Interim Results

Anite Group PLC 08 December 2005 For immediate release Thursday, 8 December 2005 ANITE GROUP PLC Interim results for the six months ended 31 October 2005 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 2005. This is the first set of results issued under IFRS; all numbers including comparatives are stated accordingly. Highlights: • Underlying results* slightly ahead of expectations: • profit before tax of £7.7m (2004: £7.3m) on revenues of £83.6m (2004: £80.3m) • profit before tax, post utilisation of contract provisions, £10.1m (2004: £10.3m) • basic earnings per share, post utilisation of contract provisions, 2.2p (2004: 2.2p); basic earnings per share 1.5p (2004: 1.3p) • Continuing investment in development expenditure on new products • Good progress on Pericles and State of Victoria ('SoV') - no additional contract provisions required • Net cash and deposits of £25.6m (2004: £11.3m; 30 April 2005: £37.4m) • After a slow start, improving order momentum in the first half with intake of £71.7m, down 14% compared to strong comparisons last year, giving book to bill ratio of 0.9 • IFRS has had a minimal effect on the underlying operating performance of the Group in this period • 7.7m shares bought back at a cost of £5.0m • Statutory results: • Group profit after tax £9.2m (2004: £9.7m) • total Group revenues £83.6m (2004: £96.5m) • Group operating profit £9.6m (2004: £6.6m) • total basic and diluted earnings per share 2.6p (2004: 2.7p) *ongoing businesses (before impairment of goodwill, disposed and discontinued operations, and utilisation of contract provisions). For a reconciliation to reported profit before tax, see attached Income Statement and notes 2.2. Commenting on today's results, Steve Rowley, Anite's Chief Executive, stated: 'With our strengthening financial position and well positioned businesses, we are continuing investment in new products to take advantage of growth opportunities. 'The first half finished strongly following a slow start to the year. This, combined with the success of our new products, strong prospect pipeline and the continuing de-risking of both Pericles and SoV since we last reported, has increased our confidence and the outlook for the year as a whole is therefore unchanged.' 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/Sarah Richardson An analysts' meeting will be held at 11.00 for 11.15 a.m. at the offices of Smithfield, 10 Aldersgate, EC1. Notes to editors Anite is an international IT company whose primary business is the provision of business critical solutions based on its deep sector knowledge of the public sector, travel and telecoms markets. These solutions almost always include at their core the supply of Anite-owned software products. The Group 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, the Group, following recent disposals, now employs around 1400 staff in 10 countries across Europe, America, and Asia Pacific. 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. Telecoms Anite provides specialist systems and software for mobile phone network simulation and handset testing to customers around the globe. We supply all of the world's leading tier one mobile phone manufacturers, and many operators, component manufacturers and test houses. Public Sector Anite is a market leader in providing software and services that enable local authorities to operate more efficiently - as well as an important supplier of secure information systems into the central government and criminal justice markets. Travel Anite is one of the leading reservation systems and e-commerce providers to UK tour operators and to cruise, ferry and rail operators worldwide, providing critical software systems and managed services. International International brings together Anite's German consultancy businesses, focusing on IT consultancy and systems integration in a range of vertical markets including finance, telecoms and public sector. 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 2005 Chairman's Statement Introduction I am pleased to report continued progress by Anite in the six months ended 31 October 2005. As stated in our AGM trading statement on 4 October 2005, after experiencing a slow start to the year we expected the first half performance to be weighted to the final weeks of the period. The outcome is better than was anticipated at that time. This is our first set of results reported under the new IFRS accounting standards. The principal changes relate to goodwill, share based payments and the capitalisation of certain development costs and have had minimal effect on the underlying operating performance of the Group in this period. Results Underlying profit before tax*, pre utilisation of contract provisions, rose to £7.7m (2004: £7.3m). Although ongoing results continue to be affected by the costs relating to the completion of the SoV and Pericles' contracts, there has been no increase in the contract provisions. We have been making steady progress with them since we last reported and anticipate further milestones being reached in the second half. As we continue to de-risk these contracts it is more appropriate that we disclose our results on a post utilisation basis going forward. On this basis, underlying profit before tax*, post utilisation of contract provisions, was £10.1m (2004: £10.3m) with underlying basic earnings per share of 2.2p (2004: 2.2p). Underlying profit benefited from a net £0.9m improvement in interest (net interest receivable of £0.5m against net interest payable of £0.4m in 2004), but was impacted by a planned increase in research and development expenditure to £5.9m (2004: £4.6m) and the reduction of income from VME, a legacy local government