TIDMAIE
RNS Number : 5385Y
Anite PLC
02 December 2014
Tuesday, 2 December 2014
ANITE PLC
Half year results for the six months ended 31 October 2014
Anite plc ("Anite" or "the Company" or "the Group"), a leading
supplier of test and measurement solutions to the international
wireless industry, today announces its half year results for the
six months ended 31 October 2014.
Financial highlights (adjusted) (1) :
-- Revenue up 3% to GBP49.0m (2013: GBP47.4m)
-- Operating profit up 89% to GBP5.1m (2013: GBP2.7m)
-- Profit before tax doubled to GBP5.1m (2013: GBP2.5m)
-- Diluted earnings per share up 117% to 1.3p (2013: 0.6p)
-- Net cash of GBP29.8m (31 October 2013: net debt GBP6.0m; 30 April 2014: net cash GBP6.1m)
-- Interim dividend up 10% at 0.63p per share (2013: 0.575p per share)
Statutory results:
-- Revenue from continuing operations of GBP49.0m (2013: GBP47.4m)
-- Operating profit from continuing operations of GBP1.0m (2013: loss of GBP0.7m), after:
- Share-based payments charge of GBP0.3m (2013: GBP0.6m)
- amortisation of acquired intangible assets of GBP2.4m (2013: GBP2.4m)
- acquisition costs of GBP1.4m (2013: GBP0.4m)
-- Profit from continuing operations before tax of GBP1.0m (2013: loss of GBP0.9m)
-- Profit for the period of GBP32.5m (2013: GBP0.6m)
- includes profit from disposed Travel business of GBP32.0m (2013: GBP1.9m)
-- Basic earnings per share from continuing operations 0.2p
(2013: loss per share of 0.5p); Diluted earnings per share 0.1p
(2013: loss per share 0.5p)
Operating highlights:
-- First period of results as a specialist wireless business
- GBP45m disposal of Travel completed on 29 May 2014
-- Handset Testing: revenue and profit growth achieved despite a challenging market backdrop
- launch of Anite 9000 v2.5 platform
-- Network Testing: progressive improvement after relatively slow start to year
- $30m acquisition of Xceed completed on 2 October 2014
-- Group order intake down 5% to GBP49.4m (2013: GBP51.8m)
- closing order book of GBP34.7m (31 October 2013: GBP32.9m; 30 April 2014: GBP32.5m)
- Handset Testing product orders up 20%
(1) Adjusted results are for continuing operations before
share-based payments, amortisation of acquired intangible assets
and acquisition and restructuring costs.
Christopher Humphrey, Chief Executive, said:
"After a relatively slow start to the year, we finished the
period with encouraging momentum building in both businesses.
Specific sales opportunities are developing well and give us
confidence for the year as a whole as we enter this seasonally
important trading period."
For further information, please contact:
www.anite.com
@AniteNews
Anite plc
Christopher Humphrey, Chief Executive
Richard Amos, Group Finance Director 01252 775200
MHP Communications 020 3128 8100
Reg Hoare/Giles Robinson/Jack Holden
An analysts' meeting will be held today at 9.15 for 9.30am at
the London Stock Exchange
10 Paternoster Square, London, EC4M 7LS
Notes to editors:
Anite plc is a leading supplier of test and measurement
solutions to the international wireless market. It provides
testing, measurement, optimisation and analytics systems based on
its specialist sector knowledge and its proprietary software and
hardware products. Customers include major manufacturers of mobile
devices, chipsets and network equipment, mobile network operators,
regulatory authorities, and independent test houses.
Its 500+ staff work from headquarters in the UK and from offices
in 14 countries across Europe, the Americas, Asia and the Middle
East.
This interim statement contains forward-looking statements.
These forward-looking statements are not guarantees of future
performance. Rather, they are based on current views and
assumptions and involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ from any
future results or developments expressed or implied from the
forward-looking statements. Each forward-looking statement speaks
only as of the date of the particular statement and, save to the
extent required by the applicable law or regulation, we do not
undertake any obligation to update or renew any forward-looking
statement.
Half year results for the six months ended 31 October 2014
All references to adjusted profit relate to continuing
operations for the period before share-based payments, amortisation
of acquired intangible assets and acquisition and restructuring
costs. A reconciliation of adjusted results to reported statutory
results is given in the Financial Review.
HALF YEAR OVERVIEW
Introduction
The first half of the year has been a busy period for Anite,
with significant corporate activity transforming the Group into a
specialist wireless business. Underlying trading has been generally
encouraging, although not without challenges, with somewhat mixed
market conditions and currency headwinds. Overall trading momentum
has improved through the period.
On 29 May 2014, in line with our long stated strategy, we
disposed of our Travel software business. This has been treated as
a discontinued operation in the results for this half year and the
comparative period. The disposal of Travel released capital which
considerably strengthened our balance sheet, some of which we
subsequently re-invested through the purchase of Xceed Technologies
Inc. on 2 October 2014. This acquisition significantly enhances the
data analytics' capabilities of our Network Testing business in a
fast growing market segment. Xceed's results are included in this
report for the short period since acquisition and were in line with
expectations.
Market conditions in the wireless industry remain challenging,
with pockets of exciting growth and some areas of reduced demand.
Corporate activity continues to impact many of the main industry
players and a number of traditional tier one handset manufacturers
have reported trading pressure particularly from the growing
presence of Chinese competitors.
Against this backdrop, Handset Testing had a reasonable half
year, including a strong finish to the period. Encouraging demand
from Asia Pacific offset weaknesses in the other regions whilst, in
product terms, there was good demand for Interoperability Testing
and Channel Emulators. Although revenue growth of 6% was slightly
below the business' high single digit target, order intake for new
product (as opposed to maintenance/support renewals) grew at 20%
and supports the business' full year expectations. Margins were
reasonable in the period and fixed costs were lower as a result of
the cost control actions taken at the end of the previous year.
This resulted in a 9% operating margin compared to 1% twelve months
ago.
Network Testing had a slow start to the year as stated in the
IMS announcement in September. Subsequently the business has seen a
pickup in demand which resulted in organic growth (ie. at constant
currency rates and excluding the impact of acquisitions/disposals)
in underlying revenue of around 4% compared to last year's very
strong first half. As planned, we have increased the level of
investment in product development which we expect to help
contribute to future growth, but the impact of this has meant that
the business' profitability took a small step backwards in the
first half of the year. In addition, Network Testing's results were
affected by the translation impact of a 6% weakening of the Euro
against Sterling compared to twelve months ago.
Group results summary
Overall in the first half of the year, the Group reported a 3%
increase in revenue to GBP49.0m (2013: GBP47.4m) and an 89%
increase in adjusted operating profit to GBP5.1m (2013: GBP2.7m)
against what were weak comparatives last year. Organic increases in
revenue and adjusted operating profit were 6% and 104%
respectively. The improved profitability came about partly through
the reported revenue growth, but mainly because of an overall
reduction in fixed costs including the benefit of the cost
reduction exercise undertaken in Handset Testing at the last
financial year end. Adjusted diluted earnings per share more than
doubled to 1.3p (2013: 0.6p).
Group order intake in the six month period was down 5% to
GBP49.4m (2013: GBP51.8m). Within this, Network Testing order
intake was flat year on year, with overall order intake in Handset
Testing down 7% following the signature of a number of large
multi-year maintenance renewal contracts in the comparative period.
Including orders for Xceed products, the Group's closing order book
was up 5% compared to last year at GBP34.7m (31 October 2013:
GBP32.9m; 30 April 2014: GBP32.5m), with a greater bias this year
towards short-term product orders rather than longer-term
maintenance/support contracts.
