Interim Results

ITIS Holdings PLC 17 November 2003 17 November 2003 ITIS Holdings plc (the 'Company' or 'ITIS') Interim results for the six months ended 30th September 2003 ITIS Holdings plc: a leading UK road traffic information and data specialist, is pleased to announce its interim results for the six months ended 30th September 2003. Highlights • New traffic information contract with Orange UK announced today to deliver realtime traffic information on Orange World. • New contracts for traffic information signed with BMW, Ford Motor Company, Lexus, Saab and Subaru with further contracts due to be announced in the second half. • Three-year contract to supply Floating Vehicle Data (FVD) for network management purposes to the Highways Agency. • Final and exclusive terms agreed today for the Acquisition of a ground breaking system for measuring and forecasting traffic flow based on anonymously sampling the positions of cellular phones (the 'Acquisition'). • Turnover up 186% to £3,156,000 (2002: £1,103,000) • Loss for financial period reduced by 14% to £2,969,000 (2002: £3,466,000 loss) • Strong cash position of £7.5 million at period end. Stuart Marks, Chief Executive of ITIS Holdings plc commented: 'We are successfully implementing our strategy of providing services directly to vehicle manufacturers, government and mobile phone networks. We are winning major contracts on a regular basis and revenues continue to demonstrate sustained and impressive growth, all of which will make a significant contribution to our second half trading. Our attention at the same time continues to be focussed on cash and cost control and ensuring that the fixed cost base of providing our services is at a level where profitability can soon be achieved and maintained. On this basis, the Directors remain confident that the Company will reach profitability within current cash reserves. We are pleased that we have finalised exclusive terms to acquire Estimotion Inc. which delivers technology to support the markets ITIS already serves and like FVD, is scaleable and operates on a low fixed cost. The technology enables us to continue to lead the way in the automated collection and analysis of traffic data but on a much wider scale than previously and to new levels of accuracy.' Enquiries: Stuart Marks, Chief Executive ITIS Holdings plc Telephone: 0161 929 5788 Ginny Pulbrook, Director Citigate Dewe Rogerson Telephone: 020 7282 2945 Financial Overview For the six month period ended 30th September 2003, turnover increased 186% to £3,156,000 (2002: £1,103,000), which has resulted in an increase in gross profit of £1,044,000 to £102,000 (2002: gross loss £942,000). Other operating costs have again been stringently controlled, with the rise of £419,000 to £3,225,000 being attributable to: the costs associated with the acquisition of the Estimotion traffic flow technology; ITIS covering certain of the running costs of Estimotion since May 2003 and an increase in professional fees on the new contracts signed. The increased revenue and continuing cost control has enabled us to reduce the operating loss for the financial period to £3,123,000 (2002: £3,748,000 loss). At 30th September 2003, the cash balance of ITIS remained strong at £7.5 million. With increasing revenues, and the move to a mainly fixed cost basis on the traffic information services side of the business, we will see a much reduced cash usage in the second half of the year. The Directors are confident that ITIS has sufficient cash to develop the business and to fully exploit the opportunities afforded by the acquisition of the Estimotion technology in the UK and internationally. Business Review Traffic Data Services ITIS operates the world's largest commercial FVD system providing full coverage of the UK's Strategic Road Network, totalling some 8,200 miles. The Company has developed a strong traffic information business providing services in four market segments including: mobile phone services; automotive; public sector and logistics. Information is delivered to customers using appropriate technologies. Examples of this include the 2222 traffic information service on Vodafone and the delivery of information direct to in car satellite navigation systems known as RDS-TMC. RDS-TMC remains the only international standard for providing traffic data to a navigation system. Virtually all screen based satellite navigation systems are TMC compliant and vehicle manufacturers see this as a low cost entry point to providing driver information services. ITIS has the exclusive licence to broadcast RDS-TMC in the UK until 2012. The penetration of satellite navigation systems is growing strongly year on year and whether offered as standard feature or a factory fitted option, the ITIS RDS-TMC service comes at no cost to the