product. Divisional performance is discussed in more detail in the Chief Executive's Operating Review. For continuing operations Group turnover for the period was £83.6m (2004: £82.4m), profit after tax was £7.7m (2004: £5.7m), and basic earnings per share were 2.2p (2004: 1.6p). *of ongoing businesses, before goodwill impairment, disposed and discontinued operations Share buyback and dividend policy Following the Board's decision to buy back shares as a means of enhancing long term shareholder returns, the Group has bought back and cancelled 7.7 million shares since July at a total cost of £5m and at an average price of 64.6p per share. In line with this, a dividend in respect of the period is not being declared. The introduction of IFRS has not affected the Group's ability to buy back its shares or pay a dividend, and in addition the Company has significant distributable reserves, enhancing its flexibility in this respect. Balance sheet and cash Net cash and deposits as at 31 October 2005 stood at £25.6m (2004: £11.3m; 30 April 2005: £37.4m). Net cash fell during the period due to normal first half seasonal operating cash outflow, increased tax payments and the £5m cost of the share buy back programme. The net proceeds of the disposal of Anite Austria of £1.4m were received in July. The Board At the AGM in October, we completed our Board succession planning and transformation following the appointment of new directors over the last two years. Following the conclusion of the AGM, Alec Daly retired, and I joined as Chairman, the final part of our succession planning. Alec Daly served as Chairman for ten years and on behalf of the Board I would like to recognise and thank him for his commitment and contribution over that long period. People On behalf of the Board, I would like to thank all employees for their contribution, hard work and support during the period. Summary I am pleased to have taken over the Chair at a time when Anite is in robust health and I look forward to building on the transformational work undertaken by the new management team. The Board remains optimistic about future prospects. Clay Brendish Chairman Chief Executive's Operating Review Strategy Anite's primary business is the provision of business critical solutions based on its deep sector knowledge of the public sector, travel and telecoms markets. These solutions almost always include at their core the supply of Anite-owned software products. Our strategy is to be number one or two in each of these markets as we believe that businesses with strong market positions have demonstrably superior returns. We can claim that position in many of our chosen sectors within the public sector, travel and telecoms markets, achieved by virtue of our expertise and experience. We aim to build on these market leading positions by investing in growth opportunities and by building up the critical mass and market position of those businesses. Divisional performance Divisional performance* was as follows: 6 months to 31 October 2005 £m Revenue Operating Share Operating Utilisation Operating % profit/ based profit/ of profit/ (loss) payments (loss)* provisions (loss)** pre SBP Public Sector 33.8 3.6 (0.1) 3.5 - 3.5 10.4 SoV 1.3 (2.0) - (2.0) 2.0 - - Pericles 1.4 (3.1) - (3.1) 0.4 (2.7) - Total Public Sector 36.5 (1.5) (0.1) (1.6) 2.4 0.8 2.2 Travel 14.6 3.2 (0.1) 3.1 - 3.1 21.2 Telecoms 24.8 6.3 (0.1) 6.2 - 6.2 25.0 International 7.7 0.6 (0.1) 0.5 - 0.5 6.5 83.6 8.6 (0.4) 8.2 2.4 10.6 12.7 *Ongoing businesses before goodwill impairment, disposed and discontinued operations and utilisation of contract provisions. Also stated before unallocated Group central costs of £1.0m (net of share based payments of £0.2m) and interest receivable of £0.5m. **After utilisation of contract provisions Telecoms Underlying revenues and profits grew in the first half by 14% and 13% respectively, reflecting a strong order backlog carried over from last year. Order intake was slow to take off due to the later than expected introduction of new products and a slow start to the period, although last year included some one off hardware sales that distort the comparison. There is a steady technology transition as orders for 2G and 2.5G systems slow, whilst orders covering 3G and 3.5G technology are increasing. The business continues to benefit from its global reach which has been extended with new sales and support offices in Shanghai, Sales presence in Bangalore and Copenhagen. Deliveries of our new platform, based on Anite and Agilent components, started in mid-summer. This platform supports all current 2G, 3G and 3.5G technologies including HSDPA and HSUPA, and has been very well received by the market. Research and development spending continues to grow across all our products to take advantage of the many market opportunities. In May, Telecoms moved into its new modern freehold property in Fleet, Hampshire, which enabled us to consolidate all our UK activities into one building and to undertake increased R&D more effectively. The move will provide long-term property cost savings and efficiencies, scope for future expansion, and improved communications within the business. Availability of our new product, our strong international presence and good order pipeline are expected to result in improving order momentum during the second half. Public Sector Orders grew by 14% and revenues by 10% year on year driven by improving demand for software and services that assist local authorities to operate more efficiently and also by further contract wins with police and non-departmental public bodies. Orders for our new Integrated Children's System for local authorities continue to gain momentum with 27 customers now