Following the disposal of Travel, the Group has significantly
increased cash resources. The net proceeds of the disposal offset
by the cost of the Xceed acquisition in aggregate increased funds
by GBP20.8m. Improved working capital levels helped ensure strong
operating cash generation in the first half of the year of GBP11.7m
(2013: GBP12.3m). Net cash as at 31 October 2014 was GBP29.8m (30
April 2014: net cash of GBP6.1m; 31 October 2013: net debt of
GBP6.0m). The Group retains significant further financial
flexibility at the period end in addition to its net cash, with
GBP10.0m of undrawn overdraft facility and GBP20.0m of undrawn
revolving credit facility.
Dividend
The Board is declaring an interim dividend of 0.63p per share,
an increase of 10% on the previous year (2013: 0.575p per share).
The increase is in line with the Board's stated dividend policy and
reflects a strong balance sheet and improving prospects. The
interim dividend will be paid on 13 February 2015 to shareholders
on the register at 30 January 2015.
Outlook
It has become apparent over the last few financial years that
trading in the Handset Testing business has become increasingly
biased towards the second half. Although both businesses have
limited pipeline visibility, the Board expects that the Group's
second half performance will improve on the first half.
In addition to this seasonality, there are a number of specific
factors that are expected to deliver incremental performance
improvements in both businesses in the second half. In Handset
Testing these include specific product, technology and customer
related revenue catalysts already identified as opportunities in
the pipeline of potential new orders. In Network Testing we expect
to see growth from recent new product launches, returns from the
increased first half R&D investment and the initial benefit
from the Xceed acquisition.
Given the recent momentum we have seen across the Group and the
specific opportunities identified for the second half, the Board
remains confident of meeting its full year expectations.
Clay Brendish Chairman Christopher Humphrey Chief Executive
1 December 2014
OPERATING REVIEW
Anite's continuing operations comprise two businesses which both
operate in the wireless test and measurement market: Handset
Testing and Network Testing.
The results for the Group show a reasonable first half
performance with solid revenue growth and significantly improved
profitability, specifically in the Handset Testing business which
had a weak comparative period. Underlying revenue grew in the
Network Testing business against a strong comparative period
although this was offset by the translation impact on its Euro
denominated results of that currency weakening 6% against Sterling
compared to last year.
Handset Testing
Handset Testing performed well in the period, with revenue
growing 6% compared to last year to GBP33.6m (2013: GBP31.8m). On a
constant currency basis the organic revenue increase was 8%. The
operational gearing benefit of the increased revenue, augmented by
reduced fixed costs, resulted in a significant increase in adjusted
operating profit to GBP3.2m from GBP0.5m last year. Order intake in
the period was down 7% to GBP33.2m (2013: GBP35.7m) although this
was due to the comparative period including a number of multi-year
support/maintenance renewals which were not repeated this year.
Excluding the impact of support/maintenance renewals, order intake
for products was healthy, reporting around 20% growth compared to
last year.
Market conditions for the Handset Testing business remained
challenging across the period, with pockets of growth offset by
areas of weak demand. The industry continues to suffer from
corporate consolidation with, for example, the takeovers of Nokia
and Motorola by Microsoft and Lenovo respectively. Additionally the
market has been adversely impacted by manufacturers exiting the
wireless modem market including Broadcom and Ericsson who both
announced closures in the period.
Against this backdrop, the revenue increase achieved by the
business was a reasonable performance. Asia Pacific experienced
strong demand, with successes both supporting tier one
international manufacturers supplying the Chinese market and also
supporting the export aspirations of domestic Chinese
manufacturers. The strength in Asia Pacific was offset by continued
weaker demand in the US and Europe. From a product perspective,
good growth was achieved in Interoperability Testing ("IOT") and
also with the Propsim Channel Emulator product acquired in
2013.
Margins were reasonable across the period with only limited
impact due to the challenging market conditions. The net revenue
percentage (revenue less third party hardware costs, as a
percentage of revenue) was a healthy 72%, three percentage points
down on the corresponding period last year. Margins continue to be
supported by a strong level of maintenance revenue which increased
10% to GBP14.4m (2013: GBP13.1m).
One of the main features of the first half was the launch in
July of the new version of the Anite 9000 test platform on which
our Handset Testing products are all based. This launch was the
culmination of significant R&D effort and investment over the
last twelve months and represents a step-change in Anite's hardware
offering, providing, for the first time, a single box containing
multiple Radio Access technologies (2G, 3G and LTE 4G). Additional
product developments in the period included enhancements to the
Channel Emulator product offering, especially progressing "Virtual
Drive Testing" ("VDT") capabilities.
Within fixed costs, we continue to invest in R&D, with a
charge to the income statement of GBP7.4m (2013: GBP7.8m),
including GBP0.9m amortisation of previously capitalised costs
(2013: GBP1.3m). An additional GBP1.2m of development cost was
capitalised in the period (2013: GBP1.4m) reflecting investment
incurred in maintaining market leadership in conformance and
interoperability test scripts.
Other fixed costs in Handset Testing decreased from GBP15.4m
last year to GBP13.7m. This is partly following the cost reduction
programme that was implemented at the end of the last year, with
further incremental savings achieved through the period. After
these, the net operating margin in Handset Testing was 9% (2013:
1%). Total headcount in Handset Testing at 31 October 2014,
including contractors, was 336 (2013: 355).
Looking forward, the Board believes that Handset Testing should
see continued growth over the medium term with opportunities being
driven by technological change, customer developments and specific
Anite initiatives aimed at expanding our addressable market and
gaining market share.
Growth in mobile data traffic continues unabated and network
operators are deploying ever more complex solutions to cope with
the increased demand. The requirements for testing of devices grow
with the complexity of the networks that they are connected to and
that provides continued opportunity for Anite. Specifically the
business is currently seeing opportunities in VoLTE (Voice over
LTE), and in the technical innovations supporting LTE-Advanced such
as MIMO (Multiple Input Multiple Output) and Carrier
Aggregation.
We continue to work closely with both existing and potential
customers on developing IOT scripts specifically addressing testing
challenges applicable to their networks. These are expected to
contribute to second half growth, as are certain of the
opportunities for expansion of our addressable market.
Network Testing
Network Testing performed well over the half with a relatively
slow start to the year offset by a stronger second quarter.
Reported revenue for the period was essentially flat on the prior
year at GBP15.4m (2013: GBP15.6m). Order intake was also unchanged
at GBP16.2m (2013: GBP16.1m). Increased investment, largely in
product development, meant that reported adjusted operating profit
was down 13% at GBP2.8m (2013: GBP3.2m). The results were impacted
by both acquisition activity and adverse currency translation
variances. Adjusting for these factors, underlying organic revenue
growth was 4%, with the underlying organic adjusted operating
profit reduction 5%.
Market conditions for the Network Testing business have been
reasonable overall, with a relatively high level of activity
towards the latter part of the period following a slow start.
Demand has been particularly strong in Asia Pacific which offset
some weakness in North America specifically in the early months of
the year. There has been good demand for products across the range,
with those servicing the indoor testing segment particularly
strong, including the newly launched Nemo Walker Air product that
allows indoor benchmarking.
Margins in the business were also strong with the net revenue
margin increasing to 73% (2013: 69%). The increase was mainly due
to changes in the product mix with more software and a shift
towards the in-house scanner product compared to the high levels of
third party scanners sold last year.
The increase in net revenue generated was offset by increased
fixed costs as we accelerated investment in the business to drive
future growth aspirations. The income statement charge for
investment in R&D in Network Testing increased to GBP2.5m
(2013: GBP2.1m) including GBP0.2m amortisation of previously
capitalised costs (2013: GBP0.1m) and the first month's R&D
cost from Xceed. In addition, GBP1.4m of R&D costs (2013:
GBP0.3m) were capitalised in the period, largely in relation to
development of a new benchmarking product, Nemo Invex II, which was
launched in November and provides support for the latest standards
including LTE-Advanced and VoLTE.
