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Company Anite PLC
TIDM AIE
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Final Results

Released 07:00 02-Jul-2013
Number 3438I07

RNS Number : 3438I
Anite PLC
02 July 2013
 



For Immediate Release

 

 

Tuesday, 2 July 2013

Anite plc

 

Final results for the year ended 30 April 2013

 

Anite plc ("Anite" or "the Group"), the leading provider of software solutions to the international wireless and leisure travel industries, today announces its final results for the year ended 30 April 2013. 

 

Financial highlights (adjusted)1

 

·      Revenue up 8% to £132.5m (2012: £122.5m) 

·      EBITDA up 18% to £40.5m (2012: £34.2m)

·      Operating profit up 20% to £34.5m (2012: £28.8m)

·      Operating margin of 26% (2012: 24%)

·      Profit before tax up 23% to £34.3m (2012: £28.0m)

·      Diluted adjusted earnings per share up 24% to 8.3p (2012: 6.7p)

·      Closing order book down 6% to £107.3m (2012: £114.5m)

·      Net debt of £0.9m (April 2012: £16.9m net cash) after £26.2m acquisition of Propsim

 

Statutory results

 

·      Revenue from continuing operations £132.5m (2012: £122.5m)

·      Profit for the year £19.3m (2012: £18.5m)

·      Basic statutory earnings per share from continuing operations 6.8p (2012: 5.7p)

·      Diluted earnings per share from continuing operations 6.3p (2012: 5.3p)

 

Dividend

 

·      Proposed final dividend up 12% to 1.265p (2012: 1.125p)

-      total dividend up 23% to 1.84p (2012: 1.50p)

 

Operating highlights1

 

·      Wireless revenue as a whole contributed 85% of Group revenue (2012: 84%)

-      acquisition of Propsim product line expands addressable market

             Handset Testing 

-      organic revenue growth led by LTE 4G and Conformance Testing ("CT")

-      revenue up 14% to £87.0m (2012: £76.4m); operating profit up 22% to £26.3m (2012: £21.5m)

-      order intake up 12% to £88.9m (2012: £79.4m); closing order book £26.8m (2012: £24.9m)

             Network Testing

-      underlying growth accelerated in H2

-      revenue £26.1m (2012: £26.0m); operating profit £5.6m (2012: £5.3m)

-      order intake up 0.8% to £26.2m (2012: £26.0m)

·      Travel:

-      increased recurring revenue mitigated impact of lower licences

-      revenue £19.4m (2012: £20.1m); operating profit £4.8m (2012: £4.6m);

-      order intake £10.2m (2012: £46.6m); closing order book £80.4m (2012: £89.6m).

 

1Adjusted results are for continuing operations before share-based payments, amortisation of acquired intangible assets, restructuring costs and other gains and losses.

 

 

 

Christopher Humphrey, Chief Executive, said:

 

"Anite has reported another good year, led by our Handset Testing business. The fundamental drivers of all our businesses are favourable and we are confident that they are well positioned for the future.

The Board believes that our strategy will reinforce Anite's position as a market leader. This year we made significant progress growing revenue and expanding into adjacent markets. We will continue to use the strength of our technology and resources to deliver further growth and increase shareholder value."

 

 

For further information, please contact:

Anite plc                                                                                         

www.anite.com



Christopher Humphrey, Chief Executive                                               

01252 775200

Richard Amos, Group Finance Director




MHP Communications                                                                    

020 3128 8100



Reg Hoare / Giles Robinson 


 

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, an international software and solutions company, operates in two defined markets. We focus
on providing mobile device and network testing systems to the Wireless market, and reservation and
e-commerce solutions to the leisure travel industry. Both are based on our comprehensive knowledge of the sectors, and on our proprietary systems.

 

Our 580 staff work with many of the world's leading wireless and travel companies from our headquarters in the UK, and from offices in 16 countries throughout Europe, the Americas, Asia and the Middle East.

 

This preliminary results announcement 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.

 

 

Final results for the year ended 30 April 2013

 

All references to adjusted profit relate to continuing operations for the period, before share-based payments, amortisation of acquired intangible assets, restructuring costs and other gains and losses. See the attached income statement and notes for details. A reconciliation of adjusted results to reported statutory results is given in the Financial Review.

 

 

Chairman's and Chief Executive's statement

 

We are pleased to report that Anite had a good year with continued growth in revenue and profitability.

 

We continued to invest significantly in new products in each of our three businesses; this helps to reinforce our current strong market positions and also expand into adjacent market areas that we believe have good potential.

 

We believe that the underlying drivers for the Wireless division - namely, the inexorable growth in mobile data resulting from smartphones and devices being used for functions that have been traditionally undertaken by PCs, and the complexity of devices and network technologies - means that growth opportunities will exist for many years to come, notwithstanding the challenging macroeconomic business environment.

 

Strategy

 

Our strategy is to position Anite as a global leader in Wireless test solutions and to capitalise on the opportunities that emerge from the development and roll out of LTE 4G technology and its successors. Our Wireless division contributed an increased proportion of Anite's total revenue 85% (2012: 84%) and profits last year.

 

Our customers are demanding a broader range of more sophisticated wireless testing products to help them develop more complex mobile devices. We have significant skill, knowledge and technology which will be used to expand our addressable markets as mobile technology continues to evolve.

 

Wireless

The Board believes that our Wireless division operates in a long-term growth market, which has high barriers to entry and relatively few major competitors. This enables it to generate good profit margins and return on investments.

 

We are committed to maintaining market leadership by continuing to invest in R&D in anticipation of the trends that we see developing in this market.

 

The Board anticipates that the majority of the division's growth will be organic. It will come from underlying growth in its respective markets, investment in its products to win market share, and lengthy and cumulative product and technology lifecycles.

 

Organic growth in the past three financial years has been supplemented by selective acquisitions of specific product sets. The acquisitions of Invex, in January 2011, and Propsim, in January 2013, increased the Group's product portfolio in its existing and adjacent Wireless markets.

 

These acquisitions should underpin and complement our organic growth rates. The Board will consider making additional selective acquisitions to grow the business further.

 

Acquisition of Propsim

In January 2013, we completed our most significant acquisition since 2006, when we acquired the Propsim Channel Emulator product line for £26.2m (including £1.2m of acquisition and integration costs). Propsim's range of products has enabled us to expand further into the Wireless performance-testing market, adjacent to our core Wireless markets.

 

Propsim - based in Oulu, Finland - is a good fit with, and is being integrated into, our Handset Testing business. Like Anite, Propsim is recognised as a technology leader in its field. Its performance since acquisition has been encouraging and it is expected to contribute to increased profits in the future.

 

Travel

Our strategy for Travel is to increase its long-term value as it changes its business model. Our @com product, which is the only proven large-scale reservation system on the market, is at the beginning of a 20-year product lifecycle. @com sits at the heart of customers' businesses, and offers them greater efficiency and reduced costs. In recent years, Travel has strengthened and improved its market position, and through long-term customer contracts has far greater revenue visibility.

 

Results summary

 

Anite's results were ahead of the previous year, with the majority of growth being derived from Handset Testing. On a divisional basis, Wireless and Travel both reported strong underlying profitability: Wireless reported an adjusted operating margin of 28% (2012: 26%) while Travel reported 25% (2012: 23%).

 

Overall Group adjusted operating profit was up 20% to £34.5m (2012: £28.8m), on revenue up 8% to £132.5m (2012: £122.5m). Adjusted diluted earnings per share were up 24% to 8.3p (2012: 6.7p). 

 

Financial summary

 

Robust cash generation enabled us to maintain a strong financial position at the year-end. This was after acquisition of Propsim in January 2013 (funded by means of a combination of existing cash and banking facilities). Following the acquisition, net debt peaked at £8.8m in March 2013, but had fallen to £0.9m by the year-end 30 April 2013 (30 April 2012: £16.9m net cash).

 

It is the Board's intention that Anite should sustain its strong financial position to provide financial flexibility. It will achieve this through a combination of optimising cash management while retaining access to appropriate bank facilities to fund small acquisitions.

 

Dividend

 

The Board is pleased to recommend an increased final dividend of 1.265p per share, an increase of 12% on the previous year (2012: 1.125p per share). This will result in a total dividend for the year of 1.84p per share, a 23% increase on the previous year's total dividend (2012: 1.50p per share). It is proposed to pay the final dividend on 29 October 2013 to shareholders on the register at 4 October 2013.

 

During the year, as intended, the Board addressed the ratio of payment between interim and final dividends to return it to the normal one third:two thirds ratio. 