customer since the commercial agreement is between ITIS and the manufacturer directly. Over the last six months, ITIS have announced material contracts with a number of the world's leading automotive companies including BMW, Ford Motor Company, Lexus, Saab and Subaru and expect to announce further contracts with manufacturers in the second half. We announce today a new contract with Orange UK to deliver real time traffic information on Orange World. Orange customers will be the first to access the new AA Roadwatch service and receive constantly updated traffic flow information displayed in colour . Users can scroll up and down affected segments of any UK motorway and see a colour coded scale that shows traffic conditions such as stationary, queuing, slow or heavy traffic. This 'at a glance' service is supplemented by incident reports from AA Roadwatch, advising users of the cause of a specific problem as well as additional ITIS data displaying traffic speed and delay extent. The service will support a wide range of popular handsets including models from Nokia, Motorola, Sony Ericsson and Sagem. Users will pay 50p allowing unlimited access for up to 60 minutes NavTrak NavTrak is able to detect vehicle theft with the owner's keys, provide detailed crime history and police liaison across 23 countries in Europe. NavTrak is now recognised as the most comprehensive stolen vehicle tracking system and this is endorsed by the number of vehicle manufacturers that not only approve the product as an accessory but also fit it as standard on their vehicles. NavTrak is recognised by top marques such as Ferrari, Maserati, Bentley, Landrover and BMW. The Acquisition ITIS announced that it has finalised exclusive terms for the acquisition of certain assets of Israel based Estimotion Inc. and Estimotion Ltd. ('Estimotion') (the 'Acquisition') by its wholly owned subsidiary, ITIS UK Limited. ('ITIS'). The initial consideration is US$0.3m and further payments of up to a maximum US$4.2m are payable over the next three years. The principal activity of Estimotion is the use of low cost and patented technology to provide a unique system for measuring and forecasting traffic flow based on anonymously sampling the position of mobile phones. The Directors believe the Acquisition marks an important strategic move to further enhance ITIS' strong position in the fast growing market for real time and predictive traffic information. The terms of the Acquisition have been structured to minimise its impact on ITIS' financial performance. Initial consideration of US$0.3m is payable in cash to Estimotion on completion. Further payments up to a maximum of US$4.2m are due over the three years following completion and are reliant upon the achievement of certain milestones, a major part of which are linked to the financial performance of ITIS. Whilst Estimotion's turnover has been negligible to date, the low level of operating costs is anticipated to have little impact on ITIS' financial performance, particularly when balanced against the forecast upside of commercialising this technology and the associated projected revenues. Over the past two years, the Group has made significant technical and commercial progress, resulting in its recognised position as a leading traffic information provider. ITIS is credited with establishing the world's first commercial application for Floating Vehicle Data ('FVD') and has been successful in using FVD to generate growing revenues in the automotive, mobile telephony, Government and logistics sectors in the UK. Customers include the Automobile Association (AA), BMW, Ford Motor Company, Highways Agency, Toyota and Vodafone. The Acquisition allows ITIS to utilise information already collected by cellular networks as part of their day-to-day operations to further develop the business in those areas that have already proven to be commercially successful. These include RDS-TMC (the delivery of traffic information directly into a vehicle satellite navigation system) and ITIS' telephone traffic services, which are available across all networks on short dial numbers, such as 2222 on Vodafone. ITIS has started to receive serious enquiries outside of the UK from government organisations and from its existing international customers. As a result of this, negotiations are already in advanced stages with several mobile networks to use their data to launch traffic information services based on the Estimotion technology. Whilst FVD is both scaleable and now operates on a fixed cost basis, ITIS believe that it will be more cost effective and quicker to deploy Estimotion's technology in these new markets given that there is no major city in the world which does not support a mobile phone network. Estimotion will enable ITIS to provide highly accurate urban traffic