Other fixed costs in Network Testing were also up by GBP0.5m, of
which GBP0.2m were costs associated with the first month's trading
post acquisition of the Xceed business and GBP0.3m were additional
sales and support costs. The net operating margin in Network
Testing was 18% (2013: 21%). Following the 54 staff and 13
contractors taken on with Xceed, total headcount in Network Testing
at 31 October 2014 was 215 (31 October 2013: 129).
Following the recent investment we have been making in the
Network Testing business, we anticipate a strong second half
performance. Additionally, the acquisition of Xceed materially
strengthens our data analytics capability. This is of increasing
value to our customers as they seek to interpret network
performance data from a wider range of sources to ensure that they
are delivering optimal customer experience and network performance.
We believe the combination of Xceed with Anite's existing product
portfolio and global sales channel will help support sustainable
growth in the Network Testing business.
FINANCIAL REVIEW
Impact of acquisitions and disposals
These results are impacted by two acquisitions and one disposal
made over the last two financial years:
-- Disposal in the first half of this financial year on 29 May
2014 of Anite Travel Ltd ("Travel") and its wholly owned subsidiary
Anite Travel Pty Ltd that previously comprised the Travel division.
The business was sold for GBP45.0m, of which GBP1.7m was placed in
escrow pending the resolution of certain commercial considerations.
The gain on sale of GBP31.7m and the profit after tax from Travel
for the one month until disposal of GBP0.3m are included within
profit from discontinued operations. Comparative numbers in the
income statement are similarly adjusted. Travel's underlying assets
and liabilities are included as held for sale on the balance sheet
at 30 April 2014 but remain disclosed within individual line items
at 31 October 2013.
-- Acquisition in the first half of this financial year on 2
October 2014 of Xceed Technologies Inc. ("Xceed") for $30.0m plus
further deferred consideration of up to $5.0m depending on the
business' performance over the period to 30 April 2016. Acquisition
and integration costs were $2.4m. The results for this acquisition
are included within the Network Testing business unit for the one
month since acquisition during which time it broke even with
revenue of GBP0.4m.
-- Acquisition in the first half of the last financial year of
Genetel SAS on 1 July 2013 for GBP1.2m plus acquisition costs of
GBP0.4m. The results for this acquisition are included within the
Network Testing business unit. In the comparative period they were
included for the four months post acquisition. In the current
period Genetel contributed GBP0.7m revenue and GBP0.1m operating
profit.
The results from the acquisitions and disposal have been
excluded when calculating the underlying organic growth in revenue
and profit referred to throughout this report.
Currency effects
The key exchange rates that affect the results were as
follows:
Average rates - (primarily impacting income statement)
Six months Six months ended
ended 31 Oct 2013
31 Oct 2014
Euro weakened against Sterling 6% 1.25 1.17
US Dollar weakened against
Sterling 7% 1.67 1.56
Period end rates - (primarily impacting balance sheet)
31 Oct 2014 30 April 2014
Euro weakened against Sterling 4% 1.27 1.22
US Dollar strengthened against
Sterling 5% 1.60 1.68
The net effect of these changes on the translation of results
from overseas subsidiaries was to decrease revenue by GBP1.6m and
operating profit by GBP0.3m. Network Testing was the main business
impacted by these translational changes as its Euro denominated
results were converted back into Sterling. These translational
impacts have been adjusted for in the calculation of underlying
organic revenue and operating profit changes disclosed.
In addition, the effect of conducting trade in foreign
currencies resulted in a transaction loss of GBP0.6m making the
total adverse effect of currency fluctuations on profits GBP0.9m
year on year, of which GBP0.7m was in the Handset Testing business
and GBP0.2m in Network Testing.
Revenue
Revenue from continuing operations was up 3% at GBP49.0m (2013:
GBP47.4m). Adjusting for the impact of acquisitions and at constant
currency, on an organic basis, revenue increased by 6%.
Geographically, revenue by destination was: Europe, Middle East
& Africa (including UK) 24% (2013: 25%); the Americas 27%
(2013: 31%); and Asia & Rest of World 49% (2013: 44%). The
changes in split reflected the continued trend in both businesses
of demand moving to Asia Pacific at the expense of particularly
North America.
Reconciliations of Adjusted and Statutory Profits
Reconciliations of adjusted EBITDA of GBP9.2m to the operating
profit of GBP1.0m and adjusted operating profit of GBP5.1m to the
reported profit before tax for the period from continuing
operations of GBP1.0m are set out in the tables below. The
reconciling items are those that, in the opinion of the Board, are
either one-off in nature or are non-cash related and are not
therefore indicative of the Group's underlying trading.
Half year ended 31 October: 2014 2013
GBPm GBPm
-------------------------------------------- ------ ------
Adjusted EBITDA 9.2 6.8
Depreciation (2.6) (2.3)
Amortisation of intangible assets (1.5) (1.8)
-------------------------------------------- ------ ------
Adjusted operating profit 5.1 2.7
Share-based payments (0.3) (0.6)
Amortisation of acquired intangible assets (2.4) (2.4)
Acquisition costs (1.4) (0.4)
Operating profit / (loss) 1.0 (0.7)
-------------------------------------------- ------ ------
Half year ended 31 October: 2014 2013
GBPm GBPm
------------------------------------------------------- ------ ------
Adjusted operating profit 5.1 2.7
Net finance charges - (0.2)
Adjusted profit before tax 5.1 2.5
Share-based payments (0.3) (0.6)
Amortisation of acquired intangible assets (2.4) (2.4)
Acquisition costs (1.4) (0.4)
Profit / (loss) from continuing operations before tax 1.0 (0.9)
------------------------------------------------------- ------ ------
Cost of sales
Cost of sales increased 2% to GBP21.7m (2013: GBP21.3m). Within
cost of sales, variable hardware/third party costs increased 3% to
GBP13.4m (2013: GBP13.0m), broadly in line with the increase in
revenue. Other costs of sales, which are predominantly fixed and
made up of employee costs, were essentially unchanged at GBP8.3m
(2013: GBP8.4m) The gross profit margin was also essentially
unchanged at 56% (2013: 55%).
Operating expenses
Total operating expenses in the period reduced to GBP26.3m
(2013: GBP26.7m). A detailed breakdown is given in note 2.3.
Within total operating expenses are one-off and non-cash items
not charged to adjusted operating profit and underlying operating
expenses that are charged to adjusted operating profit. The latter,
as expected, reduced to GBP22.2m (2013: GBP23.3m), mainly due to
cost reduction actions taken in the Handset Testing business in
response to the lower trading volumes experienced last year.
During the period, unallocated Group corporate costs reduced
slightly to GBP0.9m (2013: GBP1.0m) due to lower Group staff
costs.
After the underlying operating expenses, adjusted operating
profit increased 89% to GBP5.1m (2013: GBP2.7m). On an organic
basis, adjusted operating profit increased 104%. Adjusted EBITDA
also grew by 35% to GBP9.2m (2013: GBP6.8m).
One-off and non-cash expenses excluded from adjusted profit
calculations totalled GBP4.1m (2013: GBP3.4m). This comprised
amortisation of acquired intangible assets of GBP2.4m (2013:
GBP2.4m), a share-based payments charge of GBP0.3m (2013: GBP0.6m)
and acquisition costs of GBP1.4m (2013: GBP0.4m). The share based
payment charge reduced because non-market related performance
conditions on certain of the schemes are not expected to be
achieved resulting in a write-back of previously recognised
charges. After these non-operational costs, the Group reported an
overall operating profit from continuing operations of GBP1.0m
(2013: loss of GBP0.7m).
