Interim Results

RNS Number : 9406I

ITIS Holdings PLC

26 November 2008

 



ITIS Holdings plc ('ITIS' or the 'Company') a leading road traffic and information data specialist is pleased to announce its interim results for the six months ended 30 September 2008. 

Highlights

• Revenue from continuing operations up 3.0% to £8.33m (2007: £8.09m), of which £2.24m is from Trafficlink (2007: £nil)

• Loss before taxation on continuing operations was £0.43m (2007: profit of £2.18m), prior to the impact of exceptional items (see note 1) of £0.56m (2007: £nil), whilst loss before taxation on continuing operations after exceptional items was £0.99m (2007: profit of £2.18m) 

• Basic and diluted loss per share from continuing operations were 0.9p (2007: earnings per share 1.6p) 

• New PND and vehicle manufacturer contracts renewed

• Significant opportunities for international business growth 

• Trafficlink business fully integrated and new contract with Global Radio bringing 71 new stations 

Stuart Marks, Chief Executive of ITIS commented: 'Given the strength of our business model and our consistent earnings growth in recent years, trading levels in the first half of this year are, of course, disappointing.  We have successfully renewed all contracts that ended in the period and have won new business in both the PND and OEM markets. However, new car sales are at their lowest level since 1991 and the suddenness with which those sales deteriorated together with the fixed cost structure of our UK traffic business has contributed significantly to the fall in our results.  This was combined with an unprecedented rise in fuel prices which led to a reduction in callers to our IVR service due to below average levels of congestion.  We recognise that market conditions have changed radically and given that this new low level of activity may well continue, we have taken immediate steps to reduce our cost base.  I am pleased, however, that due to recent technological advancements with our software we are able to make these cuts without compromising our service offering and indeed we will continue to invest to maintain our leading position.   

The Trafficlink business is now fully integrated with over 90% of all radio stations using our service. Combined with our market leadership in the RDS-TMC market, more drivers have access to our traffic information than from any other source.

We are fortunate to have a first class management team who are ready to meet this more challenging market and I will be working with them to ensure we support our employees and customers and position the business appropriately.  All of these, combined with the continuing demand for our product in our home and international markets, allows us to be confident that we will deliver improved performance in the second half of the year as compared to the first half.'

FINANCIAL OVERVIEW 

For the six months ended 30 September 2008, Group revenue from continuing operations increased 3% to £8.33m (2007: £8.09m), which included £2.24m from Trafficlink (2007: £nil). Excluding Trafficlink revenue fell by 24.7% to £6.09m.  Revenue arose predominantly from the Group's UK business, being traffic data sales to RDS-TMC customers, data sales to local and central Government and other third party organisations, broadcast traffic sales to 230 commercial radio stations and the BBC, as well as from customers using the Group's mobile telephone information services.

The fall in revenue was driven by the following factors: The Group's RDS-TMC business is heavily dependent upon new car sales especially in the premium brand segment and has been directly impacted by five consecutive months of falling car sales, culminating in the lowest August sales since 1966 and a 21.2% fall in September, the lowest September levels since the twice-yearly plate change system started in 1999 (source: The Society of Motor Manufacturers and Traders Limited (SMMT)).  This trend has continued into October with a further reported fall of 23% (source: SMMT), and we expect year on year falls to continue for the rest of the current financial year.  Secondly, the dramatic increase in fuel prices in the first half of this year had the effect of reducing congestion on the roads, and this in turn led to a sharp reduction in the usage of the Group's mobile telephone information services, which have a direct correlation to congestion.  Furthermore there was no contribution from the DfT contract which ended in February. 

As the majority of the UK's traffic business costs are fixed, the fall in revenues has greatly impacted upon UK profits.  The six months to 30 September 2008 has had the full effect of the step change of costs incurred due to establishing a data centre, the additional FM bandwidth taken on during 2007 and heavy investment in the International business.  This data centre requires additional annual communications, licensing and running costs but allows all live systems to be run from one site of the highest quality with extensive capacity for expansion, whilst the additional FM bandwidth was acquired to improve the quality and coverage of our  TMC service. 

Actions have already been taken in the last two months to reduce the cost base of the Group to appropriate levels to service the current market, the benefits of which will have an effect in the second half of this financial year.  We continue to monitor our costs and review them in relation to sales performance and we will take whatever further action is necessary to keep them aligned without compromising the quality of our service.  The Group's operational infrastructure is capable of supporting incremental business without increasing its costs.