data as a result of the large concentration of mobile phones in urban areas. This will be of particular use to those cities looking at congestion charging or with chronic traffic problems. Reasons for Announcement of Acquisition The Board expect completion of this transaction shortly and have chosen to announce details today to coincide with the Interim Results and also the start of the ITS World Congress in Madrid where ITIS is meeting with potential and existing customers and wishes to demonstrate and discuss this exciting new technology. Strategy Whilst recognising the success of NavTrak, the Board believe that the Group has successfully demonstrated that the greatest potential for growth lies in the traffic information and data market. The Board are therefore reviewing how NavTrak might fit into the overall strategy of the Group. Outlook The significant revenue benefit of many of the contracts signed over the past six months will become apparent in the second half of the current year and consequently the Directors remain confident that the Company will reach profitability within current cash reserves. Consolidated profit and loss account Note Six months to Six months to Year ended 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Turnover 3,155,760 1,102,945 3,821,977 Exceptional direct costs 9 - - (1,050,000) Other cost of sales (3,053,778) (2,045,412) (5,346,229) Cost of sales (3,053,778) (2,045,412) (6,396,229) __________ __________ __________ Gross profit (loss) 101,982 (942,467) (2,574,252) Other operating costs (3,225,102) (2,805,831) (5,636,844) __________ __________ __________ Operating loss (3,123,120) (3,748,298) (8,211,096) Interest receivable and similar income 154,913 284,357 544,615 Interest payable and similar charges (723) (1,929) (2,893) __________ __________ __________ Loss on ordinary activities before taxation (2,968,930) (3,465,870) (7,669,374) Tax on loss on ordinary activities - - 241,431 __________ __________ __________ Loss for the financial period (2,968,930) (3,465,870) (7,427,943) __________ __________ __________ Basic and diluted loss per ordinary share (p) 3 (3.0) (3.5) (7.5) __________ __________ __________ There are no recognised gains or losses other than those shown in the profit and loss account above. Consolidated Balance Sheet Note 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Fixed assets Intangible assets 375,540 414,502 395,138 Tangible assets 750,070 387,861 814,016 __________ __________ __________ 1,125,610 802,363 1,209,154 __________ __________ __________ Current assets Stocks 458,416 152,179 768,865 Debtors - due within one year 3,799,071 2,119,471 2,741,985 - due after more than one year 885,312 500,000 953,438 Cash at bank and in hand 7,536,292 13,812,444 11,153,945 __________ __________ __________ 12,679,091 16,584,094 15,618,233 Creditors: Amounts falling due within one year (3,997,290) (1,548,043) (3,727,608) __________ __________ __________ Net current assets 8,681,801 15,036,051 11,890,625 __________ __________ __________ Total assets less current liabilities 9,807,411 15,838,414 13,099,779 Creditors: Amounts falling due after more than one year (1,242,224) (342,224) (1,565,662) __________ __________ __________ Net assets 8,565,187 15,496,190 11,534,117 __________ __________ __________ Capital and reserves Called-up share capital 5,186,286 5,186,286 5,186,286 Share premium account 37,342,877 37,342,877 37,342,877 Profit and loss account (33,963,976) (27,032,973) (30,995,046) __________ __________ __________ Shareholders' funds 6 8,565,187 15,496,190 11,534,117 __________ __________ __________ Shareholders' funds may be analysed as: 7 As restated Equity interests 5,347,319 12,278,322 8,316,249 Non-equity interests 3,217,868 3,217,868 3,217,868 __________ __________ __________ 8,565,187 15,496,190 11,534,117 __________ __________ __________ Consolidated Cash Flow Statement Note Six months to Six months Year ended to 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Net cash outflow from operating activities (3,770,115) (3,504,057) (6,480,904) 4 __________ __________ __________ Returns on investments and servicing of finance Interest element of finance lease rental payments (723) (1,929) (2,893) Interest received 140,964 284,357 726,068 __________ __________ __________ Net cash inflow from returns on investments and servicing of finance 140,241 282,428 723,175 __________ __________ __________ Taxation Research and development tax credit 246,593 - - __________ __________ __________ Net cash inflow from taxation 246,593 - - __________ __________ __________ Capital expenditure and financial investment Purchase of tangible fixed assets (124,326) (147,535) (30,278) Sale of tangible fixed assets - 5,000 19,950 __________ __________ __________ Net cash outflow from capital expenditure (124,326) (25,278) (127,585) __________ __________ __________ Cash outflow before financing (3,507,607) (3,246,907) (5,885,314) __________ __________ __________ Financing Capital element of finance lease rental payments (110,046) (20,092) (40,184) __________ __________ __________ Net cash outflow from financing (110,046) (20,092) (40,184) __________ __________ __________ Decrease in cash (3,617,653) (3,266,999) (5,925,498) 5 __________ __________ __________ 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 31st March 2003 and are have been neither audited nor reviewed. 