 

Overall, the Board's intention is to maintain a progressive dividend policy, broadly in line with earnings growth, and to retain strong dividend cover. 

 

Board

 

As announced separately today, Patrick De Smedt will join the Board as an additional Non-Executive Director with effect from the close of the AGM. Patrick spent 23 years with Microsoft, latterly as Chairman, Microsoft EMEA, and is currently a non-executive director of Victrex plc and Morgan Sindall Group plc.

 

Patrick will succeed David Hurst-Brown as Senior Independent Director and Chairman of the Remuneration Committee.  David will remain on the Board as a Non-Executive Director, but as he will reach the ninth anniversary of his appointment on 24 August 2013, he will no longer be considered independent under the rules of the UK Corporate Governance Code.

 

People

 

We would like to thank our staff for their continued commitment and hard work. The Board acknowledges that Anite's success is based on this on-going contribution together with their exceptional industry expertise.

 

Summary and Outlook

 

Anite has reported another good year, led by our Handset Testing business. The fundamental drivers of all our businesses are favourable and we are confident that they are well positioned for the future.

 

Given the short order-book visibility in the Wireless division, and tough first quarter comparatives, with Handset Testing's exceptional order-backlog position one year ago, we continue to be conservative in our guidance.  We expect the seasonality of our trading to return to the pattern of previous years, with relatively quiet first and third quarters and higher activity levels in quarters two and four.

 

Handset Testing continues to be a leader in its markets; the recent acquisition of the Propsim product line has added an additional dynamic to its growth potential.  Continued growth in the Conformance and Interoperability Testing markets should sustain low to mid-teens organic revenue growth. We expect this to be augmented by the benefit of a first full-year contribution from the Propsim product line.

 

In Network Testing, we anticipate that LTE 4G roll-outs will drive constant currency revenue growth of mid to high-single digits.  

 

Travel has over 75% of anticipated current year revenue already contracted.  The business is capable of low to mid single-digit revenue growth with the rate of conversion of our valuable pipeline of opportunities the key to achieving or increasing growth.

 

The Board believes that our strategy will reinforce Anite's position as a market leader. This year we made significant progress growing revenue and expanding into adjacent markets. We will continue to use the strength of our technology and resources to deliver further growth and increase shareholder value.

 

 

Clay Brendish                          Christopher Humphrey

Chairman                                  Chief Executive

 

 

Review of operations

 

Over the last twelve months we have built on the exceptional growth of the previous year, with Group revenue increasing 8% and adjusted operating profit growing 20%.

 

As has been the trend over the last three years, the growth was primarily delivered by Handset Testing, with continued growth in demand for LTE 4G products, particularly in Conformance Testing.  Network Testing grew both revenue and adjusted operating profit in underlying Euro terms, although some of this growth was offset by the translation impact of the weakening of the Euro compared to Sterling during the first half of the year. 

 

Travel saw a decline in revenue this year as delays in closing contracts in the final quarter meant that licence revenue fell by £1.4m year-on-year.  However the increasing level of recurring revenue and a strong focus on cost control meant that adjusted operating profit increased slightly despite the revenue decline.

 

Wireless

 

Trends

The world is "going mobile" - fuelled by demand for smartphones and tablets, a change from the use of the PC to a mobile device, and an explosion in mobile data traffic. Consumers expect to download more content, more quickly, and with consistent network service at all times. And that's not all. Wireless connections between objects, machines or sensors are driving machine-to-machine ("M2M") technologies at home, in the community and across a broad range of industries.

 

A single smartphone is able to generate as much data traffic as 50 basic feature phones, and a tablet as much as 120 times. Many consumers now own both. They use them to download content and applications that were unavailable on earlier-generation devices. In 2012, mobile video accounted for more than half of the 70% growth in global mobile data traffic. As new devices with increased capabilities are introduced, mobile data traffic is projected to grow a further 13-fold by 2017, with Asia and North America accounting for almost two-thirds of that growth. Laptops currently generate a disproportionate amount of traffic, but smartphones, tablets and M2M will begin to take a larger share. By 2017 it is estimated that there will be 8.6 billion mobile devices, and 1.7 billion M2M connections¹.

 

LTE 4G networks will go some way towards alleviating the network overload created by this demand for mobile data. Current-generation mobile networks were not designed for this level of use and 424 operators, in 126 countries, are currently investing in LTE 4G. To date, there are 175 LTE 4G networks in commercial service in 70 countries, including the UK. LTE 4G is, however, still in its infancy. Of the world's 6.5 billion mobile phone subscriptions, only around 100 million, primarily in Asia and North America, currently subscribe to LTE 4G².

 

Continual advances in Wireless technology result in increasingly complex mobile devices that need more tools to test them and to bring them to market quickly. Each new technology must be compatible with legacy systems, and must work on different frequencies and networks around the world. Even using our effective testing systems, a typical LTE 4G device needs 20-25% more testing than a 3G device.

 

Maintaining the quality of service - which can be affected by devices' complexity and technology, and by the insatiable demand for data and speed - has become a key differentiator for operators. To sustain performance and reduce customer churn, they need to assure the quality of handsets coming onto their networks. They also need to measure, monitor and optimise their networks.

 

The predicted doubling of mobile data traffic each year means that, even with LTE 4G, capacity and radio spectrum will eventually run out. Pilot networks for LTE-Advanced ("LTE-A") are currently being introduced. LTE-A is the next stage in LTE 4G's evolution and will deliver even faster data rates. Research has already begun on 5G, which will support future demands. This will take a considerable amount of time to develop but is an indication that existing and new technology will not cope with this growth. In time, this will create more opportunities for testing.

 

Strategy 

Our strategy is to maintain our position as a global leader in wireless test software and to capitalise on the opportunities that emerge from the development and roll out of LTE 4G technology and its successors. By continuing to invest in early R&D we will ensure that our highly specialised systems remain at the leading edge and are ready when our customers need them.

 

We have significant skill, knowledge and technology which can be used to expand our addressable markets as the increasing complexity of mobile technology continues to demand an increase in the amount, breadth and complexity of our testing products.

 

1 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012-2017, February 2013

² GSA Evolution to LTE Report, May 2013

 

 

Wireless: Handset Testing

 

Performance

The adjusted results for the Handset Testing business show continued strong year-on-year growth.  Order intake grew 12%, to £88.9m (2012: £79.4m), revenue increased by 14% to £87.0m (2012: £76.4m) and adjusted operating profit grew by 22% to £26.3m (2012: £21.5m).  The closing order book in the business increased 8% from £24.9m at the start of the year to £26.8m at 30 April 2013.

 

Part of the growth came from the inclusion for the last three months of the year of results from the acquisition of the Propsim Channel Emulator product line ("Propsim") that we made on 31 January 2013.  Propsim revenue in the period was £2.7m and adjusted operating profit £0.5m, both slightly ahead of our expectations for the period.  Order intake for Propsim product in the period was £4.7m and the closing backlog at 30 April was £2.0m (backlog at acquisition: £nil).  Extracting the impact of the acquisition, the underlying organic growth of the Handset Testing business was 10% in revenue and 20% adjusted operating profit.

 

The underlying revenue growth in Handset Testing came from increased sales of LTE 4G compatible products based on the Anite 9000 LTE hardware platform.  Revenue from LTE products grew 23% to £41.8m (2012: £33.9m), and represented 48% of Handset Testing revenue in the year, compared with 44% in the prior period.  Revenue from 2G/3G products was flat compared to the prior year at £42.5m, with the £2.7m revenue from Propsim channel emulators reflecting the balance.  The flat revenue profile for 2G/3G was in line with expectations and reflected the fact that, as anticipated, customers are focusing investment in developing their LTE 4G capabilities alongside existing 2G/3G systems.

 

From a market perspective, we continued to see strong growth for Conformance Testing ("CT") products with revenue increasing in line with our expectations for the business.  CT continues to represent half of Handset Testing revenue.  Interoperability Testing ("IOT"), which represents around 40% of Handset Testing revenue grew, albeit below our target of low to mid-teen percentage growth.  This was mainly a consequence of a strong comparative - year-on-year growth in the prior year was nearly 80%.  Other revenue, mainly Development Testing ("DT"), which now make up just under 10% of Handset Testing revenue, grew in line with our expectations.

 

On a regional basis, the Americas increased 33% to £38.4m (2012: £28.8m), making it our largest region.   EMEA revenue increased 15%, to £19.9m (2012: £17.3m) while Asia Pacific revenue decreased 5% to £28.7m (2012: £30.3m) following the exceptional performance last year.