The Group continued to invest in its research and development centre in Israel during the period, spending £0.76m (2007: £0.55m).  This investment in the Group's technology both in Israel and the UK has led to a very exciting breakthrough in our traffic data collection technologies, which we believe when implemented over the next six months will enable us to further improve our data quality and to reduce costs substantially.

As a result of delays with our contract in Missouri during the six months ended 30 September 2008, the directors have reassessed their estimate of the recoverability of revenues recognised in previous periods and have written off costs in relation to the same project (see note 1).  This has had the effect of reducing revenues in the period by £141k and is accounted for as an exceptional loss of £434k.

Loss before taxation on continuing operations was £0.43m (2007: profit of £2.18m), prior to the impact of exceptional items (see note 1) of £0.56m (2007: £nil). After exceptional items (see note 1) loss before taxation on continuing operations was £0.99m (2007: profit of £2.18m), of which £0.12m (2007: £nil) arises from Trafficlink.

Despite the challenging environment, the business remained cash generative on an operating basis during the period although cash balances fell £1.37m to £0.59m at 30 September 2008, due to the payment of a final dividend of £1.42m.  The dividend of 1.5p per share for the year ended 31 March 2008 was paid on 29 September 2008, following its approval at the Company's AGM.  At 30 September 2008, the Group had available £8m (2007: £nil) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

Basic and diluted loss per share from continuing operations were 0.9p (2007: earnings per share 1.6p). 

UK BUSINESS

The UK market has historically provided ITIS with the majority of its revenue largely because we are the leading provider of traffic information to the automotive and personal navigation device (PND) and OEM markets. The business model benefits from a high degree of operational leverage and whilst in the past ITIS' earnings growth has been driven largely by new contracts with car manufacturers and strong new car sales, the business has suffered since May 2008 when new car sales began to fall rapidly.  Our customers still demand high quality traffic information in their vehicles and on their own devices as we do not see any change to this basic requirement.

We also earn significant revenue from our Interactive Voice Response (IVR) service where drivers are able to access real time traffic information from short dial numbers across all mobile networks. This service is sensitive to congestion levels and the dramatic increase in fuel prices which affected motoring costs in the first quarter of this financial year led to significantly reduced congestion on the roads and fewer accidents. This in turn reduced disruption on the road network.  IVR call volumes reduced significantly as a result and the associated fall in revenues impacted directly on our profitability.  With fuel prices returning to more normal levels and the onset of winter we are seeing our IVR revenues return to traditional levels although we note that in this more challenging economic climate there is likely to be some negative impact on this source of sales.  

Despite these more challenging conditions, ITIS retains a position of clear market leadership in supplying RDS-TMC services to the automotive and PND sector and has successfully renewed all contracts that ended in the period.  Additionally we have recently won new business from the PND markets and continue to consolidate our leading position. Our customers include BMW, Ford, Jaguar, Land Rover, Lexus, MINI, Mercedes-Benz, Mitsubishi, Nissan, Porsche, Renault, Rolls Royce, Toyota and Volvo. Aftermarket and PND customers include Active Pilot, Clarion, Co Pilot, Harman Becker, Mio, Navman, Nokia, Pioneer, Road Angel, Route 66, Snooper, Sony Europe, Telmap, Teleatlas, Telenav, TomTom and Webraska.  The strength and depth of these contractual relationships will enable ITIS to benefit from an increase in revenues and profits when market conditions do become more favourable and market penetration of our services to car navigation devices and PNDs increase. 

We continue to invest in our UK service through greater volumes of Floating Vehicle Data (FVD) probes in order to further enhance our highly valuable traffic database and to maintain our unique national coverage to ensure all customers benefit from the best possible service.

Since April this year we have been transmitting the first component of our Transport Protocol Export Group (TPEG) service called Traffic Event Compact (TEC).  This provides incident data, similar in content to our well known TMC service, but since it is delivered through Digital Audio Broadcasting (DAB), it is transferred much faster with more messages and shorter update times, thus providing a more responsive service.

TPEG is the protocol to be used to transfer the next generation traffic and travel information ('TTI') services to drivers and other travellers.  It provides a flexible mechanism to deliver a whole new range of applications enabling new possibilities for broadcast travel information.  The greater bandwidth provided by DAB and the relatively mature infrastructure in the UK gives ITIS a great opportunity to launch enhanced traffic data to our customers.  Several different applications can be delivered through the same channel as part of a single service, or multiple services can be provided specific to individual customers.

