Interim Results

ITIS Holdings PLC 01 November 2006 ITIS Holdings plc (the 'Company' or 'ITIS') Results for the six months ended 30th September 2006 ITIS Holdings plc, a leading road traffic information and data specialist, is pleased to announce its results for the six months ended 30th September 2006. Highlights • Turnover up 41% to £8.9m (Six months ended 30th September 2005: £6.3m); • Profit before tax up 298% to £1.8m (Six months ended 30th September 2005: £0.45m); • UK business continues to trade ahead of expectations; • Contracts renewed for RDS-TMC with the BMW Group, Ford Motor Company and TomTom; • Cash balance increased to £7.2m from £5.7m at 31st March 2006. Stuart Marks, Chief Executive of ITIS Holdings plc, commented: 'We are very pleased with this excellent set of results which underline the strength of our business strategy. The Company has continued to deliver substantial growth which has led to our profits for the first half of this current financial year exceeding the pre-exceptional profits that we achieved during the whole of the last year. Within our AGM statement on 20th September 2006 we reported that 'all areas of our UK business have traded strongly'. This has continued to be the case and, therefore, our current expectations for full year profits are now slightly ahead of those we had anticipated in September. ITIS is now established as a highly profitable and leading supplier of real time traffic information with largely fixed costs and a broad base of customers and applications. We now have over 350,000 users of our RDS-TMC service across eighteen car manufacturers and seventeen aftermarket providers. The market for both line fit and aftermarket satellite navigation systems is forecast to continue to grow in the UK and we expect ITIS will remain the preferred provider of information to this market. With substantial and increasing cash reserves, strong management and proven services the Board are confident that ITIS is well positioned to take advantage of the world wide demand for accurate traffic information.' Financial Overview For the six months ended 30th September 2006, Group turnover increased 41% to £8.88m (2005: £6.29m). This increase in turnover came predominantly from the Group's UK business - from traffic data sales to RDS-TMC customers; from data sales to local and central Government and other third party organisations; and from customers using the Group's various mobile telephone information services. The Group continued to invest heavily in its research and development centre in Israel during the period, spending £0.46m (2005 research and development expenditure: £0.41m). On a Group basis, profit before taxation increased 298% to £1.78m (2005: profit before taxation £0.45m). These results again demonstrate that the Group's operational infrastructure is capable of supporting incremental business and that we are able to control our costs effectively. Basic and diluted earnings per ordinary share were 1.8p, up 350% (2005 earnings per ordinary share: 0.4p). Cash balances at 30th September 2006 strengthened to £7.2m as against £5.7m at 31st March 2006. As a sign of its confidence in the continuing growth and cash generation in the business, the Board is considering the most efficient deployment of its cash reserves. We will update shareholders further at the time of release of our preliminary results for the year ending 31st March 2007. UK Business Review ITIS continues to derive almost all of its revenues from the UK. Our sustained success in this competitive and still developing market is proof that ITIS possesses strong management, high quality information and scaleable systems. Our focus has been on supporting our customers by becoming an integral part of their customer solutions rather than by competing with them by developing our own hardware. When we announced our contract renewal with BMW for a further five years on 11th September 2006, they commented 'We have conducted ongoing testing of the service and are completely satisfied that the traffic information which ITIS supplies meets all of our quality criteria whilst their understanding and experience of TMC is significantly ahead of anyone else in this market.' We expect the UK market to continue growing and as we have consistently demonstrated, ITIS is ideally placed to take advantage of this. RDS-TMC (Radio Data Service - Traffic Message Channel) ITIS continues to dominate the delivery of real time traffic information to factory fitted navigation systems, personal navigation devices and mobile phones. Our service is established with eighteen car manufacturers; BMW, DaimlerChrysler, Ferrari, Ford, Jaguar, Land Rover, Lexus, MINI, Mitsubishi, Nissan, Porsche, Renault, Rolls Royce, Saab, Subaru, Toyota, Vauxhall (GM) and Volvo. In the period under review we announced contract renewals with BMW, the Ford Motor Company and TomTom. BMW have been a customer since 2002 and this new contract will see ITIS provide data until 2012. Aftermarket and portable device customers include AA Navigator, Bose, Clarion, Co Pilot, Harman Becker, Navicore, Naviflash, Navman, Panasonic, Pioneer, Siemens VDO, Sony Europe, TomTom, ViaMichelin and Way Finder. The size and scope of our customer base is the proof that ITIS provides the highest quality traffic information and has unparalleled knowledge and experience of the Traffic Message