 

Handset Testing's net revenue margin (revenue, less third-party hardware costs as a percentage of revenue) increased in the year to 77% (2012: 71%).  This was the result of improved margins within product sales.   During the year we have enhanced our hardware offering so that a single hardware unit can be deployed in a dual cell configuration.  This has allowed us to sell more software with each hardware unit, increasing the proportion of software sold and hence the underlying margin.  This, combined with a lack of material inventory provisions movements this year (2012: increased provision of £2.4m) has led to the improvement in net revenue percentage margin.  The proportion of overall revenue from maintenance services increased slightly from 26% to 27% across the year which also marginally assisted net revenue.

 

Maintaining our position at the forefront of the industry is critical to the continued success of our business.  Handset Testing has continued to increase its investment in R&D to extend its product offering and develop potential new opportunities for sustainable future revenue growth. 

 

Enhancements to the Anite 9000 platform in the year have included the launch of the dual cell version, the inclusion of baseband fading to access certain performance testing opportunities and continued work on LTE-Advanced functionality.  Conformance test script additions in the period have included further TD-LTE scripts plus scripts addressing LTE voice functionality ("VOLTE").  Investment also continued to be made on IOT scripts with work progressing on a number of new potential eco-systems, including with China Mobile, the world's largest mobile operator.  These investments did not result in material revenue in the period.

 

The cash spent on R&D projects increased to £14.8m (2012: £13.0m), including £1.0m spent in Propsim in the period since acquisition.  The planned increase in spend on writing LTE CT and IOT scripts resulted in a net capitalisation of R&D costs of £1.0m (2012: £0.7m).  There was no capitalisation or amortisation within Propsim.  After adjusting for net capitalisation, the profit and loss charge for R&D increased in the period to £13.8m (2012: £12.3m). 

 

Other fixed costs in Handset Testing increased by £6.4m to £27.1m (2012: £20.7m), with Propsim costs since acquisition accounting for £0.7m of the increase.  Of the remainder, fixed cost of sales has increased by £3.2m, due mainly to the increased cost of supporting installed customer systems plus costs of maintaining the growing library of test cases.  Overheads also increased by 19% or £2.4m, partly due to increased sales costs and partly due to the business taking on additional office space to accommodate the growing headcount.  Handset Testing had 288 employees at the year end (2012: 211) and 59 contractors (2012: 56).  Included in the year end number are the 54 employees who joined us with Propsim.

 

Overall, as a result of the factors described above, Handset Testing's operating margin increased two percentage points to 30% (2012: 28%).

 

Growth

To enable our Wireless customers to exploit developments in technology, and to expand our markets, we will offer an increasing range of products and continue to develop the functionality of our hardware platform. We will also maintain our technology leadership in Conformance Testing. We will expand the number of new Interoperability Testing operator eco-systems, worldwide, by anticipating and responding to operator needs. We will continue to work in partnership with industry-leading customers to enable them to build quality products using our Development Testing solutions.

 

Our acquisition of the Propsim product line has given us channel emulation solutions, enabling us to address new testing in CT and expand into the performance testing market and opening up a new customer base with network equipment manufacturers. We will continue to expand into adjacent markets, as appropriate, to meet our customers' demands.

 

We are planning for generations of technology beyond LTE 4G and LTE-A, and will also continue to support our products that address legacy technologies.

 

Wireless: Network Testing

 

Performance

Network Testing maintained reported order intake and revenue at £26.1m (2012: £26.0m).  This business has no significant closing order book. Adjusted operating profit increased by 6%, to £5.6m (2012: £5.3m).  The business is based in Finland, and these reported results suffer from the currency translation impact of the Euro weakening against Sterling in the first half of the year.  Adjusting for this impact, underlying organic revenue and adjusted operating profit growth were 5% and 11% respectively.

 

Market conditions for network testing products were relatively difficult in the first half of the year as operators continued to manage budgets tightly, however, they improved in the second half of the year.

 

Against this backdrop the business continued to do well.  Network Testing's revenue in EMEA decreased 10% to £10.6m (2012: £11.8m) reflecting the challenging economic conditions in the region.  In the Americas, however, it benefitted from its increased presence following the Invex acquisition and from the earlier adoption of 4G-LTE and grew by 12% to £7.6m (2012: £6.8m).  In ROW/Asia it grew by 7% to £7.9m (2012: £7.4m).

 

The increase in underlying revenue came partly through continued progress with the Invex benchmarking product that was launched mid-way through the comparative period.  Over three times as many benchmarking units were sold in the year ended 30 April 2013 as in the previous period.  Further progress was also made with the in-house FSR1 scanner that was acquired with Invex.  In-house scanner sales now make up the vast majority of all scanners sold by the business and this has had a positive impact on margins at a time when global competition has resulted in some pricing pressure.  As a result, the net revenue percentage increased slightly to 72% (2012: 70%). 

 

R&D costs increased 5% to £3.9m (2012: £3.7m), including £0.4m of capitalised development (2012: £0.4m).  Investments were made in improving all the Network Testing products during the year.  This included adding application testing features to all products to allow accurate end-user experience measurements.  This expands the Quality of Experience ("QoE") measurement capability from voice to streaming video and to most popular messaging and social media applications.  The drive test product was enhanced so it can be used with most of the popular smartphones, data modems and tablets, whilst the hand-held product added support for WiFi offload and heterogeneous network measurements.  The Invex benchmarking product was upgraded to support data speeds up to those achieved by LTE-A and its flexibility was increased by launching a portable version, an industry first.  The FSR1 scanner was also upgraded with additional LTE functionality including support for TD-LTE.  Other fixed cost of sales and overheads were essentially unchanged at £9.3m.  Headcount in Network Testing at the year-end was 113 (30 April 2012: 113).

 

Overall, after the factors above, operating margins for the Network Testing business improved slightly to 21% compared to the 20% achieved in the prior year.

 

Growth

We will offer an increasing range of products to expand our market and to enable our Wireless customers, worldwide, to capitalise on changes in technology. We have the most comprehensive LTE 4G product portfolio on the market. We expect the volume of LTE 4G business to increase as commercial networks are rolled out and enter into the maintenance phase, when testing tools need to be refreshed and upgraded. We will continue to develop next-generation solutions to meet market requirements, and to expand our sales channels. We also expect to continue to make progress with our market-leading scanner and benchmarking solutions, and with the strategic partnership we have formed to offer a new Customer Experience Monitoring solution. We will expand into adjacent markets, as appropriate, to meet our customers' demands.

 

We continue to support products that address legacy technologies, and are planning for future generations of technology, beyond LTE 4G and LTE-A.

 

Travel

 

Strategy

Anite is the leading supplier of reservation software to European tour operators. Our strategy is to capitalise on our technological leadership and our customer relationships in the mid and upper-tier leisure travel market by maintaining and developing our products. To achieve this, we will continue to meet changing market needs by developing and launching new @com modules. In addition, we anticipate that our ability to deliver further successful projects to our existing major customers will lead to new opportunities - for add-ons and new territories - in these very large organisations. We will work to convert our strong sales pipeline in a manner that suits our resources and expect this to result in profitable growth of the business. We will also work to provide future stability and profitability by increasing the proportion of support and maintenance revenue from existing projects.

 

Trends

The economic environment continues to have an impact on the industry. Tighter budgets and rising costs are affecting tour operators' margins. Competition is tough and customers are demanding more flexible booking and differentiated products, as well as traditional and "all-inclusive" package holidays.

 

As a result, to maximise business opportunities, save costs and improve margins, leisure-travel companies are being forced to focus on technology-driven strategies. The boundaries that once existed between traditional tour operators and dynamic packaging/online travel agents are beginning to disappear.

 

Our technology directly addresses the industry's core issues by enabling them to:

·   adapt their business models to serve all market segments;

·   improve time-to-market by quickly implementing products and services online;

·   drive cost savings by optimising business processes; and

·   react flexibly to unforeseen events and disasters.

 

We are well positioned to succeed in this changing world. Our inherently flexible @com reservation system sits at the heart of travel companies. By supporting the destination, pricing and inventory processes, it enables traditional and dynamic packaging operators to co-exist. It helps them to reduce costs by retiring legacy IT platforms and automating processes. It offers high-speed and accurate holiday searching and helps operators to market differentiated products quickly and efficiently.