contracted for the software solution, with phased delivery over the next twelve months. Underlying profits fell during the period reflecting investment in sales and marketing and research and development, as well as the expected reduction of income from our legacy Council Tax and Benefits product, VME. The core public sector business excluding Pericles and SoV delivered double digit margins and for the year as a whole Public Sector should benefit from second half seasonality as in prior years. Pericles Progress on Pericles continues in line with our expectations with a further six customers being implemented on the benefits module in the first half. These implementations, together with new software releases, have been implemented on time with improvements in predictability, stability and performance. As a result no increase in the provision has been necessary. The next release of the software at the end of the second half will represent another significant milestone in de-risking the Pericles contracts. State of Victoria This contract, where completion is due during 2007, continues to make progress. Testing of stage one of the software is now in the final stages and deployment is planned early in the New Year. The latter phases of the project are also under development with releases scheduled for 2006 and 2007. No increase in the related provision has been made during the period. Travel Travel reported stable underlying profits on slightly lower revenues in the period. Orders were lower compared to a very strong order intake in the same period last year. Margins improved this year due to lower hardware sales. Travel saw strong recurring and services revenues from its installed base during the period, as well as growing interest in @com, our new product suite. As more customers commit to @com, we expect to increase our development expenditure in the second half year, having under spent against plan in the first half. Since 31 October 2005, Travel has experienced much improved order momentum, with £5.5m worth of orders booked in November alone, including additional orders for @com software modules and services. International Although underlying revenues and profits fell overall, Germany continues to be profitable despite difficult market conditions. Outlook With our strengthening financial position and well positioned businesses, we are continuing investment in new products to take advantage of growth opportunities. The first half finished strongly following a slow start to the year. This, combined with the success of our new products, strong prospect pipeline and the continuing de-risking of both Pericles and SoV since we last reported, has increased our confidence and the outlook for the year as a whole is therefore unchanged. Steve Rowley Chief Executive Anite Group plc Consolidated income statement Six months ended 31 October 2005 Notes 6 months 6 months Year ended ended ended 30.4.05 31.10.05 31.10.04 (unaudited) (unaudited) (audited) £000 £000 £000 -------------------- ------ --------- -------- ------- Continuing operations -------------------- ------ --------- -------- ------- Revenue - ongoing businesses 83,566 80,347 162,951 Revenue - disposed businesses - 2,057 2,192 -------------------- ------ --------- -------- ------- Revenue 2 83,566 82,404 165,143 -------------------- ------ --------- -------- ------- Cost of sales -------------------- ------ --------- -------- ------- Cost of sales before utilisation of contract provisions (49,902) (47,530) (94,640) Utilisation of contract provisions 2,419 3,000 5,634 -------------------- ------ --------- -------- ------- Total cost of sales (47,483) (44,530) (89,006) -------------------- ------ --------- -------- ------- Gross profit 36,083 37,874 76,137 Net operating costs -------------------- ------ --------- -------- ------- Goodwill impairment - (2,199) (17,347) Distribution costs (5,340) (5,315) (10,925) Administrative expenses (21,134) (21,590) (41,527) -------------------- ------ --------- -------- ------- Total net operating costs (26,474) (29,104) (69,799) -------------------- ------ --------- -------- ------- Operating profit -------------------- ------ --------- -------- ------- Ongoing businesses - before utilisation of contract provisions 7,190 7,714 17,908 and goodwill impairment -------------------- ------ --------- -------- ------- Ongoing businesses - utilisation of contract provisions 2,419 3,000 5,634 -------------------- ------ --------- -------- ------- Ongoing businesses before goodwill impairment 9,609 10,714 23,542 Disposed businesses - 255 143 Goodwill impairment - (2,199) (17,347) -------------------- ------ --------- -------- ------- Continuing operations before profit on disposal of businesses 9,609 8,770 6,338 Profit on disposal of businesses 3(a) - - 1,565 -------------------- ------ --------- -------- ------- Operating profit from continuing operations 2 9,609 8,770 7,903 Investment income 457 - 76 Finance charges - (410) (609) -------------------- ------ --------- -------- ------- Profit on ordinary activities from continuing operations before tax 10,066 8,360 7,370 Income tax expense 4 (2,374) (2,696) (5,108) -------------------- ------ --------- -------- ------- Profit for the period from continuing operations 7,692 5,664 2,262 Discontinued operations Profit for the period from discontinued operations 3(b) 1,490 4,032 4,395 -------------------- ------ --------- -------- ------- Profit for the period 9,182 9,696 6,657 -------------------- ------ --------- -------- ------- Profit attributable to equity holders of the parent 9,182 9,696 6,657 -------------------- ------ --------- -------- ------- Continuing and discontinued operations Earnings per share - basic 