Group finance costs
There was no net finance charge/income in the period (2013: net
charge of GBP0.2m). The reduction reflects the payback of the
Group's drawn debt following the disposal of Travel.
Taxation
The tax charge for the period on continuing operations was
GBP0.5m (2013: GBP0.4m). The tax rate on the statutory operating
profit was 53.9% (2013: (42.4)%) with the high rate reflecting the
impact of disallowable expenses e.g. GBP1.4m acquisition costs. The
underlying tax rate on adjusted profit before tax was 22.7% (2013:
31.0 %).
Earnings per share
After taking account of the factors described above, adjusted
basic earnings per share for continuing activities increased 133%
to 1.4p (2013: 0.6p), with adjusted diluted earnings per share
similarly increasing to 1.3p (2013: 0.6p). The overall basic
earnings per share for continuing operations were 0.2p (2013: loss
per share of 0.5p).
Balance sheet
The majority of movements in the balance sheet from 30 April
2014 to 31 October 2014 result from the disposal of Travel and the
subsequent acquisition of Xceed. In particular this is the main
driver behind the increase in non-current assets from GBP103.6m to
GBP127.3m.
Within current assets, inventory decreased by GBP1.5m from
GBP10.1m to GBP8.6m, primarily due to a reclassification to fixed
assets of previously classified inventory that is loaned to
customers for collaboration purposes.
Provisions have increased from GBP5.0m at 30 April 2014 to
GBP7.1m at 31 October 2014 due to the inclusion of GBP2.2m of
potential deferred consideration on the Xceed acquisition. The
total potential payment is $5.0m (GBP3.1m) and is due for final
settlement by 30 June 2016 at the latest.
Cash flow
Cash generation in the period was strong. Cash generated from
operations (continuing and discontinued) was GBP11.7m (2013:
GBP12.3m), with the reduction due partly to Travel only being
included for one month this year and partly because the comparative
period included an exceptionally high opening working capital
position that unwound through that six months.
The net cash inflow from acquisitions/disposals was GBP20.8m,
including the sale of Travel and the purchase of Xceed. Capital
expenditure in the period was GBP0.9m (2013: GBP4.8m) with last
year seeing significant purchases to support development
requirements in Handset Testing. A further GBP2.6m was incurred on
capitalised development expenditure (2013: GBP1.7m), which
represented the cost of writing conformance and interoperability
test cases for Handset Testing and development of the benchmarking
product in Network Testing.
Payments for corporation tax were GBP2.0m (2013: GBP1.7m) and
dividends paid in the period were GBP3.7m (2013: GBP3.6m). After
these movements, net cash increased by GBP23.7m (2013: decrease of
GBP5.1m).
Borrowings and facilities
At 31 October 2014 the Group had net cash of GBP29.8m (31
October 2013: net debt of GBP6.0m; 30 April 2014: net cash of
GBP6.1m). The Group had no gross borrowings at 31 October 2014 (31
October 2013: GBP17.8m; 30 April 2014: GBP10.9m). The Group retains
a revolving credit facility of GBP20.0m available until 31 October
2016. In addition, the Group has a net overdraft facility of
GBP10.0m (31 October 2013 and 30 April 2014: GBP10.0m). The
overdraft facility was undrawn at 31 October 2014.
Key risks and uncertainties, going concern and Statement of
Directors' Responsibilities
Risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical
results.
These risks include:
-- Global economic and geo-political risks
-- Competitiveness
-- Technology risks
-- Project delivery risks
-- Reliance on major customers
-- Human resource and organisation risks; and
-- Financial risks
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 30 April 2014. A detailed explanation of
these risks is set out on pages 29-31 of that annual report, which
is available at www.anite.com.
Outlook
Any forward-looking statements made within this interim half
year report have been made in good faith by the Directors based on
the information made available up to the date of the Directors'
approval of this report. These forward-looking statements should be
treated with caution due to the inherent uncertainties, including
macro-economic and market uncertainties and business risk factors
which may affect the outcome.
Going concern
In considering going concern and liquidity risk, the Directors
have reviewed the Group's future cash requirements and earnings
projections for the next two financial years. The Directors believe
these forecasts, which show the Group being covenant compliant for
the foreseeable future, have been prepared on a prudent basis and
have also considered the impact of a range of reasonably possible
changes to trading performance. The Directors have concluded that
given these circumstances, together with the existing cash balances
and unused loan facilities, it is appropriate to prepare the
financial statements of the Group on a going concern basis.
Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge:
-- the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting
standards, gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer, or the
undertakings included in the consolidation as a whole as required
by DTR 4.2.4R;
-- The interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- The interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board
Neil Bass
Company Secretary
1 December 2014
INDEPENDENT REVIEW REPORT TO ANITE PLC
We have been engaged by the company to review the condensed
consolidated set of financial statements in the half-yearly
financial report for the six months ended 31 October 2014 which
comprises the condensed consolidated income statement, the
condensed consolidated statement of comprehensive income, the
condensed consolidated statement of changes in equity, the
condensed consolidated balance sheet, and the condensed
consolidated cash flow statement and related notes 1 to 18. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on ReviewEngagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
October 2014 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
1 December 2014
Condensed consolidated income statement
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April
2014
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Continuing operations
Revenue 2.1 48,984 47,418 109,216
Variable cost of sales (13,416) (12,961) (29,504)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Net revenue 35,568 34,457 79,712
Fixed cost of sales (8,285) (8,411) (16,866)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Gross profit 27,283 26,046 62,846
Distribution costs (6,214) (6,668) (13,120)
Research and development (11,028) (11,062) (21,865)
Administrative expenses (9,065) (8,993) (18,545)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Operating expenses 2.3 (26,307) (26,723) (53,530)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Operating profit before share-based payments, amortisation
of acquired intangible assets and
restructuring costs 5,057 2,708 15,324
Share-based payments 5 (297) (551) (188)
Amortisation of acquired intangible assets (2,435) (2,436) (4,832)
Acquisition and restructuring costs 3 (1,349) (398) (988)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Operating profit / (loss) 976 (677) 9,316
Finance income 6 84 13 25
Finance charges 6 (97) (249) (469)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Profit / (loss) from continuing operations before tax 963 (913) 8,872
Tax expense 7 (519) (392) (1,090)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Profit / (loss) from continuing operations 444 (1,305) 7,782
Profit from discontinued operations 4 32,013 1,903 4,489
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Profit for the period - attributable to equity holders of
the parent 32,457 598 12,271
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Continuing operations
Earnings per share - basic 8 0.2p (0.5)p 2.7p
- diluted 0.1p (0.5)p 2.6p
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Condensed consolidated statement of comprehensive income
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April
2014
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Retained profit for the period 32,457 598 12,271
Exchange differences arising on translation of foreign
operations (3,458) 1,230 (2,554)
Tax (charge) / credit taken directly to other comprehensive
income 7 185 (119) 721
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Total comprehensive income 29,184 1,709 10,438
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Condensed consolidated statement of changes in equity
Issued Share Capital
share premium Own Merger redemption Other Retained
capital account shares reserve reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 May 2013
Changes in equity for
the period to 31
October 2013 33,844 25,901 (11,664) 722 2,741 (8,624) 66,292 109,212
Total comprehensive
income for the period - - - - - 1,111 598 1,709
Issue of share capital 25 91 - - - - - 116
Purchase of own shares
into employee benefit