The next component application of the test service is TFP (TrafficFlow and Prediction).  This provides full network flow speeds for the full TMC network, and will enable Navigation systems to make better routing decisions and give accurate route times.  This application will be launched on air in December to accompany TEC on our test multiplex in the London area.

We are pleased to have secured national bandwidth on the DAB multiplex operated by DigitalOne, and plan to enter a live testing environment next month.

ITIS is recognised as the clear leader in both the development and deployment of this technology and is committed to developing TPEG into a class leading service.

TRAFFICLINK

In December 2007 ITIS acquired Trafficlink.  Trafficlink is the 'voice of traffic' in the UK and is the leading distributor of traffic incident and travel information to broadcasters and the media. Key customers include the BBC, Global Traffic Network (for whom we work with to deliver the Highways Agency's 'Traffic Radio' service) and through an exclusive agreement with UBC Media, 230 commercial radio stations.

In October 2008 Trafficlink signed an agreement with Global Radio and UBC Media plc, under which,  stations forming the Hit Music Network including Capital Radio in London, the Galaxy and Heart networks, Gold, and Xfm will receive information, bulletins and scripts directly from Trafficlink's seven regional offices. Classic FM and LBC will also receive voiced bulletins and live information.  The new service will include a feed of up to the minute traffic and travel information to each of Global Radio's different station websites, giving users 24/7 access to local travel news. It also opens up further potential opportunities for Global Radio and its listeners to take advantage of other traffic related products and services developed in association with ITIS.

The new two year deal underlines our position as the UK's leading supplier of traffic and travel information, as we now provide information to 90% of the UK's Independent Local Radio market as well as the BBC, ITV and Sky.  Our contract with the BBC was renewed for a further three years in December 2007 and we provide broadcasts and data to all BBC local radio stations in England as well as the national networks, Radio 2 and Five Live, together with BBC online and Ceefax.  Trafficlink information reaches over 40 million people in the UK each week and is compiled from over 4,000 CCTV images, traffic sensors, contacts with the Police, HA and other local sources and ITIS' leading Floating Vehicle Data network.

Trafficlink has now been fully integrated into ITIS' operations and the synergies achieved along with the operational efficiencies of combining the operations, will lead to substantially reduced running costs in the second half of this year.  Customer feedback on the acquisition has been encouraging and the studio environment in which Trafficlink operates has given many customers an insight into our business which they can relate to day to day through their own experience of the radio.

INTERNATIONAL

Our international business continues to enjoy strong growth despite global economic conditions.  Some countries have been more affected than others and we are prioritising our resources with those partners who can finance a national roll out and where there is a continued requirement from both Government and industry for this information.  Since we first started deploying our Cellular Floating Vehicle Data (CFVD®) platform awareness of this technology has become more widespread leading to greater recognition of it by mobile operators and in turn, more willingness from them to work with ITIS. 

In Israel, our technology centre is responsible for the development and installation of CFVD®.  Since acquiring this technology in 2003 we have continued to invest in the team there and believe that access to highly skilled people in the areas of Geographical Information Systems, wireless networks and GPS enables us to produce global market leading technology.  The strength of the NIS, the local currency, against the pound has contributed to the majority of the rise in Israeli costs during the period.

ITIS' reputation, expertise and leadership position in the commercialisation of traffic information means that the Company is frequently targeted as the partner of choice.  We currently have ten live projects across the world including two in Australia, and others in Belgium, China, Germany, Ireland, Israel, the State of Missouri, Singapore and South Africa all of which are progressing well.  Despite the delays with the Missouri Department for Transport, we continue to work closely with our customer to satisfy their requirements.  Other new contracts awarded to ITIS will be announced once the customers themselves go public with them.  In addition we have ongoing enquiries and work in progress with more than twenty others and remain confident that our strategy on focussing resources on stable economies will enable us to roll out new countries at a cost effective and efficient rate whilst satisfying our desire to become a world leader in real time traffic data.  However in these challenging times the company will make suitable investments in new countries only where an acceptable return within a defined timescale can be guaranteed. We will manage the related overhead on that basis and expect to deliver greater profitability as we go into the new financial year.  

We have acquired digital bandwidth from Bayern Digital Radio and will be using this to test our next generation traffic services in Germany.  Despite the challenging economic environment we continue to invest in delivering the most advanced services for all our customers and in particular the premium segment.   