 

Performance

The Travel division had a somewhat mixed year in terms of financial results but made continued progress commercially and operationally.  Revenue was down 3% at £19.4m (2012: £20.1m).  Adjusted operating profit however was up 4% at £4.8m (2012: £4.6m).  The closing order book remains high at £80.4m (2012: £89.6m), although order intake in the year of £10.2m was down 78% on the exceptional £46.6m of the prior year, reflecting the lumpy nature of long-term orders in this business.  Around £16m of the closing order book is expected to be delivered in the current financial year, with the balance due for delivery over the following ten years.

 

The main development in the year was the successful go-live of the @com system in Thomas Cook's UK mainstream business.  This occurred mid-way through the financial year and implementation was completed over an 18 month time period.  The go-live triggered the start of maintenance and support revenues on the contract and these, plus increased man-time revenue from a number of clients including TUI UK, meant that the underlying monthly profitability of the business was improved in the second half of the year.  This partially offset a fall in full year licence revenue from £3.0m last year to £1.6m as a result of contract slippages in the fourth quarter.

 

46% of Travel's revenue was of a recurring nature (2012: 40%), being either managed services or software maintenance/support revenue.  We expect the proportion of recurring revenue to continue to increase in the future as the large projects currently in development go live and migrate to a maintenance and support phase.

 

We continue to make progress with @com implementations.  More than seven million passengers a year now book their holidays on @com systems in the UK and across continental Europe.  67% (2012: 60%) of revenue came from the UK; 32% (2012: 39%) from Europe and 1% (2012: 1%) from the rest of the world. 

 

The net revenue percentage was essentially unchanged at 94% (2012: 96%).  Fixed costs fell in the year by £1.4m from £14.8m to £13.4m.  Most of the reduction was due to reduced sales commission following the reduction in order intake compared to the prior year.  This was augmented by reduced depreciation and lower property costs following the consolidation of property towards the end of the prior year.  Headcount remained relatively stable during the year at 161 (2012: 163).

 

Overall, Travel's operating margin increased two percentage points over the prior year to 25%.

 

Growth

Having implemented @com at TUI Central Europe and Thomas Cook UK & Ireland, we are in an excellent position to capture market share across Europe, where inflexible legacy solutions still abound. We also plan to benefit from an increasing interest beyond Europe. We will work with existing major customers who are moving into those markets or sell to new, large customers. As more customers convert to @com, we expect to earn a greater proportion of support revenue. This should improve our long-term gross margin as we benefit from economies of scale.

 

Other Group costs

 

The divisional performances discussed above are stated before unallocated corporate costs which include an element of head office staff costs, Directors' remuneration, professional fees and other non-operational costs.  During the year, unallocated Group costs decreased by £0.4m to £2.2m (2012: £2.6m), largely because of reduced property costs.

 

 

Financial review

 

Throughout this review, reference to adjusted results means the results for continuing operations before, where applicable, share-based payments, amortisation of acquired intangible assets, restructuring costs, other gains and losses.

 

On 31 January 2013, we acquired the Propsim Channel Emulator Product business ("Propsim") from Elektrobit Corporation for £26.2m including £1.2m of acquisition and integration costs. The acquisition was funded through our own cash resources and £17.6m drawn down from our existing banking facilities.

 

Financial results

Revenue from continuing operations was up 8% at £132.5m (2012: £122.5m) and adjusted profit before tax increased 23% to £34.3m (2012: £28.0m).

 

Reconciliations of adjusted EBITDA of £40.5m (2012: £34.2m), to the operating profit of £26.8m (2012: £22.5m), and adjusted operating profit of £34.5m (2012: £28.8m), to the reported profit before tax for the year of £26.6m (2012: £22.2m), 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 therefore not indicative of the Group's underlying trading. In the opinion of the Board, the adjusted results give a better representation of the underlying performance of the Group.

 


2013


£m

Adjusted EBITDA

40.5

Depreciation

(3.4)

Amortisation of intangible assets

(2.6)

(2.1)

Adjusted operating profit

34.5

28.8

Share-based payments

(3.5)

Amortisation of acquired intangible assets

(3.0)

Restructuring costs

(1.2)

(0.1)

Operating profit

26.8

22.5

 


2013

2012


£m

£m

Adjusted operating profit

34.5

28.8

Net finance charges

(0.2)

(0.8)

Adjusted profit before tax

34.3

28.0

Share-based payments

(3.5)

(2.9)

Amortisation of acquired intangible assets

(3.0)

(3.3)

Restructuring costs

(1.2)

(0.1)

Other gains and losses

-

0.5

Profit from continuing operations before tax

26.6

22.2

 

 

Currency effects

Movements in exchange rates in the year had an overall mildly negative effect on the results compared with the previous year. Year-on-year, the average exchange rate for the US Dollar strengthened by 1% against Sterling, from £1 = US$1.59 to £1 = US$1.58, although the average rate of the Euro weakened by 4%, from £1 = €1.17 to £1 = €1.22. The net effect of these changes on the translation of results from overseas subsidiaries was to reduce revenue by £1.0m and profit by £0.3m. Network Testing was particularly affected by the translation effect of the change in the Euro which reduced reported revenue by £1.3m and operating profit by £0.3m.

 

The closing exchange rates at the year end, which affect the conversion of foreign exchange-denominated balance sheet items - such as cash, and trade debtors and creditors - saw a strengthening of both the Euro and US Dollar against Sterling. The closing rate for the Euro strengthened by 3% against Sterling, from £1 = €1.23 to £1 = €1.19 and the Dollar by 5% from £1 = US$1.63 to £1 = US$1.55.

 

Where possible, exposures associated with foreign currency balance sheet accounts are hedged or minimised by converting into local currencies, as are the transactional effects of business units trading in currencies other than their local currency. In the year, these transactional exposures had a net £0.2m negative impact on profit - £0.4m in Travel; £0.1m in Handset Testing and a £0.3m positive impact in Network Testing. The overall translational and transactional currency movements resulted in a £0.5m overall negative year-on-year impact on operating profit.

 

Revenue

Revenue from continuing operations increased in the year by 8% to £132.5m (2012: £122.5m).

As described in the review of operations, the majority of the growth was achieved in our Handset Testing business, which also included the results of the newly acquired Propsim business for the last three months. The Propsim business contributed £2.7m of revenue in the period. Organic Group revenue growth (on a constant currency basis and excluding Propsim) was 7%.

 

On a geographic basis, revenue by destination showed significant increases in sales to the Americas (primarily North America) in a reflection of the importance of the region to the Wireless industry which overtook Asia this year as our most significant region. The proportions of total revenue by region were: UK 13% (2012: 13%); EMEA 24% (2012: 27%); Americas 35% (2012: 29%); and Rest of World (mainly Asia) 28% (2012: 31%).

 

The principal changes in our type of revenue in the year were the growth in sales of software product licences and hardware/third-party equipment, which increased by 7% to £89.4m (2012: £83.6m). Recurring revenue (software maintenance and managed services) increased 17% to £36.3m (2012: £31.0m) with the proportion of recurring revenue to total revenue increasing to 27% (2012: 25%).

 

Cost of sales and gross profit

Compared to a revenue growth of 8%, cost of sales increased by 2% to £51.2m (2012: £50.1m), reflecting in part the non-recurrence of the £2.4m stock obsolescence provision made in the previous year. Excluding that provision, cost of sales increased by 7%, broadly in line with revenue growth. Overall, the gross margin grew by two percentage points to 61% (2012: 59%) with gross profit at £81.3m (2012: £72.4m).

 

Operating expenses

Total operating expenses in the period increased 9% to £54.5m (2012: £49.9m). A detailed breakdown of operating expenses is given in note 2.5.

 

Within the 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 totalled £46.8m (2012: £43.6m), a 7% increase reflecting higher selling and R&D costs, together with additional costs as a result of the acquisition of Propsim.

 

The £3.2m increase in underlying operating expenses included R&D costs incurred by the Wireless businesses which increased by £1.7m to £17.7m (2012: £16.0m). This included £1.0m incurred in the new Propsim business in developing its own products and continued investment in Handset Testing on the LTE platform.  Across both businesses, £3.4m of R&D costs were capitalised in the year (2012: £2.6m), mainly on conformance test cases in Handset Testing and the Invex benchmarking product in Network Testing. Amortisation of previously capitalised R&D increased to £2.2m (2012: £1.6m). The remaining £1.5m increase resulted from the additional £2.9m increased distribution and administration costs in Handset Testing offset by £1.4m of lower distribution and administration costs in Travel which are discussed in the review of operations.

 

After underlying operating expenses, the adjusted operating profit was up 20% to £34.5m (2012: £28.8m) including £0.5m contributed by Propsim in the period. Underlying organic profit growth, adjusting for translational currency impacts and the post-acquisition Propsim contribution, was also up 19%. Adjusted EBITDA was up 18%, at £40.5m (2012: £34.2m).