trust - - (3,398) - - - - (3,398)
Gain on sale of shares
from employee benefit
trust - - 2,092 - - - (2,091) 1
Transfer of SIP shares to
employees - - 22 - - - (22) -
Recognition of
equity-settled
share-based payments
after tax - - - - - - (596) (596)
Dividend paid - - - - - - (3,624) (3,624)
-------------------------- --------- --------- --------- --------- ------------ ---------- ---------- --------
Balance at 31 October
2013 (unaudited) 33,869 25,992 (12,948) 722 2,741 (7,513) 60,557 103,420
Changes in equity for
the period to 30 April
2014
Total comprehensive
income for the period - - - - - (2,944) 11,673 8,729
Issue of share capital 4 15 - - - - - 19
Redemption of preference
shares (50) - - - 50 - - -
Purchase of own shares
into employee benefit
trust - - (71) - - - - (71)
Gain on sale of shares
from employee benefit
trust - - 39 - - - (40) (1)
Transfer of SIP shares to
employees - - 19 - - - (19) -
Recognition of
equity-settled
share-based payments
after tax - - - - - - 797 797
Dividend paid - - - - - - (1,648) (1,648)
-------------------------- --------- --------- --------- --------- ------------ ---------- ---------- --------
Balance at 30 April 2014
(audited) 33,823 26,007 (12,961) 722 2,791 (10,457) 71,320 111,245
Changes in equity for
the period to 31 October
2014
Total comprehensive
income for the period - - - - - (3,273) 32,457 29,184
Issue of share capital 30 100 - - - - - 130
Purchase of own shares
into employee benefit
trust - - (47) - - - - (47)
Gain on sale of shares
from employee benefit
trust - - 2,462 - - - (2,024) 438
Transfer of SIP shares to
employees - - 482 - - - (482) -
Recognition of
equity-settled
share-based payments
after tax - - - - - - 593 593
Dividend paid - - - - - - (3,665) (3,665)
-------------------------- --------- --------- --------- --------- ------------ ---------- ---------- --------
Balance at 31 October
2014 (unaudited) 33,853 26,107 (10,064) 722 2,791 (13,730) 98,199 137,878
-------------------------- --------- --------- --------- --------- ------------ ---------- ---------- --------
Condensed consolidated balance sheet
31 October 2014 31 October 2013 30 April
2014
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Non-current assets
Goodwill 63,232 62,941 54,496
Other intangible assets 48,268 36,810 34,048
Property, plant and equipment 12,818 14,876 12,841
Deferred tax assets 2,968 3,033 2,198
127,286 117,660 103,583
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Current assets
Inventories 8,597 13,884 10,096
Trade and other receivables 10 37,839 39,253 41,627
Derivative financial assets - 84 53
Current tax assets 1,756 91 1,463
Cash and cash equivalents 12 29,792 11,748 16,993
Assets classified as held for sale - - 13,499
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
77,984 65,060 83,731
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Total assets 205,270 182,720 187,314
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Current liabilities
Trade and other payables 11 (42,505) (40,630) (42,084)
Bank borrowings 12 - (153) (10,938)
Current tax payable (6,056) (6,484) (6,555)
Derivative financial liabilities (175) - -
Provisions 13 (7,105) (6,643) (4,978)
Liabilities directly associated with assets classified as held
for sale - - (6,292)
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
(55,841) (53,910) (70,847)
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Non-current liabilities
Bank borrowings 12 - (17,641) -
Deferred tax liabilities (11,253) (6,435) (4,915)
Provisions 13 (298) (1,314) (307)
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
(11,551) (25,390) (5,222)
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Total liabilities (67,392) (79,300) (76,069)
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Net assets 137,878 103,420 111,245
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Equity
Issued share capital 14 33,853 33,869 33,823
Share premium account 26,107 25,992 26,007
Own shares (10,064) (12,948) (12,961)
Merger reserve 722 722 722
Capital redemption reserve 2,791 2,741 2,791
Other reserves (13,730) (7,513) (10,457)
Retained earnings 98,199 60,557 71,320
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
Total equity 137,878 103,420 111,245
--------------------------------------------------------------- ----- ---------------- ---------------- ----------
The accompanying notes are an integral part of this consolidated
balance sheet
Condensed consolidated cash flow statement
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April
2014
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Profit/(loss) for the period
Continuing operations 444 (1,305) 7,782
Discontinued operations 4 32,013 1,903 4,489
------------------------------------------------------------- ----- ----------------- ----------------- ----------
32,457 598 12,271
Adjustments for:
Tax charge - continuing and discontinued 593 954 2,355
Net finance charges 6 12 218 416
Profit on disposal of subsidiary (31,732) - -
Charged to operations discontinued in a prior period - - 34
Depreciation property, plant and equipment 2,602 2,396 5,387
Amortisation of intangible assets 1,492 1,798 3,575
Amortisation of acquired intangible assets 2,435 2,436 4,832
Loss on disposal of property, plant and equipment - 2 46
Share-based payments charge 5 297 670 435
Increase/(decrease) in provisions - continuing (68) 93 (1,436)
Decrease in provisions - discontinued - - (500)
Operating cash flows before movements in working capital 8,088 9,165 27,415
Decrease/(increase) in inventories 44 (1,866) 1,922
Decrease in receivables 4,251 10,166 1,468
(Decrease)/increase in payables (671) (5,150) 2,164
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Movements in working capital 3,624 3,150 5,554
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Cash generated from operations 11,712 12,315 32,969
Interest received 74 7 12
Interest paid (49) (271) (550)
Income taxes paid (1,969) (1,713) (3,616)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Net cash generated from operating activities 9,768 10,338 28,815
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Cash flow from investing activities
Acquisition and disposal of subsidiary undertakings 21,874 (2,774) (2,774)
Net cash (disposed)/acquired with subsidiary undertakings (1,035) 905 905
Purchase of property, plant and equipment (855) (4,491) (6,372)
Purchase of software licences (68) (334) (885)
Expenditure on capitalised product development (2,560) (1,692) (3,802)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Net cash generated from/(used in) investing activities 17,356 (8,386) (12,928)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Cash flow from financing activities
Issue of ordinary share capital 130 116 135
Purchase of own shares into employee benefit trust (47) (3,398) (3,470)
Proceeds from employee SAYE scheme to purchase shares from
employee benefit trust 438 1 -
Dividend paid to Company's shareholders 15 (3,665) (3,624) (5,272)
Repayment of bank loans (10,938) (13) (6,668)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Net cash used in financing activities (14,082) (6,918) (15,275)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Net increase/(decrease) in cash and cash equivalents 13,042 (4,966) 612
Effect of exchange rate changes (243) 56 (277)
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Cash and cash equivalents at beginning of period 16,993 16,658 16,658
------------------------------------------------------------- ----- ----------------- ----------------- ----------
Cash and cash equivalents at end of period 12 29,792 11,748 16,993
------------------------------------------------------------- ----- ----------------- ----------------- ----------
1 BASIS OF PREPARATION AND accounting policies
The unaudited condensed consolidated financial statements have
been prepared using accounting policies consistent with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and in accordance with International Accounting
Standard (IAS) 34: 'Interim Financial Reporting'.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in preparation of the Group's annual financial
statements for the year ended 30 April 2014 as available on our
website www.anite.com.
1.1 Information regarding future accounting standards
The following standards or improvements to existing standards
are mandatory for the first time in the Group's accounting period
beginning on 1 May 2014. No other new standards have been early
adopted. The Group's October 2014 Interim Report has adopted the
following new standards and amendments to existing standards with
no significant impact on the Group's financial performance or
position:
Annual improvements (2011/13) "Amendments to IFRS 1, IFRS 3,
IFRS 13 & IAS 40"
IFRS 14 "Regulatory deferral accounts"
1.2 Other information
The financial information contained in this Interim Report does
not constitute statutory accounts within the meaning of Section 434
of the Companies Act 2006. The financial information contained in
this Interim Report has been reviewed by the auditors but not
audited.
