Interim Results

ITIS Holdings PLC 21 November 2001 21st November 2001 ITIS Holdings plc Interim results for the six months ended 30th September 2001 Highlights * Negotiations with major vehicle manufacturer now at advanced stage. * RDS-TMC service on schedule to be launched February 2002 with Toyota. * FVD probe acquisition ahead of target and below cost. * Considerable manufacturer interest in telematics services and RDS-TMC. * Increased sales of NavTrak. Financial highlights * Turnover up 102 % to £628,000 (2000: £311,000). * Operating loss for the financial period of £5,034,000 (2000: loss £ 3,481,000) includes the Company's investment in its RDS-TMC services and the development of telematics services for OEMs. * Strong cash position of £19.7 million reinforced through cost reduction Results For the six month period ended 30th September 2001 turnover increased by 102% to £628,000. The operating loss for the financial period of £5,034,000 reflects the fact that NavTrak hardware continued to be subsidised until July 9th, the investment made in RDS-TMC, Floating Vehicle Data (FVD) and the development of telematics services for OEMs. At September 30th 2001, the cash balance of ITIS remained strong at £ 19.7million. We have initiated a programme of cost reduction and focussed our investment in key areas of the developing business. This will safeguard our cash position and the Directors are confident that ITIS has sufficient cash to implement its strategy. As we enter our new financial year, based on the current plan, our monthly cash outflow will be substantially reduced. Commenting on the results, Stuart Marks said: 'ITIS has made considerable progress in positioning itself as the UK's leading consumer telematics service provider. Our unique position in the traffic market through FVD and RDS-TMC technologies has enabled us to work closely with the automotive industry as a partner of choice. The last six months have been an extremely important period for the development of the Company. A substantial investment and an enormous amount of effort has been made to ensure that the Company is able to implement its strategy. We remain confident that we will benefit from the accelerated commitment by vehicle manufacturers to telematics.' 'We announced at our AGM on the 13th September 2001 that ITIS was in negotiation with a major vehicle manufacturer; these negotiations are at an advanced stage and the Board remains confident that negotiations will reach a satisfactory conclusion.' Business review The market Within the next 3 to 5 years all of the major vehicle manufacturers will have introduced Telematics functionality to their vehicle lines either as an option or progressively as standard equipment. Many have already established a telematics offering in Europe. RDS-TMC, the European standard for providing traffic data over conventional FM radio, is a key technology as it is the only industry accepted telematics standard today and virtually all Satellite Navigation systems are TMC compliant. This enables a manufacturer to enter into the Telematics market quickly and cost effectively. There has been exponential growth of Satellite Navigation as an option in the UK. To September 2001 this year 342,000 vehicles sold in the UK contained a telematics option, a 63 fold increase in the number for the full year of 1999. Growth is set to continue as the availability of integrated traffic information increases the functionality of the Satellite Navigation unit from turn by turn directions during the final stages of some journeys, to a traffic alert and re-routing system for all journeys. Telematics is already proving to be a success in some major markets. In the United States, General Motors OnStar recently announced that it would reach 2 million subscribers by their year-end (a growth of over 250% this year) making it the largest telematics business in the world. Virtually all the major automotive groups have telematics solutions in Europe and the US which are now fast migrating into the UK market. Next year drivers will be able to specify telematics on many volume production car models. Telematics services In June the Company indicated that it would focus on developing services primarily for the automotive and telecoms industries. This remains our core strategy and our leadership in technologies such as RDS-TMC enables us to make significant progress in attracting OEM customers. Due to the competitive nature of the automotive industry, it has been difficult for the Company to publicise with whom it is working. In February 2002 our RDS-TMC service with Toyota goes live and we are currently in negotiations with several other manufacturers for the provision of RDS-TMC and other telematics services. Our agreement with VDO Kienzle (part of Siemens), Europe's largest provider of satellite navigation systems is progressing very well. We are seeing the benefits of the penetration of their equipment amongst vehicle manufacturers and in the aftermarket. Their systems are available in Land Rover, BMW, Peugeot, Renault and Bentley Motors and we expect the first compatible navigation disks to be available at the end of Q1 2002. Floating Vehicle Data We continue to increase the number of FVD probes supporting the ITIS national FVD network and in September announced a deal with Eddie Stobart comprising some 750 trucks. This complements the agreement with National Express and between these two