5 2.6p 2.7p 1.9p - diluted 2.6p 2.7p 1.9p Continuing operations Earnings per share - basic 5 2.2p 1.6p 0.6p - diluted 2.2p 1.6p 0.6p -------------------- ------ --------- -------- ------- Consolidated balance sheet as at 30 October 2005 Notes 6 months ended 6 months ended Year ended 31.10.05 31.10.04 30.4.05 (unaudited) (unaudited) (audited) £000 £000 £000 --------------- --- ----- ------ --------- --------- -------- Non-current assets Goodwill 34,619 49,769 34,619 Other intangible assets 3,427 1,975 2,650 --------------- --- ----- ------ --------- --------- -------- Intangible assets 38,046 51,744 37,269 Property, plant and equipment 12,363 9,583 12,027 Deferred tax assets 2,489 2,803 2,896 --------------- --- ----- ------ --------- --------- -------- 52,898 64,130 52,192 --------------- --- ----- ------ --------- --------- -------- Current assets Inventories 4,043 3,350 4,279 Trade and other receivables 6 50,031 45,038 49,577 Current tax assets 331 - 331 Short-term deposits - 953 - Cash and cash equivalents 25,598 10,407 37,443 Assets classified as held for sale 3(c) - 17,102 1,415 ------------------- ------ --------- --------- -------- 80,003 76,850 93,045 --------------- --- ----- ------ --------- --------- -------- Total assets 132,901 140,980 145,237 --------------- --- ----- ------ --------- --------- -------- Current liabilities Trade and other payables 7 (57,998) (61,739) (69,564) Current tax payable (15,003) (12,547) (14,728) Obligations under finance leases (50) (392) (151) Provisions 9 (4,246) (8,330) (8,247) Liabilities directly associated with assets classified as held for sale 3(c) - (7,231) (1,464) ------------------- ------ --------- --------- -------- (77,297) (90,239) (94,154) --------------- --- ----- ------ --------- --------- -------- Non-current liabilities Other payables 8 (148) (86) (268) Provisions 9 (12,840) (10,117) (12,694) Obligations under finance leases - (47) - ---------------- ----- ------ --------- --------- -------- (12,988) (10,250) (12,962) --------------- --- ----- ------ --------- --------- -------- Total liabilities (90,285) (100,489) (107,116) --------------- --- ----- ------ --------- --------- -------- --------------- --- ----- ------ --------- --------- -------- Net assets 42,616 40,491 38,121 --------------- --- ----- ------ --------- --------- -------- Equity Share capital Issued 10 34,773 35,359 35,446 Shares to be issued - 295 - --------------- --- ----- ------ --------- --------- -------- 34,773 35,654 35,446 Share premium account 23,611 23,273 23,390 Own shares (569) - - Merger reserve 6,538 12,605 6,538 Capital redemption reserve 773 - - Retained earnings (22,510) (31,041) (27,253) --------------- --- ----- ------ --------- --------- -------- Total equity 42,616 40,491 38,121 --------------- --- ----- ------ --------- --------- -------- Consolidated statement of changes in equity for the six months ended 31 October 2005 Share Share Own Merger Capital Retained capital premium shares reserve redemption earnings account reserve £'000 £'000 £'000 £'000 £'000 £'000 ----------- ---------- ------ ------- ------- ------ -------- ------- Balance at 1 May 2005 35,446 23,390 - 6,538 - (27,253) -------------------- ------ ------- ------- ------ -------- ------- Exchange differences arising on translation of foreign operations - - - - - 72 -------------------- ------ ------- ------- ------ -------- ------- Net income recognised directly in equity - - - - - 72 Profit for the period 9,182 -------------------- ------ ------- ------- ------ -------- ------- Total recognised income and expense for the period - - - - - 9,254 Issue of share capital 100 221 - - - - Purchase of own shares - - (569) - - - Share buy back (773) - - - 773 (5,026) Recognition of share-based payments - - - - - 515 -------------------- ------ ------- ------- ------ -------- ------- Balance at 31 October 2005 34,773 23,611 (569) 6,538 773 (22,510) -------------------- ------ ------- ------- ------ -------- ------- Consolidated cash flow statement For the six months ended 31 October 2005 6 months ended 6 months ended Year ended 31.10.05 31.10.04 30.4.05 £000 £000 £000 ----------------------- ----- --- --- -------- -------- ------- Net profit after tax - Continuing 7,692 5,664 2,262 - Discontinued 1,490 4,032 4,395 ----------------------- ----- --- --- -------- -------- ------- 9,182 9,696 6,657 Adjustments for: Income tax expense 2,374 2,756 5,220 Profit on disposal of discontinued operations (1,490) (6,209) (5,540) Profit on disposal of businesses - - (1,565) (Investment income)/ finance charges (457) 400 517 Depreciation 2,354 2,146 4,062 Amortisation of intangible assets 897 535 1,212 Goodwill impairment - 5,510 20,658 (Profit)/Loss on disposal of fixed assets (91) (23) 28 Share-based payment expense 596 412 872 Decrease in provisions (3,093) (3,070) (2,687) ----------------------- ----- --- --- -------- -------- ------- Operating cashflows before movements in working capital 10,272 12,153 29,434 (Increase)/decrease in inventories (164) 526 (878) (Increase)/decrease in receivables (409) 1,158 (3,179) (Decrease)/increase in payables (13,345) (12,179) 331 ----------------------- ----- --- --- -------- -------- ------- Cash (used in)/generated from operations (3,646) 1,658 25,708 Interest received 381 61 51 Interest paid - (362) (443) Interest element of finance lease rental payments (7) (33) (66) Taxation (paid)/ refunded (1,777) 403 (185) ----------------------- ----- --- --- -------- -------- ------- Net cash (used in)/ generated from operating activities (5,049) 1,727 25,065 --------------------------- --- -------- -------- ------- Cashflow from investing activities Sale of subsidiary undertakings (net of cash disposed) 1,381 