 

One-off and non-trading operating expenses excluded from adjusted operating profit calculations totalled £7.7m (2012: £6.3m). These included £1.2m of one-off acquisition and integration costs of the Propsim business acquired in January 2013, amortisation of acquired intangible assets of £3.0m (2012: £3.3m) and a charge for share-based payments of £3.5m (2012: £2.9m).

 

After these non-operational costs, the Group reported an overall statutory operating profit of £26.8m (2012: £22.5m).

 

Group finance costs

Group finance charges in the year reduced to a net £0.2m (2012: £0.8m). The charge this year resulted from interest on the £17.6m loan drawn down to acquire Propsim. This compared to the prior year in which the Group settled the balance of its previous term loan in November 2011, on which interest rates had been fixed at the relatively high long-term rates available when those facilities were put in place in 2006.

 

Taxation

The tax charge for the year on continuing operations was £7.3m (2012: £6.0m). The tax rate on the statutory operating profit was 27.5% (2012: 26.9%). The underlying adjusted tax rate on adjusted profit before tax was 26.0% (2012: 26.9%).  The prior year also included a tax credit related to discontinued operations of £2.3m.  This was not repeated this year.

 

Shareholder returns

After taking account of the factors described above, adjusted basic earnings per share were 8.9p (2012: 7.2p), an increase of 24%; adjusted diluted earnings per share similarly increased 24% to 8.3p (2012: 6.7p). The statutory basic earnings per share for continuing operations was 6.8p (2012: 5.7p).

As explained in the Chairman's and Chief Executive's Statement, the Board is proposing an increased final dividend up 12% to 1.265p per share (2012: 1.125p), making a total for the year up 23% to 1.84p (2012: 1.50p), which is covered 4.8 times by adjusted basic earnings.

 

Balance sheet

Non-current assets

Non-current assets have increased by £30.7m to £116.3m (2012: £85.6m). The major part of the increase is the £28.3m of goodwill and other intangible assets that were recognised on the acquisition of Propsim and which are detailed in note 7.

 

Inventories

The carrying value of inventories held by the Wireless businesses has increased by £1.8m to £12.0m at 30 April 2013 (2012: £10.2m). This included £1.4m for inventory within Propsim.

 

Trade and other receivables

Trade and other receivables increased 45% to £47.6m at 30 April 2013 (30 April 2012: £32.9m). Within this, trade debtors, net of provisions, increased 55% to £37.4m (2012: £24.2m). This large increase was mainly due to the exceptionally high revenue from Handset Testing in the last quarter compared to the previous year, together with the addition of £1.7m of trade debtors from the acquired Propsim business. Debtor days at 30 April 2013 were 71 days (30 April 2012: 59 days) with the increase on what was an exceptionally low level last year.  Accrued income (revenue taken to the Income statement, but not yet invoiced to customers) increased by £1.4m to £5.6m (2012: £4.2m), due to the timing of invoicing and payment schedules on some contracts in Travel and Handset Testing. However, of this amount, £2.4m was invoiced by Handset Testing shortly after the year-end.

 

Trade and other payables

Trade and other payables increased 24% to £46.6m at 30 April 2013 (30 April 2012: £37.7m). This is mainly as a result of the increase of £6.8m in deferred income (amounts invoiced to customers, but not yet recognised as revenue in the Income statement), to £21.6m (2012: £14.8m). This predominantly represents a timing related increase in pre-billed maintenance and support contracts in Handset Testing and Travel and includes £1.2m from the acquired Propsim business. Accruals also increased to £13.8m (2012: £11.9m) including higher provision for national insurance on share options, increased sales commission costs and additional Propsim accruals.

 

Provisions

Provisions reduced by £0.5m to £5.3m at 30 April 2013 (30 April 2012: £5.8m). The main reduction was through the £1.9m utilisation of the property provision following the surrender of two onerous non-operating properties and also a change in the lease arrangements for the Travel business's Slough headquarters, offset by £1.4m of provisions arising from the acquisition of Propsim.

 

Cash flow

Cash generated from operations amounted to £31.0m (2012: £31.0m) on EBITDA of £40.5m (April 2012: £34.2m) representing a conversion rate of 77% (2012: 91%). The decrease in the conversion rate was primarily due to an increase of £6.4m in working capital, principally being the build-up of trade debtors and accrued income within Handset Testing caused by the strong fourth quarter trading.

Capital expenditure in the period was £5.5m (2012: £5.6m). Significant purchases included £1.7m (2012: £2.9m) on equipment for the continuing Anite 9000 development. A further £3.4m (2012: £2.6m) was incurred on capitalised development expenditure.

 

Net payments for finance costs were £0.1m (2012: £0.9m) while tax payments increased to £7.1m (2012: £5.4m), a reflection of increased profits. Dividends paid to shareholders totalled £4.9m (2012: £3.2m) and an additional £4.0m (2012: £1.6m) was incurred on the purchase of shares for the Company's employee benefit trust offset by £0.4m income from the maturity of the 2009 SAYE scheme in September 2012.

 

The acquisition of the Propsim business cost £26.2m, net of £1.6m of cash acquired with the business and including £1.2m of acquisition and integration costs, the largest single item of which was stamp duty of £0.4m.

 

The gross cash balance at 30 April 2013 was £16.7m (30 April 2012: £16.9m) and with £17.6m of borrowing outstanding at 30 April 2013, the net debt at 30 April 2013 was £0.9m (30 April 2012: no borrowings and net cash £16.9m).

 

Borrowings and facilities

The Group's banking facilities totalled £25.0m (2012: £25.0m) including a revolving credit facility of £20.0m (2012: £20.0m) and a net overdraft facility of £5.0m (2012: £5.0m). The revolving facility is due to expire on 31 October 2016 and the overdraft is due for renewal on 31 July 2013. The Group drew down £17.6m under its revolving credit facility leaving £2.4m undrawn and had no drawings against its net £5m overdraft facility at 30 April 2013 - a total of £7.4 of undrawn facilities (2012: total undrawn facilities £25.0m).

 

Richard Amos

Group Finance Director

 

 

Consolidated income statement



2013

2012


Note

£000

£000

Continuing operations




Revenue

2.1

132,509

122,546

Cost of sales


(51,199)

(50,105)

Gross profit


81,310

72,441

Distribution costs


(13,345)

(12,463)

Research and development


(18,501)

(17,096)

Administrative expenses


(22,642)

(20,383)

Operating expenses

2.5

(54,488)

(49,942)

Operating profit before share-based payments, amortisation of acquired intangible assets and restructuring costs

2.2

34,435

28,772

Share-based payments


(3,437)

(2,889)

Amortisation of acquired intangible assets


(3,014)

(3,340)

Restructuring costs

3

(1,162)

(44)

Operating profit

2.2

26,822

22,499

Other gains and losses


-

487

Finance income

4

161

353

Finance charges

4

(330)

(1,152)

Profit from continuing operations before tax


26,653

22,187

Tax expense

5

(7,321)

(5,974)

Profit from continuing operations


19,332

16,213

Profit from discontinued operations


-

2,253

Profit for the year


19,332

18,466

Profit attributable to equity holders of the parent


19,332

18,466

Continuing and discontinued operations




Earnings per share             - basic

6

6.8p

6.5p

                                                - diluted


6.3p

6.0p

Continuing operations




Earnings per share             - basic

6

6.8p

5.7p

                                                - diluted


6.3p

5.3p

 

 

Consolidated statement of comprehensive income



2013

2012


Note

£000

£000





Retained profit for the year


19,332

18,466

Exchange differences arising on translation of foreign operations


2,566

(6,745)

Cash flow hedges


-

237

Recycling of fair value loss on cash flow hedges to profit or loss

4

-

42

Tax credit/(charge) taken directly to other comprehensive income

5

298

(193)

Total comprehensive income attributable to equity holders of the parent


22,196

11,807

 

 

Consolidated statement of changes in equity


Issued

share

capital

Share

premium

account

Own

shares

Merger

reserve

Capital

redemption

reserve

Other

Reservesa

Retained

earnings

Total


£000

£000

£000

£000

£000

£000

£000

£000

 

Balance at 1 May 2011

Changes in equity for the year to 30 April 2012

 

33,680

 

25,560

 

(9,229)

 

722

 

2,741

 

(4,829)

 

33,055

 

81,700

Total comprehensive income for the year

-

-

-

-

-

(6,659)