The figures for the year ended 30 April 2014 do not constitute
the statutory accounts for that period but are based upon the
Group's audited accounts prepared under IFRS. The statutory
accounts for the year ended 30 April 2014 have been delivered to
the Registrar of Companies. The auditor's report on those accounts
was unqualified and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
On 1 December 2014, this unaudited Interim Report was approved
by the Board of Directors for issue.
2 Revenue and segmental information
2.1 Revenue from operations
Six months ended Six months ended Year ended
31 October 2014 31 October 2013 30 April 2014
Note GBP000 GBP000 GBP000
-------------------------------------------- ----- ----------------- ----------------- ---------------
Own product software licences 18,885 19,338 47,757
Hardware and other third-party product 13,420 12,938 29,906
Software maintenance and support 16,679 15,142 31,553
-------------------------------------------- ----- ----------------- ----------------- ---------------
Revenue from continuing operations 48,984 47,418 109,216
Finance income 6 84 13 25
-------------------------------------------- ----- ----------------- ----------------- ---------------
Total revenue from continuing operations 49,068 47,431 109,241
Revenue from discontinued operations
Revenue 4 1,570 10,055 20,542
Finance income 6 1 18 28
-------------------------------------------- ----- ----------------- ----------------- ---------------
Total revenue from discontinued operations 1,571 10,073 20,570
Total revenue 50,639 57,504 129,811
-------------------------------------------- ----- ----------------- ----------------- ---------------
2.2 Operating segments - primary basis
The Group is organised into three operating segments: Handset
Testing; Network Testing and Group. With the exception of Group,
which performs the head office function, the operating segments
derive their revenue from the sale and support of products, mainly
software, relating to their relevant industry sectors.
Discontinued operations relate to the Travel business segment
that was disposed on 29 May 2014.
Operating segment information under the primary reporting format
is as disclosed in the tables below:
Handset Network
Testing Testing Total Wireless Group Total
Six months ended 31 October 2014 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- --------------- -------- --------
External revenue 33,580 15,404 48,984 - 48,984
Internal revenue - - - 758 758
------------------------------------------------- --------- --------- --------------- -------- --------
Total segment revenue 33,580 15,404 48,984 758 49,742
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) profit / (loss) before tax 3,165 2,754 5,919 (875) 5,044
Net finance charges - - - 13 13
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) operating profit / (loss) 3,165 2,754 5,919 (862) 5,057
Share-based payments (73) (11) (84) (213) (297)
Amortisation of acquired intangible assets (1,039) (1,396) (2,435) - (2,435)
Acquisition and restructuring costs - - - (1,349) (1,349)
Segment operating profit / (loss) 2,053 1,347 3,400 (2,424) 976
Finance income 84
Finance charges (97)
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from continuing operations before tax 963
Tax expense (519)
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from continuing operations 444
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from discontinued operations 32,013
------------------------------------------------- --------- --------- --------------- -------- --------
Profit for the period 32,457
------------------------------------------------- --------- --------- --------------- -------- --------
Segment total assets 65,785 99,143 164,928 40,342 205,270
------------------------------------------------- --------- --------- --------------- -------- --------
(1) Profit / (loss) from operations before share-based payments,
amortisation of acquired intangible assets and acquisition and
restructuring costs
Handset Network
Testing Testing Total Wireless Group Total
Six months ended 31 October 2013 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- --------------- -------- --------
External revenue 31,801 15,617 47,418 - 47,418
Internal revenue - - - 988 988
------------------------------------------------- --------- --------- --------------- -------- --------
Total segment revenue 31,801 15,617 47,418 988 48,406
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) profit / (loss) before tax 469 3,257 3,726 (1,254) 2,472
Net finance charges - - - 236 236
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) operating profit / (loss) 469 3,257 3,726 (1,018) 2,708
Share-based payments (139) (86) (225) (326) (551)
Amortisation of acquired intangible assets (1,110) (1,326) (2,436) - (2,436)
Acquisition and restructuring costs - - - (398) (398)
Segment operating (loss) / profit (780) 1,845 1,065 (1,742) (677)
Finance income 13
Finance charges (249)
------------------------------------------------- --------- --------- --------------- -------- --------
Loss from continuing operations before tax (913)
Tax expense (392)
------------------------------------------------- --------- --------- --------------- -------- --------
Loss from continuing operations (1,305)
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from discontinued operations 1,903
------------------------------------------------- --------- --------- --------------- -------- --------
Profit for the period 598
------------------------------------------------- --------- --------- --------------- -------- --------
Segment total assets 81,484 75,865 157,349 13,198 170,547
------------------------------------------------- --------- --------- --------------- -------- --------
(1) Profit / (loss) from operations before share-based payments,
amortisation of acquired intangible assets and acquisition and
restructuring costs
Handset Network
Testing Testing Total Wireless Group Total
Year ended 30 April 2014 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- --------- --------- --------------- -------- --------
External revenue 77,353 31,863 109,216 - 109,216
Internal revenue - - - 1,696 1,696
------------------------------------------------- --------- --------- --------------- -------- --------
Total segment revenue 77,353 31,863 109,216 1,696 110,912
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) profit / (loss) before tax 10,804 6,007 16,811 (1,931) 14,880
Net finance charges - - - 444 444
------------------------------------------------- --------- --------- --------------- -------- --------
Segment adjusted (1) operating profit / (loss) 10,804 6,007 16,811 (1,487) 15,324
Share-based payments (118) (173) (291) 103 (188)
Amortisation of acquired intangible assets (2,191) (2,641) (4,832) - (4,832)
Acquisition and restructuring costs (484) - (484) (504) (988)
------------------------------------------------- --------- --------- --------------- -------- --------
Segment operating profit / (loss) 8,011 3,193 11,204 (1,888) 9,316
Finance income 25
Finance charges (469)
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from continuing operations before tax 8,872
Tax expense (1,090)
------------------------------------------------- --------- --------- --------------- -------- --------
Profit from continuing operations 7,782
Profit from discontinued operations 4,489
------------------------------------------------- --------- --------- --------------- -------- --------
Profit for the period 12,271
------------------------------------------------- --------- --------- --------------- -------- --------
Segment total assets 74,983 72,896 147,879 25,936 173,815
------------------------------------------------- --------- --------- --------------- -------- --------
(1) Profit / (loss) from operations before share-based payments,
amortisation of acquired intangible assets and acquisition and
restructuring costs
2.3 Operating expenses - continuing operations
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
--------------------------------------------------------------- ----------------- ----------------- ---------------
Distribution costs
- amortisation of acquired intangible assets 1,303 1,304 2,679
- other underlying operating expenses 4,911 5,364 10,441
--------------------------------------------------------------- ----------------- ----------------- ---------------
6,214 6,668 13,120
--------------------------------------------------------------- ----------------- ----------------- ---------------
Research and development
- amortisation of internally generated assets 1,065 1,381 2,679
- other underlying operating expenses 8,831 8,549 17,033
--------------------------------------------------------------- ----------------- ----------------- ---------------
9,896 9,930 19,712
- amortisation of acquired intangible assets 1,132 1,132 2,153
11,028 11,062 21,865
--------------------------------------------------------------- ----------------- ----------------- ---------------
Administrative expenses
- share-based payments 297 551 188
- acquisition and restructuring costs 1,349 398 988
- other underlying operating expenses 7,419 8,044 17,369
--------------------------------------------------------------- ----------------- ----------------- ---------------
9,065 8,993 18,545
--------------------------------------------------------------- ----------------- ----------------- ---------------
Total operating expenses 26,307 26,723 53,530
--------------------------------------------------------------- ----------------- ----------------- ---------------
Analysed as:
- amortisation of acquired intangible assets 2,435 2,436 4,832
- acquisition and restructuring costs 1,349 398 988
- share-based payments 297 551 188
One-off and non-trading operating expenses excluded from
adjusted profit 4,081 3,385 6,008
- amortisation of internally generated assets 1,065 1,381 2,679
- other underlying operating expenses 21,161 21,957 44,843
--------------------------------------------------------------- ----------------- ----------------- ---------------
Total operating expenses 26,307 26,723 53,530
--------------------------------------------------------------- ----------------- ----------------- ---------------
3 acquisition and Restructuring costs
Acquisition and restructuring costs incurred in the period
primarily relate to the costs incurred on the acquisition of Xceed
Technologies Inc.