companies, ITIS now has access to data on nearly 200,000,000 miles travelled on the strategic road network in the UK each year. The quality of real time and historic data is better than anticipated and is being acquired at significantly below original cost estimates. ITIS FVD is unique and we see considerable opportunities both from commercial and government sectors for our information. The software and systems have been developed in such a way that they are scaleable and can be licenced to other operators outside the UK. We intend to use the global reach of our partners and customers to fulfill this. NavTrak During the six months ended 30th September 2001 we connected 2,722 units, an increase over the previous period despite having withdrawn the hardware subsidy. During October 2001 NavTrak connected 401 units. Nearly half of all sales were for the proactive unit, which has been well received especially by the insurance industry. This in turn has led to the product being recognised by almost all insurers and in some circumstances is the preferred solution. This reflects the rising number of vehicle thefts using the owner's keys. NavTrak has recently received the Gold award from In Cars Magazine for its proactive security system. We now sell the units for up to £499 and £14.99 per month. At the end of October 2001, we had a total of 6,284 subscribers. New Partners We recently reached agreement with Webraska, the world's leading provider of wireless navigation and mapping technologies to make ITIS traffic content available on Webraska's platform in the UK. The two companies have agreed to collaborate on offering this to the automotive and telecoms industries. Last month, ITIS reached agreement with Sky News, part of British Sky Broadcasting ('BskyB'), to supply traffic information to be broadcast on air four times a day, seven days a week. As part of the agreement ITIS and BSkyB are reviewing additional opportunities for the delivery of traffic and travel content through SkyActive and premium rate telephone services. Current trading and prospects Our cash position remains strong and the Group has the management team and technologies to successfully execute its plans. Consumer telematics will undoubtedly become a huge market and we have already seen encouraging signs of manufacturer adoption of suitable hardware in vehicles. We believe that ITIS is well placed to capitalise on the significant opportunities that will arise. Date: Wednesday 21st November 2001 Contact: Stuart Marks, Chief Executive ITIS Holdings plc Telephone: 020 7282 2940 Ginny Pulbrook, Director Citigate Dewe Rogerson Telephone: 020 7282 2940 Consolidated profit and loss account Six months to Six months to Year ended 30 September 30 September 31 March 2001 2000 2001 Unaudited Unaudited Audited Turnover 628,280 310,656 585,226 Cost of sales (1,697,201) (666,877) (1,688,653) ----------------- --------------- ------------- Gross loss (1,068,921) (356,221) (1,103,427) Other operating costs (3,965,262) (3,125,603) (7,607,929) ---------------- ---------------- -------------- Operating loss (5,034,183) (3,481,824) (8,711,356) Share of operating loss in (275,000) - (50,000) joint venture Amortisation of joint venture (141,667) - (47,222) goodwill Interest receivable 679,486 94,456 855,654 Interest payable and similar - (9,402) - charges ---------------- ------------ ------------ Loss on ordinary activities (4,771,364) (3,396,770) (7,952,924) before taxation Tax on loss on ordinary - - - activities ---------------- ------------ ----------- Loss on ordinary activities (4,771,364) (3,396,770) (7,952,924) after taxation Dividends on non-equity - (89,781) (89,781) shares -------------- ---------------- ------------ Loss for the financial period (4,771,364) (3,486,551) (8,042,705) ========= ========= ========= Loss per ordinary share (p) (4.8) (6.8) (11.1) ========= ======= ======= All activity has arisen from continuing operations. The Group has no recognised gains or losses other than those shown in the profit and loss account above. Consolidated balance sheet 30 September 30 September 31 March 2001 2000 2001 Unaudited Unaudited Audited £ £ £ Fixed assets Intangible assets 456,500 523,944 512,520 Tangible assets 1,202,263 332,243 860,419 Investments - Joint ventures - share of gross assets 705,878 - 998,750 - share of gross (180,878) - (198,750) liabilities - associated goodwill 661,111 - 802,778 ------------ ------------ ------------ 2,844,874 856,187 2,975,717 -------------- ------------ ------------- Current assets Stocks 104,959 128,210 93,879 Debtors 3,458,519 1,153,620 1,307,647 Cash at bank and in hand 19,718,863 3,986,606 25,769,329 ---------------- ---------------- ---------------- 23,282,341 5,268,436 27,170,855 Creditors: Amounts (3,070,182) (1,911,096) (2,281,980) falling due within one year ----------------- ------------------ ----------------- Net current assets 20,212,159 3,357,340 24,888,875 ----------------- ------------------ --------------- Total assets less 23,057,033 4,213,527 27,864,592 current liabilities Creditors: Amounts (378,805) - (415,000) falling due after more than one year --------------- -------------- -------------- Shareholders' funds 22,678,228 4,213,527 27,449,592 ========== ========= ========= Shareholders' funds may be analysed as: Equity interests 22,678,228 479,700 27,449,592 Non-equity interests - 3,733,827 - ----------------- ---------------- ------------ 22,678,228 4,213,527 