18,466

11,807

Issue of share capital

22

68

-

-

-

-

-

90

Purchase of own shares into employee benefit trust

-

-

(1,628)

-

-

-

-

(1,628)

Gain on sale of shares from employee benefit trust

-

-

875

-

-

-

(871)

4

Recognition of equity-settled share-based payments after tax

-

-

-

-

-

-

3,299

3,299

Dividend paid

-

-

-

-

-

-

(3,171)

(3,171)

Balance at 30 April 2012

33,702

25,628

(9,982)

722

2,741

(11,488)

50,778

92,101

 

Changes in equity for the year to 30 April 2013









Total comprehensive income for the year

-

-

-

-

-

2,864

19,332

22,196

Issue of share capital

142

273

-

-

-

-

-

415

Purchase of own shares into employee benefit trust

-

-

(3,957)

-

-

-

-

(3,957)

Gain on sale of shares from employee benefit trust

-

-

1,582

-

-

-

(1,211)

371

Transfer of SIP shares to employees

-

-

693

-

-

-

(693)

-

Recognition of equity-settled share-based payments after tax

-

-

-

-

-

-

2,967

2,967

Dividend paid

-

-

-

-

-

-

(4,881)

(4,881)

Balance at 30 April 2013

33,844

25,901

(11,664)

722

2,741

(8,624)

66,292

109,212

a    Other reserves comprise net exchange differences arising on the translation of foreign operations, along with the related tax impact.

 

 

Consolidated balance sheet



2013

2012


Note

£000

£000

Non-current assets




Goodwill


61,777

54,280

Other intangible assets


36,943

15,892

Property, plant and equipment


12,834

10,967

Deferred tax assets


4,837

4,489



116,391

85,628

Current assets




Inventories


11,975

10,195

Trade and other receivables

8

47,626

32,856

Derivative financial assets


30

92

Current tax assets


846

157

Cash and cash equivalents

10

16,658

16,947



77,135

60,247

Total assets


193,526

145,875

Current liabilities




Trade and other payables

9

(46,637)

(37,741)

Bank borrowings

10

(17,559)

-

Current tax payable


(8,549)

(7,666)

Provisions

11

(4,266)

(4,899)



(77,011)

(50,306)

Non-current liabilities




Deferred tax liabilities


(6,243)

(2,527)

Provisions

11

(1,060)

(941)



(7,303)

(3,468)

Total liabilities


(84,314)

(53,774)

Net assets


109,212

92,101

Equity




Issued share capital

12

33,844

33,702

Share premium account


25,901

25,628

Own shares


(11,664)

(9,982)

Merger reserve


722

722

Capital redemption reserve


2,741

2,741

Other reserves


(8,624)

(11,488)

Retained earnings


66,292

50,778

Total equity


109,212

92,101

 

The financial statements of Anite plc (Company no. 01798114) were approved by the Board on 1 July 2013 and signed on its behalf by:

Christopher Humphrey

Chief Executive

Richard Amos

Group Finance Director

 

 

Consolidated cash flow statement



2013

2012


Note

£000

£000





Profit for the year




Continuing operations


19,332

16,213

Discontinued operations


-

2,253



19,332

18,466

Adjustments for:




Tax charge - continuing and discontinued

5

7,321

3,721

Other (gains) and losses


-

(487)

Net finance charges

4

169

799

Depreciation of property, plant and equipment


3,407

3,280

Amortisation of intangible assets


2,673

2,154

Amortisation of acquired intangible assets


3,014

3,340

Loss/(profit) on disposal of property, plant and equipment


17

(74)

Share-based payments charge


3,437

2,889

Decrease in provisions


(1,941)

(1,907)

Operating cash flows before movements in working capital


37,429

32,181

Increase in inventories


(736)

(5,473)

Increase in receivables


(10,148)

(894)

Increase in payables


4,459

5,160

Increase in working capital


(6,425)

(1,207)

Cash generated from operations


31,004

30,974

Interest received


100

509

Interest paid


(168)

(1,381)

Income taxes paid


(7,120)

(5,413)

Net cash generated from operating activities


23,816

24,689

Cash flow from investing activities




Purchase of Propsim

7

(26,562)

-

Net bank balance acquired with subsidiary undertakings

7

1,555

-

Settlement of cross-currency swap


-

(21,591)

Purchase of product line and deferred consideration paid


-

(622)

Purchase of property, plant and equipment


(4,439)

(4,952)

Proceeds from sale of property, plant and equipment


-

76

Purchase of software licences


(1,024)

(697)

Expenditure on capitalised product development


(3,382)

(2,629)

Net cash used in investing activities


(33,852)

(30,415)

Cash flow from financing activities




Issue of ordinary share capital


415

90

Purchase of own shares into employee benefit trust


(3,957)

(1,628)

Proceeds from sale of own shares from employee benefit trust


371

4

Dividend paid to Company's shareholders

13

(4,881)

(3,171)

Drawdown/(repayment) of bank loans


17,559

(10,000)

Net cash used in financing activities


9,507

(14,705)

Net decrease in cash and cash equivalents

10

(529)

(20,431)

Effect of exchange rate changes


240

(289)

Cash and cash equivalents at 1 May


16,947

37,667

Cash and cash equivalents at 30 April

10

16,658

16,947

 

 

1 STATEMENT OF ACCOUNTING POLICIES

a) Basis of preparation

The preliminary results have been prepared under the historical cost convention and in accordance with current International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations. This announcement does not, however, contain sufficient information to comply with all the disclosure requirements of IFRS.

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions in certain areas that affect the reported amounts in the financial statements. Although these estimates and assumptions are based on management's best knowledge, the actual results ultimately may differ from those estimates.

The statutory accounts for 2013 have been prepared following accounting policies consistent with those for the year ended 30 April 2012. These can be found on our website www.anite.com. The financial statements are presented in pounds Sterling because that is the currency of the primary economic environment in which the Group operates.

The financial information set out in this announcement does not constitute statutory accounts within the meaning of Sections 434 to 436 of the Companies Act 2006 and is an abridged version of the Group's financial statements for the year ended 30 April 2013, which were approved by the directors on 1 July 2013. Statutory accounts for the year ended 2012 have been delivered to the Registrar of Companies, the auditors have reported on those accounts, their report was unqualified and did not contain statements under Section 498 of the Companies Act 2006. Statutory accounts for the period ended 30 April 2013 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts, their reports were unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The preliminary announcement for the year ended 30 April 2013 was approved by the Board of Directors on 1 July 2013.

 

2Revenue and segmental information

2.1Revenue from operations



2013

2012


Note

£000

£000





Own product software licences


60,234

52,561

Hardware and other third-party product


29,184

30,959

Bespoke services, systems integration and implementation of software products


6,741

7,908

Managed services


4,915

4,552

Software maintenance and support


31,435

26,566

Revenue from operations

2.2

132,509

122,546

Finance income

4

161

353

Total revenue


132,670

122,899

 

2.2 Operating segments - primary basis

The Group is organised into four operating segments: Handset Testing, Network Testing, Travel and Group. With the exception of Group, which performs the head office function, each operating segment derives its revenue from the development, installation and support of products, mainly software, relating to its relevant industry sector.

Operating segment information under the primary reporting format is as disclosed in the tables below:

 


Handset

Testing

Network

Testing

Total Wireless

Travel

Group

Total

Year ended 30 April 2013

£000

£000

£000

£000

£000

£000








External revenue

87,031

26,082

113,113

19,396

-

132,509

Internal revenue

-

-

-

-

2,129

2,129

Total segment revenue

87,031

26,082

113,113

19,396

2,129

134,638

Segment adjusteda profit/(loss) before tax

26,315

5,567

31,882

4,775

(2,391)

34,266

Net finance charges before recycled hedge loss

-

-

-

-

169

169

Segment adjusteda operating profit/(loss)

26,315

5,567

31,882

4,775

(2,222)

34,435

Share-based payments

(800)

(50)

(850)

(237)

(2,350)

(3,437)

Amortisation of acquired intangible assets

(554)

(2,460)

(3,014)

-

-

(3,014)

Restructuring costs

-

-

-

-

(1,162)

(1,162)

Segment operating profit/(loss)

24,961

3,057

28,018

4,538

(5,734)

26,822

Finance income

-

-

-

-

161

161

Finance charges

-

-

-

-

(330)

(330)

Profit/(loss) from operations before tax

24,961

3,057

28,018

4,538

(5,903)

26,653

Tax expense

-

-

-

-

(7,321)

(7,321)

Profit/(loss) for the period

24,961

3,057

28,018

4,538

(13,224)