The costs incurred in the prior period relate to the costs
incurred on the acquisition of Genetel SAS and its integration into
the Network Testing business.
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
-------------------------------------------------------------- ----------------- ----------------- ---------------
Costs incurred on the acquisition and integration of Xceed 1,349 - -
Costs incurred on the acquisition and integration of Genetel - 398 492
Costs incurred on the acquisition and integration of Propsim - - 12
Reorganisation and redundancy costs - - 484
-------------------------------------------------------------- ----------------- ----------------- ---------------
Acquisition and restructuring costs 1,349 398 988
-------------------------------------------------------------- ----------------- ----------------- ---------------
4 discontinued operations
4(a) Accounting treatment
On 29 May 2014, the Group completed its disposal of the Anite
Travel division with the sale of its 100% interest in the ordinary
share capital of Anite Travel Limited and its subsidiary Anite
Travel Systems Pty Limited.
The results of the Travel division, including the results from
businesses discontinued in prior periods, are shown below:
4(b) Profit after tax relating to discontinued operations
Period 1 May to 29 May 2014 Six months ended Year
31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
---------------------------------------------------- ---------------------------- ----------------- ---------------
Profit after tax for the period from Anite Travel
Revenue 1,570 10,055 20,542
Cost of sales (852) (5,036) (10,130)
---------------------------------------------------- ---------------------------- ----------------- ---------------
Gross profit 718 5,019 10,412
Operating expenses (364) (2,453) (4,905)
---------------------------------------------------- ---------------------------- ----------------- ---------------
Adjusted operating profit 354 2,566 5,507
Share-based payments - (119) (247)
---------------------------------------------------- ---------------------------- ----------------- ---------------
Operating profit 354 2,447 5,260
Net finance income 1 18 28
---------------------------------------------------- ---------------------------- ----------------- ---------------
Profit before tax 355 2,465 5,288
Tax expense (74) (562) (1,265)
---------------------------------------------------- ---------------------------- ----------------- ---------------
Profit after tax from Anite Travel 281 1,903 4,023
Release of provision in relation to other
previously discontinued operations - - 500
Charge in respect of other previously discontinued
operations - - (34)
Profit on sale of Anite Travel 31,732 - -
Profit after tax for the period from discontinued
operations 32,013 1,903 4,489
---------------------------------------------------- ---------------------------- ----------------- ---------------
The Travel business was disposed of on 29 May 2014 for GBP45.0m
of which GBP1.7m was held in escrow pending the resolution of
certain commercial considerations. These are due to be resolved by
30 April 2015. The calculation of profit on sale of subsidiary has
currently used net proceeds of GBP43.3m. This will be reviewed once
the final escrow release is known.
5 SHARE-BASED PAYMENTS
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
----------------------------------------------------- ----------------- ----------------- ---------------
Equity settled 284 551 1,338
Cash settled 13 - (1,150)
----------------------------------------------------- ----------------- ----------------- ---------------
Share-based payment charge on continuing operations 297 551 188
Discontinued operations - 119 247
----------------------------------------------------- ----------------- ----------------- ---------------
Share-based payments charge 297 670 435
----------------------------------------------------- ----------------- ----------------- ---------------
The Group does not operate separate cash-settled share-based
payment arrangements; however, the employer's NIC liability arising
on the outstanding awards is treated as such an arrangement for
accounting purposes.
6 Net finance charge
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
------------------------------------------------------------- ----------------- ----------------- ---------------
Finance income
Interest receivable and similar income 78 7 11
Interest on short-term deposits 6 6 14
Total finance income 84 13 25
------------------------------------------------------------- ----------------- ----------------- ---------------
Finance charges
Bank loans and overdrafts (20) (207) (387)
Other loans/commitment fees (77) (37) (74)
Other interest - (5) (8)
Total finance charges (97) (249) (469)
------------------------------------------------------------- ----------------- ----------------- ---------------
Net finance charge - continuing operations (13) (236) (444)
------------------------------------------------------------- ----------------- ----------------- ---------------
Finance income - discontinued operations 1 18 28
------------------------------------------------------------- ----------------- ----------------- ---------------
Net finance charge - continuing and discontinued operations (12) (218) (416)
------------------------------------------------------------- ----------------- ----------------- ---------------
7 tax expense
Continuing operations Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
--------------------------------------- ----------------- ----------------- ---------------
Current tax
UK corporation tax 408 (286) 775
Foreign tax 1,006 863 1,660
--------------------------------------- ----------------- ----------------- ---------------
1,414 577 2,435
--------------------------------------- ----------------- ----------------- ---------------
Adjustments in respect of prior years
UK corporation tax - - (61)
Foreign tax - - 5
- - (56)
--------------------------------------- ----------------- ----------------- ---------------
Total current tax expense 1,414 577 2,379
--------------------------------------- ----------------- ----------------- ---------------
Deferred tax
UK (772) 211 465
Foreign (123) (396) (1,754)
--------------------------------------- ----------------- ----------------- ---------------
Total deferred tax credit (895) (185) (1,289)
--------------------------------------- ----------------- ----------------- ---------------
Total income tax expense 519 392 1,090
--------------------------------------- ----------------- ----------------- ---------------
Income tax for the interim period is charged at 22.7% (October
2013: 31.0%), representing the weighted average of the estimated
annual effective income tax rate expected to apply to adjusted
profit for the full year in each jurisdiction and major category of
income within continuing operations. The equivalent weighted
average rate on the statutory profit is 53.9% (October 2013:
(42.4)%).
Tax charge / (credit) taken to equity Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April 2014
GBP000 GBP000 GBP000
--------------------------------------------------------------- ----------------- ----------------- ---------------
Deferred tax relating to the translation adjustment to
amortisation of acquired intangible
assets (185) 119 (135)
UK corporation tax relating to foreign exchange - - (586)
--------------------------------------------------------------- ----------------- ----------------- ---------------
Income tax relating to components of other comprehensive
income (185) 119 (721)
Deferred tax relating to share-based payments 2 1,593 1,825
Current tax relating to share-based payments (311) (327) (441)
--------------------------------------------------------------- ----------------- ----------------- ---------------
Total tax charge / (credit) taken directly to equity (494) 1,385 663
--------------------------------------------------------------- ----------------- ----------------- ---------------
8 Earnings per share
The calculations of earnings per share are based on the Group
profit for the period, adjusted profit(1) and weighted average
number of shares in issue:
Basic Diluted
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
31 October 31 October 30 April 31 October 31 October 30 April
2014 2013 2014 2014 2013 2014
EPS summary
EPS for continuing and
discontinued
operations 11.3p 0.2p 4.3p 10.9p 0.2p 4.1p
EPS for discontinued
operations 11.1p 0.7p 1.6p 10.7p 0.6p 1.5p
EPS for continuing
operations 0.2p (0.5)p 2.7p 0.1p (0.5)p 2.6p
Adjusted EPS (2) 1.4p 0.6p 4.0p 1.3p 0.6p 3.9p
------------------------ ---------------- ---------------- ---------------- ------------ ------------ ----------
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
31 October 31 October 30 April 31 October 31 October 30 April
2014 2013 2014 2014 2013 2014
Pence per share Pence per share Pence per share
GBP000 GBP000 GBP000
------------------------ ---------------- ---------------- ---------------- ------------ ------------ ----------
Profit for the period 11.3 0.2 4.3 32,457 598 12,271
Profit from
discontinued
operations (11.1) (0.7) (1.6) (32,013) (1,903) (4,489)
------------------------ ---------------- ---------------- ---------------- ------------ ------------ ----------
Profit / (loss) from
continuing operations 0.2 (0.5) 2.7 444 (1,305) 7,782
Reconciliation to
adjusted profit:
Amortisation of
acquired intangible
assets (net of tax) 0.7 0.7 0.9 1,914 1,834 2,517
Share-based payments
(net of tax) 0.1 0.3 0.1 308 772 375
Acquisition and
restructuring costs
(net of tax) 0.4 0.1 0.3 1,234 398 856
------------------------ ---------------- ---------------- ---------------- ------------ ------------ ----------
Adjusted profit (1) 1.4 0.6 4.0 3,900 1,699 11,530
------------------------ ---------------- ---------------- ---------------- ------------ ------------ ----------
1 Profit from continuing businesses before amortisation of
acquired intangible assets, share-based payments and acquisition
and restructuring costs.