7,042 19,372 Disposal of fixed asset investment - 170 170 Proceeds from previously closed businesses 31 - 216 Deferred consideration paid - (1,037) (1,061) Purchase of tangible fixed assets (2,020) (4,398) (9,219) Purchase of software licences (200) (17) (162) Expenditure on capitalised product development (1,469) (736) (1,943) Proceeds on disposal of property, plant and equipment 87 2 31 --------------------------- --- -------- -------- ------- Net cash (used in)/generated from investing activities (2,190) 1,026 7,404 --------------------------- --- -------- -------- ------- Cashflow from financing activities Decrease in short-term deposits - 142 1,095 Issue of ordinary share capital 321 110 238 Share buyback (5,019) - - Capital element of finance lease rental payments (105) (476) (783) Redemption of vendor loan note instruments (28) (3,299) (6,838) -------------------------- --- --- -------- -------- ------- Net cash used in financing activities (4,831) (3,523) (6,288) ----------------------- ----- --- --- -------- -------- ------- Net (decrease)/increase in cash and cash equivalents (12,070) (770) 26,181 Effect of exchange rate changes 225 (176) (91) Cash and cash equivalents at 1 May 37,443 11,353 11,353 ----------------------- ----- --- --- -------- -------- ------- Cash and cash equivalents at 31 October and 30 April 25,598 10,407 37,443 --------------------------- --- -------- -------- ------- Notes to the accounts 1. Basis of preparation and accounting policies The transition date for the application of IFRS for the Group was 1 May 2004. The Group will adopt IFRS for the first time in its consolidated financial statements for the year ended 30 April 2006, which will include comparative financial information for the year ended 30 April 2005. IFRS 1 requires that an entity develop accounting policies based on its standards effective at the reporting date of its first IFRS financial statements. In accordance with the Listing Rules of the UKLA this Interim Report for the six months period ended 31 October 2005, including comparative information for the six months period ended 31 October 2004 and for the year ended 30 April 2005, has been prepared on a basis consistent with its anticipated 2006 IFRS accounting policies, except for IAS 32/39 where UK GAAP was adopted in the comparative period. The accounting policies adopted assume that all existing standards in issue from the IASB will be fully endorsed by the EU. These are subject to ongoing amendment by the IASB and subsequent endorsement by the EU and therefore subject to possible change. A reconciliation and explanation of the effect of the transition from UK GAAP to IFRS for the six months ended 31 October 2004 and year ended 30 April 2005 have been published on the Anite corporate website (www.anite.com), together with a full description of the Company's anticipated IFRS accounting policies. The financial information contained in this Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. No statutory accounts for the period have been delivered to the Registrar of Companies. 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 2005 are based upon the Group's audited accounts prepared under UK GAAP at that date and adjusted under IFRS. The statutory accounts for the year ended 30 April 2005 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. 2. Segmental information 2.1 Business segments At 31 October 2005, the Group is organised into four business segments: Public Sector, Travel, Telecoms and International Consultancy. These four business segments are the Group's primary reporting format for segment information. Part of the International Consultancy operation was sold in the previous year. Details are as disclosed in note 3. Segment results, assets and liabilities include items directly attributable to a segment as well as those than can be allocated on a reasonable basis. Unallocated items comprise several income-earning assets and revenue, interest- bearing loans, corporate assets and liabilities and expenses. Segment information under the primary reporting format is as disclosed in the table below: Public Sector Travel Telecoms International Total Consultancy 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 ---------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Revenue - ongoing businesses 36,598 33,111 15,228 16,779 24,830 21,786 8,119 9,948 84,775 81,624 - disposed businesses - 823 - - - 1,234 - - - 2,057 Inter-segment revenue1 (75) - (674) (746) - - (460) (531) (1,209) (1,277) -------- ------- ------- ------- ------- ------- ------- ------ ------ ------- ------- Revenue - continuing operations 36,523 33,934 14,554 16,033 24,830 23,020 7,659 9,417 83,566 82,404 Revenue - discontinued operations - - - - - - - 14,068 - 14,068 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Total 36,523 33,934 14,554 16,033 24,830 23,020 7,659 23,485 83,566 96,472 Revenue ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- --------- Segment profit - ongoing businesses 801 3,006 3,083 2,983 6,210 5,494 525 796 10,619 12,279 - disposed businesses - 92 - - - 163 - - - 255 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- - continuing operations 801 3,098 3,083 2,983 6,210 5,657 525 796 10,619 12,534 Unallocated corporate costs (after recharges) (1,010) (1,565) ------- ------- ------- ------- Operating profit for continuing 9,609 10,969 operations before goodwill - Goodwill impairment - (2,199) - - - - - - - (2,199) --------- ------- ------- ------- ------- ------- ------- ------ ------- Operating profit -continuing operations 801 899 3,083 2,983 6,210 5,657 525 796 Operating loss from discontinued operations - - - - - - - (2,127) - (2,127) (note 3(b)) ------- ------- ------- ------- ------- ------- ------ ------- --------- Operating profit/(loss) 801 899 3,083 2,983 6,210 5,657 525 (1,331) --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Total operating profit 9,609 6,643 Profit on disposal of businesses - discontinued operations (note 3(b)) 1,490 6,209 Investment income/(finance charges) - continuing 457 (410) - discontinued (note 3(b)) - 10 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Profit on ordinary activities before tax 11,556 12,452 Taxation - continuing (note 4) (2,374) (2,696) Taxation - discontinued (note 3(b)) - (60) -------------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Profit for the period 9,182 9,696 -------------- ------- ------- ------- ------- ------- ------ ------- ------- ------- ------- 1 - inter-segment revenues are charged at prevailing market rates. 