19,332








 

 


Handset

Testing

Network

Testing

Total Wireless

Travel

Group

Total

Year ended 30 April 2012

£000

£000

£000

£000

£000

£000








External revenue

76,423

26,044

102,467

20,079

-

122,546

Internal revenue

-

-

-

-

1,583

1,583

Total segment revenue

76,423

26,044

102,467

20,079

1,583

124,129

Segment adjusteda profit/(loss) before tax

21,458

5,311

26,769

4,622

(3,376)

28,015

Net finance charges before recycled hedge loss

-

-

-

-

757

757

Segment adjusteda operating profit/(loss)

21,458

5,311

26,769

4,622

(2,619)

28,772

Share-based payments

(695)

(36)

(731)

69

(2,227)

(2,889)

Amortisation of acquired intangible assets

-

(3,340)

(3,340)

-

-

(3,340)

Restructuring costs

-

-

-

-

(44)

(44)

Segment operating profit/(loss)

20,763

1,935

22,698

4,691

(4,890)

22,499

Other gains and losses

-

-

-

-

487

487

Finance income

-

-

-

-

353

353

Finance charges

-

-

-

-

(1,152)

(1,152)

Profit/(loss) from continuing operations before tax

20,763

1,935

22,698

4,691

(5,202)

22,187

Tax expense

-

-

-

-

(5,974)

(5,974)

Profit/(loss) from continuing operations

20,763

1,935

22,698

4,691

(11,176)

16,213

Profit from discontinued operations

-

-

-

-

2,253

2,253

Profit/(loss) for the period

20,763

1,935

22,698

4,691

(8,923)

18,466








 

a  Segment adjusted operating profits are stated prior to the adjusting items of share-based payments, amortisation of acquired intangible assets and restructuring costs.

 

2.3Other information

 

Year ended 30 April 2013

Handset

Testing

Network

Testing

Total Wireless

Travel

Group

Total


£000

£000

£000

£000

£000

£000








Total assets

85,348

73,721

159,069

12,078

22,729

193,876

Including:







Non-current asset additions in the year

7,459

859

8,318

249

367

8,934

Non-current assets acquired in the year

29,007

-

29,007

-

-

29,007








Adjusted EBITDA calculation







Segment adjusted operating profit/(loss)

26,315

5,567

31,882

4,775

(2,222)

34,435

Depreciation

2,661

315

2,976

220

211

3,407

Amortisation of intangible assets

2,144

444

2,588

36

49

2,673

Adjusted EBITDA

31,120

6,326

37,446

5,031

(1,962)

40,515








 

Year ended 30 April 2012

Handset

Testing

Network

Testing

Total Wireless

Travel

Group

Total


£000

£000

£000

£000

£000

£000








Total assets

38,599

61,687

100,286

11,700

33,889

145,875

Including:







Non-current asset additions in the year

6,799

1,016

7,815

435

119

8,369








Adjusted EBITDA calculation







Segment adjusted operating profit/(loss)

21,458

5,311

26,769

4,622

(2,619)

28,772

Depreciation

2,454

233

2,687

433

160

3,280

Amortisation of intangible assets

1,701

366

2,067

56

31

2,154

Adjusted EBITDA

25,613

5,910

31,523

5,111

(2,428)

34,206








 

 

2.4Geographic segment - secondary basis

The operating segments operate in four principal geographic areas, as set out below.

The following analysis of the Group's revenue is based on the geographic location of customers irrespective of the origin of the goods or services. The corresponding segment assets are based on the geographic location of the assets.


Total Revenue


2013

2012


£000

£000

United Kingdom

17,624

15,341

EMEA - excluding United Kingdom

31,987

33,557

The Americas

46,073

35,700

Rest of the World

36,825

37,948


132,509

122,546

 


Non-current assets


2013

2012


£000

£000

United Kingdom

17,340

14,265

EMEA - excluding United Kingdom

91,134

65,557

The Americas

3,271

1,213

Rest of the World

159

104


111,904

81,139

 

2.5Operating expenses


2013

2012


£000

£000

Distribution costs



- amortisation of acquired intangible assets

2,223

2,243

- other underlying operating expenses

11,122

10,220


13,345

12,463

Research and development



- amortisation of internally generated assets

2,161

1,622

- other underlying operating expenses

15,549

14,377


17,710

15,999

- amortisation of acquired intangible assets

791

1,097

18,501

17,096

Administrative expenses



- share-based payments

3,437

2,889

- restructuring costs

1,162

44

- other underlying operating expenses

18,043

17,450


22,642

20,383

Total operating expenses

54,488

49,942




Analysed as:



- amortisation of acquired intangible assets

3,014

3,340

- restructuring costs (note 3)

1,162

44

- share-based payments

3,437

2,889

One-off and non-trading operating expenses excluded from adjusted profit

7,613

6,273

- amortisation of internally generated assets

2,161

1,622

- other underlying operating expenses

44,714

42,047

Total operating expenses

54,488

49,942

 

 

 

3RESTRUCTURING COSTS

Restructuring costs incurred in the year relate to the costs incurred on acquisition of the Propsim business and its integration into the Handset Testing division.

The restructuring costs incurred in the prior period relate to the net impact on the property provision of changes in the provisions for non-operational properties that were originally charged within restructuring costs.

 


2013

2012


£000

£000

Costs incurred on acquisition of Propsim

1,154

-

Net property provision established

8

44

1,162

44

 

 

4Net finance charge


2013

2012


£000

£000




Finance income



Interest receivable and similar income

26

26

Interest on short-term deposits

76

237

Interest on extended payment terms

59

90

161

353




Finance charges



Bank loans and overdrafts

(151)

(84)

Other loans/commitment fees

(149)

(106)

Losses on financial instruments in a hedging relationship:



- Interest rate swaps and caps - cash flow hedges

-

(478)

- Cross-currency swaps - net investment hedge

-

(347)

Other interest

(6)

(3)

Unwinding of discount on provisions a

(24)

(92)


(330)

(1,110)

Recycling of fair value loss on cash flow hedges b

-

(42)

Total finance charges

(330)

(1,152)




(169)

(799)




Adjusted net finance charge before recycled hedge loss

(169)

(757)

Recycling of fair value loss on cash flow hedges b

-

(42)

Net finance charge

(169)

(799)

 

a The unwinding of discount on provisions (note 11) relates to property and deferred consideration provisions.

b The recycling of fair value loss on cash flow hedges arises due to the repayments of the term loan reducing the interest payments, causing some of the interest cash flows to be classed as no longer probable. In accordance with IAS39, an equivalent proportion of the fair value losses under the interest rate swap arrangement, previously taken to equity, are released to profit or loss.

 

 

5Income tax expense


Continuing operations

Discontinued operations

                Total


2013

2012

2013

2012

2013

2012


£000

£000

£000

£000

£000

£000

Current tax







UK corporation tax

4,522

4,071

-

-

4,522

4,071

Foreign tax

3,467

2,774

-

-

3,467

2,774


7,989

6,845

-

-

7,989

6,845

Adjustments in respect of prior years







UK corporation tax

328

86

-

(2,253)

328

(2,167)

Foreign tax

33

-

-

-

33

-


361

86

-

(2,253)

361

(2,167)

Total current tax expense/(credit)

8,350

6,931

-

(2,253)

8,350

4,678

Deferred tax







UK

(308)

(180)

-

-

(308)

(180)

Foreign

(721)

(777)

-

-

(721)

(777)

Total deferred tax credit

(1,029)

(957)

-

-

(1,029)

(957)

Total income tax expense/(credit)

7,321

5,974

-

(2,253)

7,321

3,721

UK corporation tax is calculated at 23.92% (2012: 25.84%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.


2013

2012


£000

£000

Charged/(credited) to equity



Deferred tax relating to the translation adjustment to acquired intangibles

19

(257)

UK corporation tax relating to foreign exchange

(317)

450

Income tax relating to components of other comprehensive income

(298)

193

Deferred tax relating to share-based payments

(40)

(1,818)

Current tax relating to share-based payments

(715)

-

(1,053)

(1,625)

 

Factors affecting tax charge for the year

The tax assessed on the profit on ordinary activities for the year is different to the standard rate of corporation tax in the UK. The differences are explained below:

 

 


2013

2012


£000

£000

Profit before tax



Continuing operations

26,653

22,187

Tax on Group profit at standard UK corporation tax rate of 23.92% (2012: 25.84%)

6,375

5,733

Effects of:



Disallowed expenses and non-taxable income (net)

114

301

Ineligible depreciation

42

82

Change in tax rates

41

178

Prior year adjustment in relation to deferred tax

-

(59)

Short term timing differences

(68)

(452)

Tax losses carried forward

127

18

Utilisation of tax losses

(169)

(238)

Higher tax rates on overseas earnings

651

147

Deferred tax not provided

(133)

178

Adjustments to current tax charge in respect of previous periods

333

86

Other

8

-

7,321

5,974

Tax rate for continuing operations

27.5%

26.9%

The Group earns its profits in the UK and overseas. The tax rate used for tax on profit on ordinary activities is 23.92% (2012: 25.84%), being the standard rate for UK corporation tax, as the Group's head office is in the UK. As a result of changed tax rates in the UK and overseas, the tax charge for the year was increased by £41,000 (2012: £178,000).