Channel. Currently ITIS supports over 350,000 users of TMC and this is number increasing rapidly. We expect that the penetration of in-vehicle satellite navigation systems in the UK will continue to rise as only 8% of new cars sold have navigation fitted as standard or as an option compared to 24% in Germany. The personal navigation device market is extremely competitive and is moving towards a model where traffic information is bundled into the price of the unit rather than a monthly subscription. We expect to see our revenues grow in this market as this strategy becomes widely adopted by all the leading manufacturers. Other Services We announced on 23rd October 2006 that we had entered into a partnership with Clear Channel to operate a new cross network short dial traffic service called ' The Hound' which is being promoted extensively on Clear Channel media sites throughout the country. ITIS has established short dial traffic information services with the AA, Vodafone, T-Mobile and various other networks. Through all of these channels, customers express a high degree of satisfaction with the services and once trialled, ongoing regular usage is likely. It is expected that the partnership with Clear Channel will be an effective means of generating initial customer trials. We announced on 26th October 2006 that the Department for Transport had extended its contract with ITIS to supply historic traffic information until February 2008. As part of this contract, all local authorities receive limited historic data from ITIS and we have enjoyed some success in selling real time data and more detailed historic information to a small number of them. Sales in this area take time because our data is relatively new and prospective customers need to undertake rigorous evaluation. In the medium term, as the Government seeks to understand better how congestion can be managed and continues to work more closely with the private sector, we are confident that this will become an important revenue stream. International Business Review Internationally, we use both our Floating Vehicle Data and our Cellular Floating Vehicle Data (CFVD) technologies. CFVD works on a combination of our highly developed algorithms and specific information provided by mobile networks. Cooperation from the networks and their ability to provide us with the data we require can vary, not only from country to country but from network to network. Given the critical nature of the networks' involvement, we look for markets where we can develop a strong relationship with our chosen network partner, combined with private or public sector revenues. We have a significant R&D operation based in Israel focussed on further developing our software and algorithms and a dedicated team in the UK currently supporting existing deployments. The size and experience of the team is such that additional business can be accommodated within the existing infrastructure. The Board recognises that progress in the US has been slower than we would have liked following the encouraging start with the contract wins with the Maryland and Missouri Departments of Transport. However, our cost exposure in the US market is minimal due to our decision to partner with Delcan - a US based organisation which already has significant resources committed to serving the DOTs. We remain focussed on fulfilling our obligations to deliver traffic information in the State of Missouri and continue to believe that the global market for traffic information is vast and that ITIS will be able to compete effectively. We have proven with trials in the US, Belgium, Scotland and Israel that our CFVD technology is robust, highly accurate and scalable. We also have the necessary experience and resources to handle complex and large deployments. At our AGM on 20th September 2006, we announced that we had been selected by one of the world's largest mobile operators to demonstrate how we can provide traffic information in a large European metropolitan area. We are encouraged to see a major network taking a lead in this technology. Our business model for international markets will be determined by the scope of work required, strength of local partners and geography. The Groups licensing model for entering into new markets allows for controlled expansion and we have already proven this model in Australia. We are confident that such new markets can be profitable for ITIS in the short to medium term. NavTrak NavTrak continued to grow its subscriber base predominantly through our principle automotive customers - Bentley Motors, Ferrari and Maserati. We continue to develop business outside the UK by partnering with organisations that can support the NavTrak brand and we currently have such relationships in 32 countries. Consistency and quality of service are very important to the automotive industry and therefore the ability for a manufacturer to make one vehicle tracking product standard throughout the world is an attractive proposition. Current Trading & Prospects In recent years, ITIS has successfully delivered on its strategy to focus on traffic information technologies through a largely fixed cost base and this has turned the company into a respected and leading information provider. ITIS is now entering an exciting phase of its development. The UK market continues to experience strong growth and the Board believes that the