CURRENT TRADING AND PROSPECTS

The Board remain confident of the Company's ability to maintain market leadership in the UK and establish ITIS as the leading global provider of traffic information services whilst maintaining rigorous cost control and where necessary, cost reduction.  Whilst the first half results were disappointing, the Board believes that the fundamental drivers of our business remain unchanged and we are in a very good position to capitalise on any improvement in trading conditions around the world.

Consolidated income statement

	Note	Six months to	Six months to	Year ended
		30 September	30 September	31 March
		2008	2007	2008
		Unaudited	Unaudited	Unaudited
		£	£	£
Revenue	5	8,326,505	8,086,716	18,322,831
Cost of sales		(3,956,623)	(2,832,824)	(6,342,440)
		__________	__________	__________
Gross profit		4,369,882	5,253,892	11,980,391
Operating costs before exceptional items		(4,968,520)	(3,413,997)	(7,591,028)
Amortisation of acquired intangible assets	6	(121,969)	-	(81,314)
Non-recurring contract costs	5	(293,334)	-	-
Total operating costs		(5,383,823)	(3,413,997)	(7,672,342)
Operating (loss) profit before exceptional items		(457,715)	1,839,895	4,389,363
Amortisation of acquired intangible assets	6	(121,969)	-	(81,314)
Non-recurring contract loss	5	(434,257)	-	-
Operating (loss) profit		(1,013,941)	1,839,895	4,308,049
Interest receivable and similar income		25,903	336,060	493,620
Group interest payable and similar charges		-	-	(8,986)
		__________	__________	__________
(Loss) profit before tax		(988,038)	2,175,955	4,792,683
Current tax on ordinary activities		-	(609,267)	(106,680)
Deferred tax credit (charge)		51,634	-	(1,486,544)
		__________	__________	__________
Tax on (loss) profit on ordinary activities		51,634	(609,267)	(1,593,224)
		__________	__________	__________
(Loss) profit for the period	5	(936,404)	1,566,688	3,199,459
		__________	__________	__________
		__________	__________	__________

		Six months to	Six months to	Year ended
		30 September	30 September	31 March
		2008	2007	2008
		Unaudited	Unaudited	Unaudited
Earnings per share
Basic and diluted (loss) earnings per ordinary share (pence)	2	(0.9)	1.6	3.2
		__________	__________	__________

All activity arose from continuing operations

Consolidated statement of recognised income and expense

		Six months to	Six months to	Year ended
		30 September	30 September	31 March
		2008	2007	2008
		Unaudited	Unaudited	Unaudited
		£	£	£
(Loss) profit for the financial period		(936,404)	1,566,688	3,199,459
Currency translation difference		-	-	527
		__________	__________	__________
Total recognised income and expense for the period		(936,404)	1,566,688	3,199,986
		__________	__________	__________
Attributable to:
Equity holders of the parent		(936,404)	1,566,688	3,199,986
		__________	__________	__________

Consolidated balance sheet

Note			30 September	30 September	31 March
			2008	2007	2008
			Unaudited	Unaudited	Unaudited
			£	£	£
Non-current assets
Goodwill			9,315,548	-	9,315,548
Other intangible assets			2,013,931	541,541	2,288,700
Property, plant and equipment			2,006,542	1,226,323	1,885,005
Deferred tax asset			-	882,563	5,286
Other receivables			421,668	-	552,854
			__________	__________	__________
			13,757,689	2,650,427	14,047,393
			__________	__________	__________
Current assets
Trade and other receivables			5,924,584	6,450,163	6,322,318
Cash and cash equivalents			591,621	12,962,933	1,964,522
			__________	__________	__________
			6,516,205	19,413,096	8,286,840
			__________	__________	__________
Total assets			20,273,894	22,063,523	22,334,233
			__________	__________	__________
Current liabilities
Trade and other payables			(4,430,071)	(4,267,139)	(4,193,130)
			__________	__________	__________
Net current assets			2,086,134	15,145,957	4,093,710
			__________	__________	__________
Non-current liabilities
Other payables			(30,888)	(37,083)	(69,039)
			__________	__________	__________
Total liabilities			(4,460,959)	(4,304,222)	(4,262,169)
			__________	__________	__________
Net assets			15,812,935	17,759,301	18,072,064
			__________	__________	__________
Capital and reserves
Called-up share capital			5,230,270	5,230,270	5,230,270
Share premium account			-	38,070,740	-
Retained earnings			10,058,236	(25,873,499)	12,413,527
Other reserve			524,429	331,790	428,267
			__________	__________	__________
Equity attributable to equity holders of the parent		4	15,812,935	17,759,301	18,072,064
			__________	__________	__________
Total equity			15,812,935	17,759,301	18,072,064
			__________	__________	__________