2. Segmental information continued 2.2 Ongoing businesses before goodwill impairment Public Sector Travel Telecoms International Total Consultancy 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Revenue on ongoing businesses 36,523 33,111 14,554 16,033 24,830 21,786 7,659 9,417 83,566 80,347 Underlying operating profit1 - before utilisation of provisions and share based payments (1,489) 114 3,193 3,066 6,325 5,571 554 824 8,583 9,575 Share based payments (129) (108) (110) (83) (115) (77) (29) (28) (383) (296) Contract provisions utilised2 2,419 3,000 - - - - - - 2,419 3,000 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Underlying operating profit 1 801 3,006 3,083 2,983 6,210 5,494 525 796 10,619 12,279 Unallocated corporate costs (797) (1,449) Share based payments (213) (116) --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Underlying operating profit 9,609 10,714 Finance income/(charges) net 457 (410) -------------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Underlying profit before taxation1 10,066 10,304 -------------- ------- ------- ------- ------- ------- ------ ------- ------- ------- ------- Underlying profit before taxation1 - before utilisation of contract provisions 7,647 7,304 - contract provisions utilised 2,419 3,000 ------- ------- ------- ------- - after utilisation of contract provisions 10,066 10,304 ------- ------- ------- ------- 2.3 Additional analysis of Public Sector ongoing businesses Public Sector Pericles State of Total (Excluding development Victoria Pericles and SoV) 2005 2004 2005 2004 2005 2004 2005 2004 £000 £000 £000 £000 £000 £000 £000 £000 --------- ------- ------- ------- ------- ------- ------- ------ ------- ------- ------- Revenue on ongoing businesses 33,822 30,686 1,418 1,338 1,283 1,087 36,523 33,111 Operating profit2 - before utilisation of provisions and share based payments 3,615 5,706 (3,141) (4,112) (1,963) (1,480) (1,489) 114 Share based payments (129) (108) - - - - (129) (108) Contract provisions utilised2 - - 456 1,473 1,963 1,527 2,419 3,000 ------------------- ------- ------- ------- ------- ------- ------- ------- ------- Total operating profit/(loss)1 3,486 5,598 (2,685) (2,639) - 47 801 3,006 ------------------- ------- ------- ------- ------- ------- ------- ------- ------- 2.4 Additional analysis of revenue on ongoing businesses 2005 2004 £000 £000 ---------------------------------------------------------------- ------- ------- IT Consultancy 4,357 7,554 Own product software licences 14,839 13,435 Bespoke services, systems integration and implementation of software products 21,076 19,230 Managed services (includes software maintenance and support) 27,139 24,581 Originating from third party 16,155 15,547 ---------------------------------------------------------------- ------- ------- 83,566 80,347 ---------------------------------------------------------------- ------- ------- This additional information has been given to give a clearer understanding of the results of the core ongoing businesses 1 Ongoing businesses before goodwill impairment. 2 Contract provisions relate to the utilisation of the contract provisions made for the State of Victoria and Pericles contracts. 3.Disposed businesses/discontinued operations a) Disposed businesses 6 months ended 6 months Year 31.10.05 ended ended 31.10.04 30.4.05 £000 £000 £000 --------------------------- --------- --------- --------- Profit on sale of business and assets of: Telecoms Billing business (Anite Calculus Limited) - - 742 Transport division (Anite Public Sector Limited) - - 823 --------- --- --- --- ---------------- --------- --------- --------- - - 1,565 --------- --- --- --- ---------------- --------- --------- --------- In the opinion of the directors, the disposed businesses do not meet the criteria to be classified as discontinued operations under IFRS 5 ' Non - current assets held for sale and discontinued operations' as they do not represent a separate major line of business within the Group. b)Discontinued operations 6 months ended 6 months Year 31.10.05 ended ended 31.10.04 30.4.05 £000 £000 £000 --------- --- --- --- ---------------- --------- --------- --------- Loss after tax for the period from discontinued operations Revenue - 14,068 24,260 Cost of sales - (10,450) (18,096) --------- --- --- --- ---------------- --------- --------- --------- Gross profit - 3,618 6,164 Goodwill impairment - (3,311) (3,311) Operating expenses - (2,434) (3,902) ------------- ---------------- --------- --------- --------- Operating loss before interest - (2,127) (1,049) Investment income - 10 16 ------------- ---------------- --------- --------- --------- Loss before tax - (2,117) (1,033) Attributable tax expenses - (60) (112) ------------- ---------------- --------- --------- --------- Loss after tax - (2,177) (1,145) ------------- ---------------- --------- --------- --------- Profit