potential exists to add to this growth outside the UK. These strong results combined with our excellent management, growing cash and proven technology, give the Board good reason to be confident about the Company's future. Contact: Stuart Marks, Chief Executive ITIS Holdings plc - 07768 454700 Ginny Pulbrook, Director Citigate Dewe Rogerson - 0207 282 2945 Consolidated profit and loss account Note Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Group turnover 8 8,884,515 6,289,853 14,416,113 Cost of sales (3,672,885) (3,044,266) (6,982,244) __________ __________ __________ Gross profit 5,211,630 3,245,587 7,433,869 Operating costs (3,544,723) (2,870,488) (5,630,145) __________ __________ __________ Operating profit 1,666,907 375,099 1,803,724 Operating profit before exceptional item 1,666,907 375,099 1,472,456 Exceptional item 3 - - 331,268 Operating profit 1,666,907 375,099 1,803,724 Group interest receivable and similar income 116,433 73,214 158,723 Group interest payable and similar charges - (729) (2,123) __________ __________ __________ Profit on ordinary activities before taxation 8 1,783,340 447,584 1,960,324 Tax on profit on ordinary activities - (6,528) 93,350 __________ __________ __________ Profit on ordinary activities after taxation 1,783,340 441,056 2,053,674 Minority interests (4,036) (4,578) (5,396) __________ __________ __________ Profit for the financial period 1,779,304 436,478 2,048,278 __________ __________ __________ Basic and diluted earnings per ordinary share (p) 4 1.8 0.4 2.1 __________ __________ __________ Consolidated statement of total recognised gains and losses Note Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Profit for the financial period 1,779,304 436,478 2,048,278 Currency translation difference 2,078 1,893 1,858 Prior period adjustment - adoption of FRS20 Share Based 1 26,128 - - Payments __________ __________ __________ Total recognised gains relating to the period 1,807,510 438,371 2,050,136 __________ __________ __________ Consolidated Balance Sheet Note 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Fixed assets Intangible assets 502,515 733,109 617,812 Tangible assets 925,874 515,408 659,746 __________ __________ __________ 1,428,389 1,248,517 1,277,558 __________ __________ __________ Current assets Stocks 283,442 286,493 374,998 Debtors - due within one year 4,982,087 3,189,698 4,300,432 - due after more than one year 27,500 55,000 40,000 Cash at bank and in hand 7,169,519 4,718,100 5,697,498 __________ __________ __________ 12,462,548 8,249,291 10,412,928 Creditors: Amounts falling due within one year (4,924,240) (3,605,133) (4,434,618) __________ __________ __________ Net current assets 7,538,308 4,644,158 5,978,310 __________ __________ __________ Total assets less current liabilities 8,966,697 5,892,675 7,255,868 Creditors: Amounts falling due after more than one year - accruals and deferred income (516,732) (811,536) (601,991) Provisions for liabilities and charges (36,290) (109,766) (54,459) __________ __________ __________ Net assets 8 8,413,675 4,971,373 6,599,418 __________ __________ __________ Capital and reserves Called-up share capital 5,230,270 5,230,270 5,230,270 Share premium account 38,070,740 38,070,740 38,070,740 Profit and loss account (34,955,537) (38,348,684) (36,736,919) Other reserve 54,967 10,666 26,128 __________ __________ __________ Equity shareholders' funds 8,400,440 4,962,992 6,590,219 7 Minority Interests - equity 13,235 8,381 9,199 __________ __________ __________ Total capital employed - equity 8,413,675 4,971,373 6,599,418 __________ __________ __________ Consolidated Cash Flow Statement Note Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Net cash inflow from operating activities 5 1,792,014 505,789 1,765,284 __________ __________ __________ Returns on investments and servicing of finance Interest element of finance lease rental payments - (729) (2,123) Interest received 116,433 73,214 158,723 __________ __________ __________ Net cash inflow from returns on investments and servicing of 116,433 72,485 156,600 finance __________ __________ __________ Taxation Foreign tax paid - - (20,300) Research and development tax credit 20,924 128,613 127,124 __________ __________ __________ Net cash inflow from taxation 20,924 128,613 106,824 __________ __________ __________ Capital expenditure and financial investment Purchase of tangible fixed assets (459,428) (161,523) (489,566) __________ __________ __________ Net cash outflow from capital expenditure (459,428) (161,523) (489,566) __________ __________ __________ Cash inflow before financing 1,469,943 545,364 1,539,142 __________ __________ __________ Financing Issue of share capital - 771,847 771,847 Capital element of finance lease rental payments - (14,345) (28,690) __________ __________ __________ Net cash inflow from financing - 757,502 743,157 __________ __________ __________ Increase in cash 6 1,469,943 1,302,866 2,282,299 __________ __________ __________ 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 2006 and have been neither audited nor reviewed. FRS 20 Share Based Payments was adopted in the period. FRS 20 requires the Group to recognise a charge in the Profit and Loss account and a credit in equity to reflect the fair value of outstanding share options issued to employees. Share compensation charges have been recognised in the period and comparative periods have been restated to include a similar charge (see note 7). FRS 25 Financial Instruments: Disclosure and Presentation was adopted in the prior year. This has resulted in a change in the presentation of the Group's deferred shares. These are now classified as equity rather than non-equity. 