27,449,592 ========= ======== ========= Reconciliation of movements in Group shareholders' funds Six months to Six months to Year ended 30 Sep 2001 30 Sep 2000 31 Mar 2001 Unaudited Unaudited Audited £ £ £ Loss for the financial (4,771,364) (3,486,551) (8,042,705) period ----------------- ------------------- ----------------- New equity share - 169,741 651,482 capital subscribed New preference share - 1,479,450 1,479,450 capital subscribed Premium on new share - 6,954,257 34,397,459 capital subscribed net of expenses Shares issued to - - (132,724) Employee Benefit Trust Dividends on - 89,781 89,781 non-equity shares ------------- ------------ ------------- Net (reduction from) (4,771,364) 5,206,678 28,442,743 addition to shareholders' funds Opening shareholders' 27,449,592 (993,151) (993,151) funds (deficit) ------------------ ---------------- ----------------- Closing shareholders' 22,678,228 4,213,527 27,449,592 funds ========= ========== ======== Consolidated Cash Flow Statement Six months to Six months to Year ended 30 Sep 2001 30 Sep 2000 31 Mar 2001 Unaudited Unaudited Audited £ £ £ Net cash outflow from (5,481,010) (3,986,649) (7,969,036) operating activities ---------------- ---------------- --------------- Returns on investments and servicing of finance Interest paid - (9,402) - Interest received 67,665 94,456 855,654 ------------ ------------ ------------ Net cash inflow 67,665 85,054 855,654 ------------- ------------------- ---------------- Capital expenditure and financial investment Purchase of intangible - (535,000) (935,000) fixed assets Purchase of tangible (632,929) (193,904) (902,305) fixed assets Sale of tangible fixed 6,500 - - assets -------------- ---------- ------------- Net cash outflow from (626,429) (728,904) (1,837,305) capital expenditure -------------- --------------- --------------- Acquisitions and disposals Investment in joint - - (1,700,000) venture -------------- ------------- ------------ Cash outflow before (6,039,774) (4,630,499) (10,650,687) financing --------------- -------------- -------------- Financing Issue of equity share - 169,741 518,758 capital Issue of preference share - 1,479,450 1,479,450 capital Share premium on issue of - 6,954,257 34,397,459 equity and preference share capital ------------- --------------- ------------- Net cash inflow from - 8,603,448 36,395,667 financing ------------- --------------- -------------- (Decrease) increase in (6,039,774) 3,972,949 25,744,980 cash ---------------- --------------- -------------- Notes (unaudited) 1. Accounting policies The interim accounts have been prepared using accounting policies stated in the Company's Report and Accounts for the year ended 31 March 2001 and are unaudited. 2. Preparation of the interim financial information The comparative figures for the year ended 31 March 2001 are an abridged version of the Company's full accounts and, together with other financial information contained in these interim results, do not constitute statutory accounts of ITIS Holdings PLC within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 March 2001 have been delivered to the Registrar of Companies. The report of the auditors on these was unqualified. 3. Loss per share Six months Six months Year to to ended 30 30 31 September September March 2001 2000 2001 Unaudited Unaudited Audited £ £ £ Loss for the financial period (4,771,364) (3,486,551) (8,042,705) ====== ======== ========= Weighted average number of ordinary shares 98,420,884 50,989,762 72,240,367 in issue ====== ======== ========== Loss per ordinary share (p) (4.8) (6.8) (11.1) ====== ====== ====== Due to losses made, there is no difference between loss per ordinary share and diluted loss per ordinary share. 4. Dividends on non-equity shares Six months to Six months to Year ended 30 September 30 September 31 March 2001 2000 2001 Unaudited Unaudited Audited £ £ £ Dividend on preference shares - (89,781) (89,781) ======= ====== ===== 5. Net cash outflow from operating activities Six months to Six months to Year ended 30 September 30 September 31 March 2001 2000 2001 Unaudited Unaudited Audited £ £ £ Operating loss (5,034,183) (3,481,824) (8,711,356) Depreciation and 340,967 385,252 547,482 amortisation of licenses (Increase) decrease in (11,080) (17,225) 17,106 stocks Increase in debtors (1,539,051) (757,897)(911,924) Increase (decrease) in 762,700 (114,955)1,055,237 creditors (Profit) loss on (363) - 34,419 disposal of tangible fixed assets ----------- ------------ ---------- Net cash outflow from (5,481,010) (3,986,649) (7,969,036) operating activities ========= ========= 6. Reconciliation of net cash flow to movement in net funds Six months to Six months to Year ended 30 September 30 September 31 March 2001 2000 2001 Unaudited Unaudited Audited £ £ £ (Decrease) increase in cash (6,039,774) 3,972,949 25,744,980 in the period ----------- ---------- --------- Change in net debt (6,039,774) 3,972,949 25,744,980 Net funds brought forward 25,758,637 13,657 13,657 --------------- ----------- -------- Net funds carried forward 19,718,863 3,986,606 25,758,637 ========= ========= ========= 7. Interim statement A copy of this announcement will be circulated to all registered shareholders of the Company and copies will be available for members of the public upon application to the Registered Office at The Warrant House, 1 High Street, Altrincham, Cheshire, WA14 1PZ.

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