Anite cuts 70 jobs and warns of difficult trading

Anite Group, the computer-services company, said yesterday it was axing 70 jobs in an effort to pare down costs after it warned trading conditions continued to be difficult ahead of its half-year results.

Shares rose on the trading statement from the group that outlined it efforts to further streamline operations. The stock has fallen 89 per cent this year and rallied 29 per cent yesterday to close at 18.75p.

John Hawkins, the chief executive of Anite, indicated in July first-half profits were heading for a fall and said the business was trading in line with expectations. Forecasts for the group's full-year profits before tax range from £19m to £28m.

The job cuts, most of them in the division that supplies services to the public sector, will result in a charge of £2m, but Mr Hawkins said the reduced headcount would help save the business £3m a year. The group has already cut 30 jobs this year.

"We will continue to reduce costs, and drive synergies between the businesses," said Mr Hawkins, who added the group's strong cash generation would see it through trading difficulties.

Costs relating to research, restructuring and buying businesses will mean first-half profits will be £3m lower than the same period in the previous year.

Revenues in Anite's consultancy business are set to fall, while the telecommunications division is expected to be flat.

The dramatic fall in the share price from its dot.com high at the start of 2000 threatened to derail the company's four-year acquisition spree. Anite has had to renegotiate the terms of a series of acquisitions. The company agreed to pay part of the acquisitions as shares based on the performance of the assets. The share price fall meant the company would have had to issue millions of new shares, handing control over to the acquired companies. In the six months to October, Anite paid former owners of acquired businesses £16m in so-called earnout payments. It plans to pay an additional £12m in the second half of the year.

The group is still without a finance director after the sudden departure of Simon Hunt announced at the company's annual general meeting in September. Mr Hawkins said Mr Hunt would receive a payoff of around £750,000.