2. Preparation of the interim financial information The summarised results for the six months to 30 September 2006 and the comparative results for the half year to 30 September 2005 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 31 March 2006 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 2006 have been delivered to the Registrar of Companies. The report of the auditors was not qualified and did not contain a statement under Sections 237 (2) and (3) of the Companies Act 1985. 3. Turnover Included within turnover for the year-ended 31 March 2006 is an amount of £354,297. This amount, net of associated expenses of £23,029, has been shown as an exceptional item of £331,268 on the face of the profit and loss account as it relates to income from one of the Group's customers that related to the 2005 financial year. This was not declared to the Group until after publication of the 2005 financial statements. 4. Basic and diluted earnings per ordinary share Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated £ £ £ Profit for the financial period 1,779,304 436,478 2,048,278 __________ __________ __________ Weighted average number of ordinary shares in issue 100,620,099 97,446,256 100,120,420 __________ __________ __________ Basic and diluted earnings per ordinary share (p) 1.8 0.4 2.1 __________ __________ __________ 5. Reconciliation of operating profit to cash inflow from operating activities Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Operating profit 1,666,907 375,099 1,803,724 Depreciation and amortisation of licences 308,597 254,699 552,934 Decrease (increase) in stocks 91,556 67,058 (21,447) Increase in debtors (690,079) (339,894) (1,322,584) Increase in creditors 404,363 223,888 867,563 Decrease in provisions (18,169) (85,727) (141,034) Share compensation charge 28,839 10,666 26,128 __________ __________ __________ Net cash inflow from operating activities 1,792,014 505,789 1,765,284 __________ __________ __________ 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 2006 2005 2006 Unaudited Unaudited Audited £ £ £ Increase in cash in the period 1,469,943 1,302,866 2,282,299 Cash inflow from decrease in lease funding - 14,345 28,690 __________ __________ __________ Change in net funds resulting from cash flows 1,469,943 1,317,211 2,310,989 Translation differences 2,078 1,893 1,858 __________ __________ __________ Change in net funds in the period 1,472,021 1,319,104 2,312,847 Net funds brought forward 5,697,498 3,384,651 3,384,651 __________ __________ __________ Net funds carried forward 7,169,519 4,703,755 5,697,498 __________ __________ __________ 7. Reconciliation of movements in Group shareholders' funds Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 Unaudited Unaudited Audited Restated Restated (Note 1) (Note 1) £ £ £ Profit for the financial period 1,779,304 436,478 2,048,278 Other recognised gains and losses relating to the period 2,078 1,893 1,858 Issue of share capital - 771,847 771,847 Share compensation charge 28,839 10,666 26,128 __________ __________ __________ Net increase in Group shareholders' funds 1,810,221 1,220,884 2,848,111 Opening Group shareholders' funds 6,590,219 3,742,108 3,742,108 __________ __________ __________ Closing Group shareholders' funds 8,400,440 4,962,992 6,590,219 __________ __________ __________ 8. Segmental analysis The Directors are of the opinion that the Group operates in a single segment, that of the provision of telematic products and services. Hence all turnover, profits and net assets relate to this class of business. Turnover by origin Turnover by destination Six months to Six months Six months to Six months to Year ended to Year ended 30 September 30 September 31 March 30 September 30 September 31 March 2006 2005 2006 2006 2005 2006 Unaudited Unaudited Audited Unaudited Unaudited Audited £ £ £ £ £ £ United Kingdom 8,761,263 6,108,977 14,216,022 8,713,317 6,103,852 14,187,833 Mainland Europe - - - 47,946 5,125 28,189 U.S.A. 28,252 180,876 200,091 28,252 180,876 200,091 Other 95,000 - - 95,000 - - _________ _________ _________ _________ _________ _________ Total 8,884,515 6,289,853 14,416,113 8,884,515 6,289,853 14,416,113 _________ _________ _________ _________ _________ _________ Profit (loss) before taxation Net assets Six months to Six months Year ended Six months to Six months Year ended to to 30 September 30 September 31 March 30 September 30 September 31 March 2006 2005 2006 2006 2005 2006 Unaudited Unaudited Audited Unaudited Unaudited Audited Restated Restated Restated Restated (Note 1) (Note 1) (Note 1) (Note 1) £ £ £ £ £ £ United Kingdom 2,434,047 725,250 2,889,018 8,360,537 4,960,939 6,552,724 Mainland Europe (121,326) (82,813) (123,796) - - - U.S.A. (167,250) 104,668 66,318 - - - Other (299,521) (871,216) 53,138 10,434 46,694 (362,131) _________ _________ _________ _________ _________ _________ Total 1,783,340 447,584 1,960,324 8,413,675 4,971,373 6,599,418 _________ _________ _________ _________ _________ _________ 9. 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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