Consolidated cash flow statement

Note		Six months to	Six months to	Year ended
		30 September	30 September	31 March
		2008	2007	2008
		Unaudited	Unaudited	Unaudited
		£	£	£
Net cash from operating activities	3	540,079	1,565,408	3,874,611
		__________	__________	__________
Investing activities
Interest received		25,903	336,060	493,620
Proceeds on disposal of property, plant and equipment		-	-	136,627
Purchases of property, plant and equipment		(519,996)	(509,637)	(1,347,812)
Purchases of intangible assets		-	-	(16,795)
Acquisition of subsidiary		-	-	(3,010,346)
		__________	__________	__________
Net cash used in investing activities		(494,093)	(173,577)	(3,744,706)
		__________	__________	__________
Financing activities
Dividends paid		(1,418,887)	-	(1,417,012)
Repayment of borrowings		-	-	(8,320,000)
		__________	__________	__________
Net cash used in financing activities		(1,418,887)	-	(9,737,012)
		__________	__________	__________
Net (decrease) increase in cash and cash equivalents		(1,372,901)	1,391,831	(9,607,107)
Cash and cash equivalents at the beginning of the period		1,964,522	11,571,102	11,571,102
Effect of foreign exchange rate changes		-	-	527
		__________	__________	__________
Cash and cash equivalents at the end of the period		591,621	12,962,933	1,964,522
		__________	__________	__________

Notes to the interim financial information (unaudited) 

1.

Preparation of the interim financial information

The interim financial report has been prepared using accounting policies consistent with International Financial Reporting standards (IFRS) and in accordance with those disclosed in the annual report for the year ended 31 March 2008, with the exception of the presentation of exceptional items, which is set out further below. The requirements of IAS 34 'Interim Financial Reporting' do not apply to this interim financial report. Exceptional items Exceptional items are those items that are unusual because of their size, nature or incidence or that the directors consider should be disclosed separately to enable a full understanding of the group's results. This includes the amortisation of intangible assets acquired in business combinations (note 6) and non-recurring contract costs (note 5). Exceptional items have been presented separately on the face of the income statement and accordingly the comparative amounts for the year ended 31 March 2008 have been restated. The directors consider that this change in presentation gives a fairer presentation of the results of the group. The summarised results for the six months to 30 September 2008 and the comparative results for the six months to 30 September 2007 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 2008 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 IT IS Holdings plc within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 March 2008 have been delivered to the Registrar of Companies. The report of the auditors was not qualified and did not contain a statement under Section 237 (2) and (3) of the Companies Act 1985.

2.	Basic and diluted earnings per ordinary share

		Six months to		Six months to		Year ended
		30 September		30 September		31 March
		2008		2007		2008
		Unaudited		Unaudited		Unaudited
		£		£		£
(Loss) profit for the financial period		(936,404)		1,566,688		3,199,459
		__________		__________		__________
Weighted average number of ordinary shares for the purposes of basic (loss) earnings per share		98,442,884		98,442,884		98,442,884
Effect of dilutive potential ordinary shares - Share options*		1,672,916				1,672,916
			__________	__________		_________
		100,115,800		98,442,884		100,115,800
		__________		__________		__________
		__________		__________		__________
Basic and diluted (loss) earnings per share (p)		(0.9)		1.6		3.2
		__________		__________		__________

• The number of share options used is the excess of options in issue at 31 March 2008 and 30 September 2008, over the number of shares held in the IT IS Holdings EBT.

Notes to the interim financial information (unaudited)

3.	Reconciliation of operating (loss) profit to net cash inflow from operating activities

		Six months to	Six months to	Year ended
		30 September	30 September	31 March
		2008	2007	2008
		Unaudited	Unaudited	Unaudited
		£	£	£
(Loss) profit for the period		(936,404)	1,566,688	3,199,459
Adjustments for:
Depreciation of property, plant and equipment		398,459	359,608	533,955
Amortisation of intangible assets		274,769	-	393,138
Interest income		(25,903)	(336,060)	(493,620)
Share-based payment expense		96,162	-	171,860
Finance costs		-	-	8,986
Income tax expense		-	609,267	106,680
Deferred tax (credit) charge		(51,634)	-	1,486,544
Gain on disposal of property, plant and equipment		-	-	(22,370)
		__________	__________	__________
Operating cash flows before movements in working capital		(244,551)	2,199,503	5,384,632
Decrease (increase) in receivables		528,920	(1,661,021)	(833,643)
Increase (decrease) in payables		255,710	1,026,926	(672,267)
		__________	__________	__________
Cash generated by operations		540,079	1,565,408	3,878,722
Interest paid		-	-	(8,986)
Research and development tax credit		-	-	4,875
		__________	__________	__________
Net cash from operating activities		540,079	1,565,408	3,874,611
		__________	__________	__________