on sale of discontinued operations Profit on disposal of Anite Austria 1,490 - - Profit on disposal of Anite Systems GmbH - 6,209 6,187 Loss on disposal of Datavance Informatique SAS - - (479) Loss on disposal of French Space Business (Delta Partners SAS) - - (168) --------- --- --- --- ---------------- --------- --------- --------- Net profit before tax on sale of discontinued operations 1,490 6,209 5,540 Attributable tax expenses - - - --------------------------- --------- --------- --------- Net profit after tax on sale of discontinued operations 1,490 6,209 5,540 --------------------------- --------- --------- --------- --------------------------- --------- --------- --------- Total 1,490 4,032 4,395 --------------------------- --------- --------- --------- c) Assets/(liabilities) classified as held for sale On 29 June 2004, the Directors resolved to dispose of some of the non-core businesses within the International Consultancy division. The assets and liabilities of Anite Austria and Datavance Informatique SAS which were expected to be, and were sold, within twelve months, have been classified as a disposal group held for sale and are presented separately in the balance sheet at 31 October 2004 and 30 April 2005 (Anite Austria only). The results of these businesses are included in the International consultancy division as discontinued operations for segment reporting purposes (see note 2). The Directors also resolved to dispose other non-core businesses, which included the assets and liabilities of Anite Calculus Limited - telecoms billing business (Telecoms division) and Transports (Public Sector division) prior to 1 May 2004. The assets and liabilities of both businesses which were expected to be, and were sold within twelve months, have been classified as a disposal group held for sale and are presented separately in the balance sheet at 1 May 2004 and 31 October 2004.The results of these businesses are included in Telecoms and Public Sector divisions as disposed businesses for segment reporting purposes for the period (see note 2). The telecoms billing and Transport businesses were subsequently sold on 12 November 2004 and 3 December 2004, respectively. Disposed businesses/discontinued operations continued The major classes of assets and liabilities of these disposed and discontinued businesses classified as held for sale are as follows: 6 months ended 6 months Year ended 31.10.05 ended 30.4.05 31.10.04 £000 £000 £000 -------------------------------------- --------- --------- --------- Goodwill - 8,245 556 Property, plant and equipment - 332 105 Trade and other receivables - 8,525 754 -------------------------------------- --------- --------- --------- Total assets classified as held for sale - 17,102 1,415 Trade and other payables, and total for liabilities associated with assets classified held for sale - (7,231) (1,464) -------------------------------------- --------- --------- --------- Net assets/(liabilities) - 9,871 (49) -------------------------------------- --------- --------- --------- 4. Income tax expense 6 months 6 months Year ended ended ended 31.10.05 31.10.04 30.4.05 Current tax £000 £000 £000 ----------------------------------- -------- -------- -------- UK corporation tax 1,118 1,780 4,073 Foreign tax 1,021 421 709 ----------------------------------- -------- -------- -------- 2,139 2,201 4,782 ----------------------------------- -------- -------- -------- Adjustments in respect of prior years - UK corporation tax (91) - (228) - foreign tax - - 24 ----------------------------------- -------- -------- -------- (91) - (204) ----------------------------------- -------- -------- -------- Total current tax expense 2,048 2,201 4,578 ----------------------------------- -------- -------- -------- Deferred tax UK 326 192 (79) Foreign - 303 609 ----------------------------------- -------- -------- -------- Total deferred tax expense 326 495 530 ----------------------------------- -------- -------- -------- ----------------------------------- -------- -------- -------- Total income tax expense 2,374 2,696 5,108 ----------------------------------- -------- -------- -------- In addition to the income tax expense above, there was a corporation tax charge of £nil (October 2004: £60,000; April 2005: £112,000) on the profit from discontinued operations (see note 3b above). No tax arose on the profit on sale of discontinued operations. Corporation tax for the interim period is charged at 23.6% (October 2004: 25.5%), representing the best estimate of the weighted average annual corporation tax rate expected for the full year on the profit (before goodwill impairment) on continuing operations. 5. Earnings per share The calculations of profit and underlying earnings per share are based on the following profit and underlying profit and number of shares: 6 months 6 months Year 6 months 6 months Year ended ended ended ended ended ended 31.10.05 31.10.04 30.4.05 31.10.05 31.10.04 30.4.05 Pence per Pence per Pence per £000 £000 £000 share share share -------------------------- -------- ------- ------- ------- ------- ------- Profit for the period- basic and diluted 2.6 2.7 1.9 9,182 9,696 6,657 -------------------------- -------- ------- ------- ------- ------- ------- Adjustment: Profit for the period from discontinued operations (0.4) (1.1) (1.3) (1,490) (4,032) (4,395) -------------------------- -------- ------- ------- ------- ------- ------- Profit for the period on continuing operations - basic and diluted 2.2 1.6 0.6 7,692 5,664 2,262 -------------------------- -------- ------- ------- ------- ------- ------- Reconciliation to underlying earnings: - Operating profit from disposed businesses - - - - (255) (143) - Goodwill