Trading Statement

Anite Group PLC
20 November 2002


For immediate release                                Wednesday, 20 November 2002




                                   ANITE GROUP plc

                             Half Year Trading Statement

Anite Group plc ('Anite' or 'the Group'), the European consultancy and services
company, is today announcing a trading update for the six months ended 31
October 2002.

Current Trading

As indicated at the time of the Annual General Meeting in September, market
conditions continue to be challenging but we remain confident that, for the year
as a whole, the underlying performance of the Group will be in line with
expectations, continuing to benefit from its business and geographical
diversification.

In respect of the first half, as indicated at the time of the preliminary
results in July, pre-tax profits before exceptional items and goodwill
amortisation will be lower than the corresponding period in 2001/2 as result of
a £2m increase in research and development spending within our Telecoms and
Public Sector divisions, together with the second half bias in the delivery
patterns of the strongly growing Public Sector business.  In addition, first
half restructuring costs of £1m have been incurred together with pre-sales costs
in relation to the successful award of the £11m State of Victoria contract.

The Group's focus for the period has been on managing its assets and good
housekeeping, as evidenced by strong cash generation, driving the synergies of
the businesses, successfully renegotiating the earnouts and reducing costs.

Key points for the period since the preliminary results in July include:

  • At the Group level, revenue growth has been achieved but margins have been
    impacted, as expected, by higher R&D costs, and first half restructuring
    costs, leading to lower profits
  • The recruitment of a new Finance Director is progressing well - we expect
    to be in a position to announce an appointment early in the New Year. In the
    period under review, the finance director's role has been ably handled by
    other members of our finance team, both at head office and in the divisions
  • The interim results will include the exceptional £0.75m cost relating to
    the departure of the outgoing Finance Director
  • There has been strong cash generation and control of working capital in
    the first half and the Group is operating comfortably within its banking
    facilities:
      • Net debt (including outstanding loan notes): at the half year end
        stood at around £17m (30 April 2002: £11.5m), after £16m of earnout
        payments.  A similar level of net debt is anticipated at the year end
        after paying a further £12m in earnout payments
  • Restructuring:
      • First half - there has been a headcount reduction of 30, principally
        in Consultancy in Germany and Travel, giving annualised savings of £1m,
        with a first half restructuring cost of £1m
      • Second half - there will be a headcount reduction of a further 70,
        principally within Public Sector, which is expected to give annualised
        savings of £3m at a cost of £1.5-£2m
  • The earnout obligations for Calculus, Carus, Didgicom, MSPS, Parsec, and
    Rox, representing 78% of the Group's total potential earnout liabilities,
    have been successfully renegotiated; negotiations to crystallise the
    remaining smaller uncapped earnouts are underway.  A detailed breakdown will
    be provided at the time of the interim results
  • A review of goodwill relating to past acquisitions will result in an
    impairment charge of c.£35m being included in the interim results,
    principally in respect of Anite Calculus which was acquired in December 2000
  • All acquisitions have been successfully integrated. Only one acquisition
    was completed in the current financial year (CME in June), and none are
    currently expected in second half
  • The Group has seen strong order intake of £114m in the first half; the
    divisional outlook and order book positions are as follows:
      • Public Sector - the outlook is excellent with an order intake to
        revenue ratio of 1.2. Orders in the first half were up 50% on the same
        period last year including the recently announced £11m State of Victoria
        contract which utilised the skills of five of the Group's companies
      • Travel - the outlook is reasonable with an order intake to revenue
        ratio 0.8.  The MyTravel contract proceeding to plan
      • Telecoms - the outlook is reasonable with an order intake to revenue
        ratio of 0.9. Testing solutions order intake was up 16%
      • Consultancy - the outlook is uncertain with an order intake to revenue
        ratio of 1.0.  Approximately 25% of consultancy sales were represented
        by applications management and support on longer term contracts



Divisional review

Public Sector

Public Sector has enjoyed a strong order intake in the first half and there is a
strong order pipeline going forward.  Substantial progress was made in the first
half, although as previously indicated profits were impacted by increased R&D
and the timing of deliveries.

Public Sector is now our largest business, currently with over 900 people, built
up through organic investment and acquisition. All the acquisitions have now
been integrated into one organisational structure with three divisions focused
on local and regional government; central government; and Scotland.  The
integration has given us the opportunity to remove duplicated activities without
impacting the division's capacity to exploit growth, and we have therefore
instigated a plan to reduce the total number of employees by 70, approximately
8% of Public Sector's workforce, providing annualised savings of £3m.