4.	Statement of changes in equity

	Six months to	Six months to	Year ended
	30 September	30 September	31 March
	2008	2007	2008
	Unaudited	Unaudited	Unaudited
	£	£	£
(Loss) profit for the financial period	(936,404)	1,566,688	3,199,459
Other recognised gains and losses relating to the period	-	-	527
IFRS 2 share option charge	96,162	75,383	171,860
Dividends paid	(1,418,887)	-	(1,417,012)
	__________	__________	__________
Net (reduction in) addition to Group shareholders' funds	(2,259,129)	1,642,071	1,954,834
Opening Group shareholders' funds	18,072,064	16,117,230	16,117,230
	__________	__________	__________
Closing Group shareholders' funds	15,812,935	17,759,301	18,072,064
	__________	__________	__________

Notes to the interim financial information (unaudited)

5.	Segmental analysis The directors are of the opinion that the Group operates in a single segment, that of the provision of road traffic and data services. Hence all revenue and results relate to this class of business. The geographical analysis of revenue and result is set out below:

	Revenue
	Six months to	Six months to	Year ended
	30 September	30 September	31 March
	2008	2007	2008
	Unaudited	Unaudited	Unaudited
	£	£	£
United Kingdom	8,002,677	7,676,345	17,254,785
Mainland Europe	227,002	322,490	817,199
U.S.A.	(140,923)	-	140,923
Israel	31,004	47,879	81,221
Rest of World	206,745	40,002	28,703
Intersegmental sales	1,091,781	971,000	2,529,873
Eliminations	(1,091,781)	(971,000)	(2,529,873)
	_________	_________	_________
Consolidated	8,326,505	8,086,716	18,322,831
	_________	_________	_________

	Result
	Six months to	Six months to	Year ended
	30 September	30 September	31 March
	2008	2007	2008
	Unaudited	Unaudited	Unaudited
	£	£	£
United Kingdom	(211,190)	2,387,815	5,362,641
Mainland Europe	233,377	85,283	463,592
U.S.A.	(434,257)	(91,184)	(13,752)
Israel	(757,094)	(546,000)	(1,510,694)
Rest of World	155,223	3,981	6,262
	_________	_________	_________
Operating profit	(1,013,941)	1,839,895	4,308,049
	_________	_________	_________
Other gains and losses
Interest received	25,903	336,060	493,620
Finance costs	-	-	(8,986)
	_________	_________	_________
Profit before tax	(988,038)	2,175,955	4,792,683
	_________	_________	_________
Tax	51,634	(609,267)	(1,593,224)
	_________	_________	_________
Consolidated	(936,404)	1,566,688	3,199,459
	_________	_________	_________

During the six months ended 30 September 2008, as a result of ongoing delays with the State of Missouri Department for Transport, the directors have reassessed their estimate of the recoverability of revenues recognised in previous periods. Revenues in the period have therefore been reduced by £140,923, being the amount previously recognised in the year ended 31 March 2008. In addition, costs of £293,334 incurred in relation to the same project have been written off to the income statement, creating a one-off loss for the period of £434,257 in the USA segment.

Notes to the interim financial information (unaudited)

6.	Amortisation of acquired intangible assets On 6 December 2007 the group acquired 100% of the issued share capital of Trafficlink Limited. Intangible assets of £1,969,510 were recognised in the group balance sheet following the acquisition.

7.

Contingent liability As disclosed in the annual report for the year ended 31 March 2008 a claim was filed in the Tel Aviv District Court against IT IS Traffic Service Ltd. ('ITSL'), a wholly owned subsidiary of the Group. Based on advice from legal counsel, the Directors believe ITSL has strong defences to the claims and thus it is unlikely that a liability will arise from this litigation. As a result no contingency in respect of the claim has been provided for in the company accounts. During the six months ended 30 September 2008, the group spent £95,211 (2007: £148,643) defending the claim.

8.	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.

 

END

 

 

IR FKPKNFBDDDDB