Some components of the Group's overseas profits are likely to be taxed at an effective rate that is higher than the UK rate. Other components, due to the availability of losses brought forward in certain countries, are likely to be taxed at a lower rate.

 

 

6Earnings per share

The calculations of earnings per share are based on the Group profit for the year, adjusted profit1 and weighted average number of shares in issue:

 


Basic

Diluted


2013

2012

2013

2012

EPS summary





Basic EPS

6.8p

6.5p

6.3p

6.0p

Basic EPS for continuing operations

6.8p

5.7p

6.3p

5.3p

Adjusted EPSb

8.9p

7.2p

8.3p

6.7p


2013

2012

2013

2012


Pence per share

Pence per share

£000

£000

Profit for the year

6.8

6.5

19,332

18,466

Profit from discontinued operations

-

(0.8)

-

(2,253)

Profit for the year on continuing operations

6.8

5.7

19,332

16,213

Reconciliation to adjusted profit:





Other gains and losses (net of tax)

-

(0.1)

-

(361)

Recycled hedge lossesc (net of tax)

-

-

-

31

Amortisation of acquired intangible assets (net of tax)

0.7

0.9

2,108

2,472

Share-based payments (net of tax)

1.0

0.7

2,742

2,103

Restructuring costs (net of tax)

0.4

-

1,162

32

Adjusted profita

8.9

7.2

25,344

20,490

a  Profit from continuing businesses before other gains and losses, recycled hedge losses, amortisation of acquired intangible assets, share-based payments and restructuring costs.

b  Earnings per share on adjusted profita have been included to give a clearer understanding of the results of the continuing businesses.

c  Recycled hedge losses relate to the recycling of fair value losses on cash flow hedges reclassified from equity to profit or loss in the year.

 

Diluted EPS for discontinued operations is nil p (2012: 0.7p).

Number of shares ('000)

2013

2012

Weighted average number of shares in issue used to calculate basic earnings per share

285,488

283,597

Effect of dilutive ordinary shares



- SAYE and share option schemes

20,389

24,255

Number of shares used to calculate diluted earnings per share

305,877

307,852

 

 

7 ACQUISITIONS

On 31 January 2013, Anite plc acquired 100% control of the Propsim Channel Emulation product set from Elektrobit Corporation, comprising a range of radio channel emulation (fader) hardware and software products, associated R&D capability, sales and marketing capacity and fulfilment resources. As a result of the acquisition, Anite plc expects to be able to expand into performance testing, a market that is adjacent to Anite's core test markets and also opens up a new opportunity in network infrastructure testing. The business is being fully integrated into Anite's existing Handset Testing division.

The initial accounting is incomplete as there is still uncertainty over the accrued purchase price adjustment, which will affect the disclosed value of goodwill. All other measurement period adjustments are as disclosed in the table below.

Goodwill represents the potential for operational synergies in the future production of testing platforms, of which £1,981,000 is deductible for income tax purposes.

The accrued purchase price adjustment represents management's assessment of the fair value of the liability to the vendor subject to a negotiated settlement. 

Recognised amounts of assets acquired and liabilities assumed:


Book value

Adjustments

Fair value






£000

£000

£000





Goodwill

-

5,904

5,904

Intangible assets - Trademarks

-

837

837

Intangible assets - Customer relationships

-

3,060

3,060

Intangible assets - Technology

-

18,451

18,451

Other intangible assets

331

(331)

-

Fixed assets

662

93

755

Deferred tax assets

-

1,057

1,057

Inventory

1,580

(536)

1,044

Trade and other receivables

4,447

208

4,655

Bank balances

1,555

-

1,555

Trade and other payables

(4,140)

671

(3,469)

Provisions

-

(1,426)

(1,426)

Deferred tax liabilities

-

(5,475)

(5,475)





Total

4,435

22,513

26,948





Consideration




Cash



26,562

Accrued



386

Total



26,948

 

Propsim contributed £2.7m to Group revenue and £0.5m to Group operating profit for the period between 1 February 2013 and the balance sheet date.

If the acquisition of the Propsim business had been completed on the first day of the financial year, its contribution to revenue and operating profit (excluding amortisation of acquired intangible assets and financing costs) for the 12 months to 30 April 2013 would have been £13.1m and £1.6m respectively. These figures are determined using the vendor's methodology for allocating shared corporate costs and may not be directly comparable to the results of the post-acquisition period.

Acquisition and integration costs of £1,154,000 have been expensed in the consolidated income statement of Anite plc during the period under the heading "restructuring costs".

 

 

8Trade and other receivables


2013

2012


£000

£000

Current assets



Trade debtors

37,939

25,229

Less: provision for impairment of trade receivables

(526)

(983)

Trade debtors net of provision

37,413

24,246

Other receivables

1,561

1,555

Prepayments

3,013

2,810

Accrued income

5,639

4,245


47,626

32,856

 

 

9 Trade and other payables


2013

2012


£000

£000

Trade creditors

8,268

8,988

Other taxes and social security

2,026

1,740

Deferred income

21,644

14,767

Accruals

13,755

11,870

Other creditors

944

376


46,637

37,741

 

 

10 Net debt



2013

2012



£000

£000

Cash and cash equivalents


16,658

16,947

Bank borrowings


(17,559)

-

Net (debt)/cash


(901)

16,947

 

A reconciliation of the movement in net (debt)/cash for the year is as detailed below:






2013

2012



£000

£000

Net cash at 1 May


16,947

27,672

Net decrease in cash and cash equivalents


(529)

(20,431)

Unamortised issue costs of bank borrowings


-

(5)

(Increase)/decrease in bank borrowings


(17,559)

10,000

Exchange movement


240

(289)

Net (debt)/cash at 30 April


(901)

16,947

 

 

11 Provisions



Warranties

Property

Other





provision

provisions

Total



£000

£000

£000

£000

At 1 May 2012


3,210

2,330

300

5,840

Release of provision


-

(137)

(234)

(371)

Provision adopted on acquisition of subsidiary


-

-

1,426

1,426

Established during the year


-

51

-

51

Utilised during the year


-

(1,555)

(66)

(1,621)

Unwinding of discount


-

24

-

24

Exchange movement


-

-

(23)

(23)

At 30 April 2013


3,210

713

1,403

5,326

 


2013

2012


£000

£000

Analysed as:



Current liabilities

4,266

4,899

Non-current liabilities

1,060

941


5,326

5,840

 

The warranty provision has been made to cover any potential claims made by disposed businesses during the contractual warranty period. It is expected to be utilised in one to two years.

The property provision is in respect of all properties surplus to business requirements and dilapidation provisions for properties currently in use. The provision is calculated in accordance with IAS 37. It is expected to be utilised in one to three years.

Other provisions include contractual provisions that are expected to be utilised within one year.

12 share capital


Ordinary shares

of 11.25p each

Deferred

redeemable shares

of £1 each




Number

£000

Number

£000

Authorised:





At 30 April 2012 and 2013

355,555,556

40,000

50,000

50

Allotted, issued and fully paid:





At 30 April 2012

299,131,879

33,652

50,000

50

Issued during the year

1,263,597

142

-

-

At 30 April 2013

300,395,476

33,794

50,000

50

 

13 Dividends

Dividends paid during the year are set out below:


Payment date

2013

2013

2012

2012



pence


pence




per share

£000

per share

£000

For the year ended 30 April 2011






Final dividend

25 October 2011



0.735

2,101

For the year ended 30 April 2012






Interim dividend

17 February 2012



0.375

1,070

Final Dividend

23 October 2012

1.125

3,233



For the year ended 30 April 2013






Interim dividend

15 February 2013

0.575

1,648






4,881


3,171

 

At the AGM on 26 September 2013, a final dividend in respect of the year ended 30 April 2013 of 1.265p per share (expected total £3.6m) is to be proposed.

 


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