As part of this reorganisation, we have strengthened the division's management.
John Gibson, who joined us from Bull Information Systems Ltd where he was chief
executive, has been appointed managing director of Public Sector, whilst Ian
Tait, has been appointed to the new role of head of European and International
Operations, having been managing director of Public Sector.

Dati, a Latvian based software development group which provides software and
services and for which we have an option to acquire, has as expected been used
on a number of projects in Public Sector and other divisions. The benefits of
this low cost offshore development resource are that it enables us to continue
to invest in product development at a considerable saving and to take advantage
of new business opportunities.

Travel

The Travel division continues to make good progress following the acquisition
and integration of FSS, despite tough market conditions.  Travel will also
benefit from further cost savings made from a reduction of 12 employees. The
high percentage of revenues derived from managed services, applications
management and support contracts provides good forward visibility and a
predictable revenue stream from its key customers.  However, discretionary spend
from travel market customers is proving less predictable because of the current
economic climate.

In the light of recent speculation surrounding MyTravel, it is appropriate to
clarify our trading position with this customer.  We have a long-term managed
services contract with MyTravel that continues to be implemented successfully
and without interruption.  The customer in return continues to meet all its
obligations to us.  The annualised value of this contract represents around 5%
of the revenues of the Travel division and the contract period is for 10 years
with a 3 year break clause.

Prospects for the Travel division remain good on the back of its strong market
position and the long-term nature of its managed contracts, although its market
remains challenging.

Telecoms

The core testing business continues to perform well in a difficult market.  The
prospects for 3G testing are steadily improving and as a result we continue to
invest in R&D in this sector.   Order intake for core testing solutions, which
represents approximately 93% of the turnover of our Telecoms business, has
increased by 16% driven by continued success in 2G.  We have a healthy prospect
list for both 2G and 3G solutions.

The remainder of the division includes Anite Calculus, a supplier of billing
solutions to the telecoms' market, which we acquired in December 2000.  Since
acquisition, the billing market has not performed as expected, and we have
decided, therefore, to review the carrying value of the goodwill acquired with
this business.

Consultancy

The Consultancy business continues to trade profitably, albeit at a lower level
than last year.  The market for Consultancy services is under extreme pressure
with an over-supply of services and shortening contract cycles.  In addition, we
have seen particular pricing pressure in the Netherlands and Germany. As a
result, we have taken the opportunity to rationalise our German businesses which
has resulted in the closure of offices and a reduction in staff.

The division continues to focus on utilisation levels, keeping overheads low and
diversifying the business as far as possible in applications management and
support contracts. Overall the division continues to benefit from:

•        Application and management support contracts in Germany
•        An increase in public sector contracts won through the German armed
         forces
•        Over 100 of our consultants being linked to long-term contracts with
         customers - resulting in a variable cost structure
•        Strong margins and utilisation in our French and UK consultancy base.

Commenting on the trading update, John Hawkins, Chief Executive of Anite,
stated:

'Overall, we are confident that, for the year as a whole, Anite will perform in
line with expectations, continuing to benefit from its business and geographical
diversification against a background of tough trading conditions.

'Our strategy to focus on building strong market positions in our chosen
sectors means that the Group, following the actions taken to renegotiate the
earnout obligations, reduce costs and drive synergy benefits from the
integration of its recent acquisitions, will be well placed to recover strongly
in 2003/4.

'We will provide a further update on trading and a detailed review of the
actions taken, at the time of the Group's interim results announcement, which is
currently planned to be released on Wednesday, 11 December 2002.'



                                    - Ends -



For further information, please contact:         www.anite.com

Anite Group plc                                                  0118 945 0129
John Hawkins, Chief Executive
Neil Bass, Group Financial Controller

Weber Shandwick Square Mile                                      020 7950 2880
Reg Hoare

A conference call for analysts and investors to discuss today's announcement
with John Hawkins is being held today at 9.30am. Participants should dial 0845
245 0248 from the UK and ++ 44 (0) 1452 560068 from abroad.

A replay will be available until close of business on Friday, 22 November 2002
on the following numbers: UK dial in number - 0845 245 5205; International dial
in number   [phone]. Access number: 796908#.



                      This information is provided by RNS
            The company news service from the London Stock Exchange