,984 43,427 ----------------------------------------- -------- -------- ------- 80,648 95,432 94,103 ----------------------------------------- -------- -------- ------- 8. Creditors - Amounts falling due after more than one year Unaudited Unaudited Audited six months to six months to 12 months to 30 31 October 2004 31 October 2003 April 2004 £'000 £'000 £'000 ----------------------------------------- -------- -------- ------- Obligations under finance leases and hire purchase contracts 67 544 210 Bank loans - 1,249 - Other creditors 86 72 471 ----------------------------------------- -------- -------- ------- 153 1,865 681 ----------------------------------------- -------- -------- ------- 9. Provisions for liabilities and charges Deferred Warranties Surplus Onerous Other Group consideration property contract provisions total provisions £'000 £'000 £'000 £'000 £'000 £'000 At 1 May 2004 1,495 538 5,988 12,380 2,279 22,680 Reclassificati on to creditors - - - - (11) (11) Crystallisation of earnout and transferred to vendor loan notes payable (165) - - - - (165) Release of provision credited to profit and loss - - (229) - (23) (252) Established during the period - 477 860 350 400 2,087 Disposal of subsidiaries - (28) - - (1) (29) Utilised during the period (306) - (1,031) (3,000) (1,113) (5,450) Foreign exchange adjustment - 2 (1) 5 18 24 Unwinding of discounting of surplus property provision - - 104 - - 104 -------------------------- -------- ------ ------ ------- ------- ------ At 31 October 2004 1,024 989 5,691 9,735 1,549 18,988 -------------------------- -------- ------ ------ ------- ------- ------ 10. Reconciliation of net funds/(debt) Unaudited Unaudited Audited six months to six months to 12 months to 30 31 October 2004 31 October 2003 April 2004 £'000 £'000 £'000 ---------------------------------------------- -------- -------- ------- (Decrease)/increase in cash in the period (770) 2,095 1,819 Cash inflow from decrease in current asset investment (170) - - Cash outflow from decrease in bank loan and lease financing 476 1,587 16,276 Cash inflow from decrease in liquid resources (142) (1,009) (953) ---------------------------------------------- -------- -------- ------- Change in net funds resulting from cash flows (606) 2,673 17,142 Increase in finance lease (29) (25) (78) Receipt of shares - - 170 Exchange movement (176) (263) (296) Net funds/(debt) at 1 May excluding loan notes 11,712 (5,226) (5,226) ---------------------------------------------- -------- -------- ------- Net funds/(debt) excluding loan notes 10,901 (2,841) 11,712 Vendor loan notes (note 7) (3,616) (7,959) (6,750) ---------------------------------------------- -------- -------- ------- Net funds/(debt) 7,285 (10,800) 4,962 ---------------------------------------------- -------- -------- ------- 11. Reserves Shares to be Share premium Merger Profit and loss issued account reserve account £'000 £'000 £'000 £'000 ------------------------------------- ------ ------ ------ ------ At 1 May 2004 800 22,856 14,227 (44,811) Retained profit for the period - - - 6,861 Premium on shares issued - 417 78 - Transfer goodwill amortisation and impairment to merger reserve - - (1,733) 1,733 Shares issued against earnouts in the period (505) - - - Net gain on foreign currency translation - - - 210 ------------------------------------- ------ ------ ------ ------ At 31 October 2004 295 23,273 12,572 (36,007) ------------------------------------- ------ ------ ------ ------ 12. Post balance sheet events In November we sold the trade and assets of Anite Calculus Limited, our Telecoms billing systems business to Azure Solutions Limited for a consideration of £0.75m, and in December our Transport business, to Trapeze Inc., for £0.9m. INDEPENDENT REVIEW REPORT TO ANITE GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 31 October 2004 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow statement, the reconciliation of movements in shareholders' funds, consolidated statement of total recognised gains and losses, reconciliation of operating profit to net cash inflow from operating activities, analysis and reconciliation of net funds and related notes 1 to 12. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 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 interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 October 2004. Deloitte & Touche LLP Chartered Accountants London 6 December 2004 This information is provided by RNS The company news service from the London Stock Exchange

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