2 Earnings per share on adjusted profit (1) have been included
to give a clearer understanding of the results of the continuing
businesses.
Six months ended Six months ended Year
31 October 2014 31 October 2013 ended
30 April
Number of shares ('000) 2014
-------------------------------------------------------------------- ----------------- ----------------- ----------
Weighted average number of shares in issue - used to calculate
basic earnings per share 287,898 285,328 285,390
Effect of potentially dilutive ordinary shares
- SAYE and share option schemes 10,147 13,067 13,132
-------------------------------------------------------------------- ----------------- ----------------- ----------
Number of shares used to calculate diluted earnings per share 298,045 298,395 298,522
-------------------------------------------------------------------- ----------------- ----------------- ----------
9 acquisitions
On 2 October 2014, Anite plc acquired 100% control of Xceed
Technologies Inc. ("Xceed"), a leading provider of wireless network
optimisation and performance management products. The acquisition
will allow Anite to broaden its product portfolio in the analytics
and post-processing market, an area of significant operator focus
and growth.
The consideration for the acquisition was $30.0m in cash on
completion plus a potential further deferred consideration of up to
$5.0m dependent on the achievement of performance targets for the
years to 30 April 2015 and 2016. $3.5m (GBP2.2m) of this potential
deferred consideration has been provided for in these accounts,
being the amount potentially due to the vendor shareholders. The
remaining $1.5m is due to employees and will be recognised as
employment costs within acquisition and restructuring costs in the
Income Statement over the earnout period. Adjustment to both
amounts will be reassessed according to the expectation of the
achievement of the performance conditions.
Goodwill represents the potential for Anite to sell its existing
products into Xceed's customer base, none of which is deductible
for income tax purposes.
Provisional recognition of assets acquired and liabilities
assumed are:
Fair value
GBP000
--------------------------------------- -----------
Goodwill 10,795
Intangible assets - marketing-related 964
Intangible assets - customer-related 1,718
Intangible assets - technology-based 13,849
Fixed assets 300
Trade and other receivables 530
Provision for doubtful receivables (68)
Cash 1,035
Trade and other payables (1,118)
Provisions due within one year (56)
Deferred tax liability (6,647)
--------------------------------------- -----------
Total 21,302
--------------------------------------- -----------
Consideration
Cash(1) 19,138
Contingent consideration 2,164
--------------------------------------- -----------
Total Consideration 21,302
--------------------------------------- -----------
(1) The cash consideration paid includes $30.0m purchase price
plus $0.9m working capital adjustment.
Xceed contributed GBP446,000 of revenue and broke even during
the period 3 October 2014 to 31 October 2014.
Acquisition costs of GBP1,349,000 have been expensed in the
consolidated income statement of Anite plc during the period.
10 trade and other receivables
31 October 2014 31 October 2013 30 April 2014
GBP000 GBP000 GBP000
----------------------------------------------------- ---------------- ---------------- --------------
Trade receivables 32,654 31,114 36,011
Less: provision for impairment of trade receivables (1,677) (936) (1,864)
----------------------------------------------------- ---------------- ---------------- --------------
Trade receivables net of provision 30,977 30,178 34,147
Other receivables 2,775 2,308 1,694
Prepayments 3,182 4,421 3,624
Accrued income 905 2,346 2,162
37,839 39,253 41,627
----------------------------------------------------- ---------------- ---------------- --------------
11 trade and other payables
31 October 2014 31 October 2013 30 April 2014
GBP000 GBP000 GBP000
--------------------------------- ---------------- ---------------- --------------
Trade creditors 8,914 8,102 9,296
Other taxes and social security 512 1,722 827
Deferred income 25,023 20,862 23,383
Accruals 7,615 9,340 8,058
Other creditors 441 604 520
42,505 40,630 42,084
--------------------------------- ---------------- ---------------- --------------
12 Net CASH / (debt)
31 October 2014 31 October 2013 30 April 2014
GBP000 GBP000 GBP000
------------------------------- ---------------- ---------------- --------------
Cash and cash equivalents 29,792 11,748 16,993
Bank borrowings - current - (153) (10,938)
Bank borrowings - non-current - (17,641) -
Net cash / (debt) 29,792 (6,046) 6,055
------------------------------- ---------------- ---------------- --------------
13 provisions
NI on options Contingent Warranties Property provision Other Total
consideration
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------------- ------------------------ ----------- ------------------- ------- -------
At 1 May 2014 1,358 - 2,710 183 1,034 5,285
Transferred from
accruals - - - - 407 407
Release of provision - - - - (172) (172)
Established during the
period 13 - - - 93 106
Utilised during the
period (120) - - - (277) (397)
Acquisition of
subsidiary - 2,147 - - 56 2,203
Foreign exchange - 11 - - (40) (29)
At 31 October 2014 1,251 2,158 2,710 183 1,101 7,403
------------------------ -------------- ------------------------ ----------- ------------------- ------- -------
14 share capital
Ordinary shares
of 11.25p each
Number GBP000
---------------------------------- ------------ -------
Allotted, issued and fully paid:
At 1 May 2014 300,645,388 33,823
Issued during the period 267,500 30
---------------------------------- ------------ -------
At 31 October 2014 300,912,888 33,853
---------------------------------- ------------ -------
At 31 October 2014, 11,545,690 shares were held in the Company's
Employee Benefit Trust, which are non-participating and are
excluded from the calculation of basic earnings per share.
15 Dividends
The Company paid a final dividend of 1.265p (2013: 1.265p) per
share totalling GBP3,665,442 (2013: GBP3,623,745) on 24 October
2014.
16 Contingent liabilities
There are contingent liabilities that arise in the normal course
of business in respect of indemnities, warranties, guarantees and
legal claims. However, the Directors consider that none of these
claims is expected to result in a material loss to the Group. There
has been no change in the Directors' assumptions in regard to
contingent liabilities since 30 April 2014.
Following the disposal of the Travel business, Anite plc will
continue to guarantee performance obligations of Travel for a
specific on-going implementation. This guarantee will expire on 30
April 2016 and the maximum contingent liability under it is
GBP5.0m.
17 related parties
Transactions between the company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. There have been no material related party
transactions in the period.
18 post balance sheet events
There have been no material events post the balance sheet date
that require disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMMGZNMNGDZM
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