2. Preparation of the interim financial information The summarised results for the six months to 30th September 2003 and the comparative results for the half year to 30th September 2002 are non-statutory accounts within the meaning of Section 240 of the Companies Act 1985 and have not been reported upon by the auditors under Section 235 of the Companies Act 1985. The comparative figures for the year ended 31st March 2003 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 31st March 2003 have been delivered to the Registrar of Companies. The report of the auditors was not qualified and did not contain any statements under Section 237 (2) or (3) of the Companies Act 1985. 3. Basic and diluted loss per ordinary share Six months to Six months to Year ended 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Loss for the financial period (2,968,930) (3,465,870) (7,427,943) __________ __________ __________ Weighted average number of ordinary shares 98,420,884 98,420,884 98,420,884 in issue __________ __________ __________ Loss per ordinary share (p) (3.0) (3.5) (7.5) __________ __________ __________ Due to losses made, there is no difference between basic loss per ordinary share and diluted loss per ordinary share. 4. Net cash outflow from operating activities Six months to Six months to Year ended 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Operating loss (3,123,120) (3,748,298) (8,211,096) Depreciation and amortisation of licenses 207,870 134,954 338,921 Decrease (Increase) in stocks 310,449 (42,531) (659,217) (Increase) decrease in debtors (1,221,604) 705,668 (310,305) Increase (decrease) in creditors 56,290 (551,683) 2,371,412 Profit on disposal of tangible fixed assets - (2,167) (10,619) __________ __________ __________ Net cash outflow from operating activities (3,770,115) (3,504,057) (6,480,904) __________ __________ __________ 5. Reconciliation of net cash flow to movement in net funds Six months to Six months to Year ended 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Decrease in cash in the period (3,617,653) (3,266,999) (5,925,498) Cash outflow from decrease in lease funding 110,046 20,092 40,184 __________ __________ __________ Change in net funds resulting from cash flows (3,507,607) (3,246,907) (5,885,314) New finance lease - - (500,000) __________ __________ __________ Change in net funds in the year (3,507,607) (3,246,907) (6,385,314) Net funds brought forward 10,643,899 17,029,213 17,029,213 __________ __________ __________ Net funds carried forward 7,136,292 13,782,306 10,643,899 __________ __________ __________ 6. Reconciliation of movements in Group shareholders' funds Six months to Six months to Year ended 30th September 30th September 31st March 2003 2002 2003 Unaudited Unaudited Audited £ £ £ Loss for the financial period (2,968,930) (3,465,870) (7,427,943) __________ __________ __________ Net reduction in Group shareholders' funds (2,968,930) (3,465,870) (7,427,943) Opening Group shareholders' funds 11,534,117 18,962,060 18,962,060 __________ __________ __________ Closing Group shareholders' funds 8,565,187 15,496,190 11,534,117 __________ __________ __________ 7. Non-equity shares In the year ended 31st March 2003, the directors, having considered the terms of the group's deferred shares in the light of the requirements of FRS 4, reclassified these shares as non-equity interests. The comparative figures for 30th September 2002 have accordingly been restated. 8. Segmental analysis The directors are of the opinion that the Group operates in a single segment, that of the provision of telematics products and services. Hence all turnover, profits and net assets relate to this class of business. All of the activities were carried out in and supplied to the United Kingdom. 9. Exceptional item Exceptional direct costs in the year ended 31st March 2003 comprise £650,000 in respect of licence costs written off and £400,000 payable on renegotiation of a commission agreement. 10. 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 Station House, Stamford New Road, Altrincham, Cheshire, WA14 1EP. This information is provided by RNS The company news service from the London Stock Exchange

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