impairment - 0.6 4.9 - 2,199 17,347 - Profit on disposal of businesses - - (0.4) - - (1,565) - Tax charge on the results of the - - - - 60 49 discontinued businesses -------------------------- -------- ------- ------- ------- ------- ------- Underlying earnings - profit for the period on ongoing businesses before goodwill impairment, disposed businesses and discontinued operations 2.2 2.2 5.1 7,692 7,668 17,950 -------------------------- -------- ------- ------- ------- ------- ------- - ongoing businesses - utilisation of (0.7) (0.9) (1.4) (2,282) (3,000) (4,991) contract provisions (net of tax) -------------------------- -------- ------- ------- ------- ------- ------- Underlying earnings (as above) before utilisation of contract provisions 1.5 1.3 3.7 5,410 4,668 12,959 -------------------------- -------- ------- ------- ------- ------- ------- Number of shares ('000) Weighted average number of shares in issue used to calculate basic earnings per share 351,768 352,554 353,046 -------------------------- -------- ------- ------- ------- ------- ------- Effect of dilutive ordinary shares - SAYE and share option schemes 6,115 5,383 5,122 - contingent consideration - 234 - -------------------------- -------- ------- ------- ------- ------- ------- Number of shares used to calculate diluted earnings per share 357,883 358,171 358,168 -------------------------- -------- ------- ------- ------- ------- ------- -------------------------- -------- ------- ------- ------- ------- ------- Underlying earnings per share based on ongoing businesses excluding goodwill impairment a) Before utilisation of contract provisions -basic 1.5p 1.3p 3.7p - diluted 1.5p 1.3p 3.6p b) After utilisation of contract provisions -basic 2.2p 2.2p 5.1p - diluted 2.2p 2.1p 5.0p Underlying earnings per share on ongoing businesses excluding goodwill impairment, disposed businesses and discontinued operations have been included as the Directors consider that this figure provides a meaningful measure of the ongoing businesses. 6. Trade and other receivables 6 months 6 months Year ended ended ended 31.10.05 31.10.04 30.4.05 £000 £000 £000 ------------------------------------ ------- ------- -------- Trade debtors 33,118 33,011 34,540 Less: Provision for impairment of trade debtors (831) (1,226) (840) ------------------------------------ ------- ------- -------- ------------------------------------ ------- ------- -------- Trade debtors 32,287 31,785 33,700 Other debtors 1,520 1,053 1,784 Prepayments 5,779 5,461 6,050 Accrued income 10,445 6,739 8,043 ------------------------------------ ------- ------- -------- ------------------------------------ ------- ------- -------- 50,031 45,038 49,577 ------------------------------------ ------- ------- -------- 7. Trade and other payables 6 months 6 months Year ended ended ended 31.10.05 31.10.04 30.4.05 £000 £000 £000 -------------------------------------- -------- -------- ------- Vendor loan notes 932 3,616 77 Trade creditors 9,597 10,419 12,203 Other taxes and social security 3,180 5,166 5,919 Other creditors 3,170 2,240 3,426 Payments received on account 4,769 1,656 6,304 Accruals 18,666 16,811 18,720 Deferred income 17,684 21,831 22,915 -------------------------------------- -------- -------- ------- 57,998 61,739 69,564 -------------------------------------- -------- -------- ------- -------------------------------------- -------- -------- ------- 8. Non current liabilities - other payables 6 months 6 months Year ended ended ended 30.4.05 31.10.05 31.10.04 £000 £000 £000 --------------------------- -------- -------- ------- Other payables 148 86 268 --------------------------- -------- -------- ------- 148 86 268 --------------------------- -------- -------- ------- 9. Provisions for liabilities and charges Deferred Warranties Surplus Onerous Other Total consideration property contract provisions provisions £000 £000 £000 £000 £000 £000 ------------------- -------- -------- ------- ------- ------- ------- At 1 May 2005 1,024 5,675 5,225 7,592 1,425 20,941 Reclassification to creditors (883) - - - - (883) Release of provision credited to income statement - - - - (273) (273) Established during the period - - 131 - 21 152 Utilised during the period - - (275) (2,419) (470) (3,164) Unwinding of discounting - - 119 - - 119 Foreign exchange adjustment - 19 1 161 13 194 ------------------- -------- -------- ------- ------- ------- ------- ------------------- -------- -------- ------- ------- ------- ------- At 31 October 2005 141 5,694 5,201 5,334 716 17,086 ------------------- -------- -------- ------- ------- ------- ------- 6 months 6 months Year ended ended ended 31.10.05 31.10.04 30.4.05 £000 £000 £000 ------- ------- ------- Analysed as: Current liabilities 4,246 8,330 8,247 Non-current liabilities 12,840 10,117 12,694 ------- ------- ------- 17,086 18,447 20,941 ------- ------- ------- 10. Share capital issued Ordinary shares Deferred redeemable Total shares of 10p each of £1 each Numbers £000 Numbers £000 £000 ------------------- ---------- -------- -------- ------- ------- Allotted, issued and fully paid: At 1 May 2005 353,956,998 35,396 50,000 50 35,446 Issued during the period 1,001,567 100 - - 100 Cancelled during the period (7,733,332) (773) - - (773) ------------------- ---------- -------- -------- ------- ------- At 31 October 2005 347,225,233 34,723 50,000 50 34,773 ------------------- ---------- -------- -------- ------- ------- The shares cancelled during the period were acquired at an average price of 64.6 pence per share, as part of the Group's share buy back programme. This information is provided by RNS The company news service from the London Stock Exchange

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