RNS Number : 8596W
ITIS Holdings PLC
17 June 2008
HIGHLIGHTS
ITIS Holdings plc a leading road traffic and information data specialist is pleased to announce its preliminary results for the year
ended 31 March 2008.
Highlights
� Revenue from continuing operations up 29.3% to �18.32m (2007: �14.17m), of which �1.43m
is from Trafficlink
� Profit before taxation on continuing operations up 30.5% to �4.79m (2007: profit of �3.67m), of which �0.19m is from Trafficlink
� Basic and diluted earnings per share from continuing operations were 3.2p (2007: 5.2p). Continuing basic and diluted earnings per
share before the effects of tax increased 29.7% to 4.8p (2007: 3.7p)
� Final dividend proposed of 1.5p
� The nationwide CFVD� system with Be-mobile in Belgium is now fully operational and profitable
� Significant growth from international business with projects including China, South Africa and Russia
� Acquisition of Trafficlink in December 2007, the UK*s leading distributor of traffic incident and travel information to broadcasters,
business and Government in December 2007
� Renewal of TMC traffic contracts with Jaguar, Land Rover, Renault and Nissan and new contract with Garmin
� New contract to supply traffic information on Nokia mobile devices in the UK announced today
Stuart Marks, Chief Executive of ITIS commented: "This has been a record year for ITIS in terms of both revenues and profits from
continuing operations. We anticipate revenue from the international markets is set to grow strongly this year as we now convert prospects
into customers and as we continue to find new countries that are eager to deploy our technologies. Our acquisition of Trafficlink has
brought immediate benefits to the quality of our information in the UK and we are now implementing operational synergies between the
companies, which will enable us to grow both businesses. ITIS enjoys a reputation for market leading technology combined with unparalleled
commercial success and we are building on these strengths to expand our business around the world."
FINANCIAL OVERVIEW
For the year ended 31st March 2008, revenue from continuing operations increased by 29.3% to �18.32m (2007: �14.17m). Following the sale
on 27 March 2007 of NavTrak Limited, the Group's stolen vehicle tracking subsidiary, to Cobra Automotive Technologies spa, �4.62m of revenue
for the year ended 31 March 2007 has been presented as discontinued. Revenue for the year ended 31st March 2008, also included a revenue
contribution of �1.43m from Trafficlink Limited ("Trafficlink") post its acquisition on 7 December 2007. 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 as well as from customers using the Group's various mobile telephone information services.
Whilst the majority of the UK's traffic business costs are fixed, there has been a step change of just under �0.5m in those fixed costs
during the year, mainly as a consequence of establishing a data centre. This necessitates 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. Additional
FM bandwidth has been acquired to improve the quality and coverage of the businesses' TMC service. Trafficlink, the nature of its cost base
being primarily fixed, also increased the fixed cost base of the Group.
On a Group basis, continuing profit before taxation was �4.79m (2007: �3.67m). Trafficlink contributed �0.19m profit before taxation
post its acquisition. During the year a deferred tax asset of �1.49m was released, which created a taxation debit of �1.49m (2007: credit of
�1.49m) in the profit and loss account.
Basic and diluted earnings per share from continuing operations were 3.2p (2007: 5.2p). Continuing basic and diluted earnings per share
were up 29.7% to 4.8p (2007: 3.7p), before the effects of tax.
On 7 December 2007, ITIS purchased Trafficlink Limited for �2.18m and repaid certain loans within Trafficlink of �8.32m. Purchased with
Trafficlink were approximately �10m tax losses which are available for Trafficlink to use against its future trading profits. This cash
outflow on Trafficlink, the purchase and fit out of the data centre and the payment of a maiden dividend of �1.42m in February 2008 all
contributed to reducing the year end cash balance to �1.96m (2007: �11.57m).
Following the High Court approval given on 23 January 2008 of the resolution passed at the Company's extraordinary general meeting on 22
November 2007 for the elimination of an accumulated deficit on its profit and loss account of �33,520,972 by the cancellation of the whole
of the amount standing to the credit of its share premium account, a dividend of 1.5p per share was paid on 29 February 2008 in respect of
the 2006/7 year.
The Board of ITIS will declare a final dividend each year. The Board will recommend to shareholders at the Company's forthcoming AGM
that a final dividend for the year ended 31 March 2008 of 1.5p per will be paid on 29 September 2008 to the members on the register at the
close of business on 5 September 2008.
The Board would like to thank all of the management and staff for their huge contribution to this year's results and for their hard
work, especially the extensive travelling undertaken by the international development team. We would like to welcome too, the staff of
Trafficlink and we are confident that together both businesses will be able to offer exciting new services to our customers.
UK BUSINESS
For the year in review, the UK market generated the majority of our revenues and profits, which grew substantially by �3.72m (of which
Trafficlink contributed �1.43m) and �0.68m (of which Trafficlink contributed �0.19m) respectively. We continue to work closely with our
customers in the UK and are finding ways to introduce new products and applications using both our real time and historic data. In the last
few months we have renewed important RDS-TMC contracts with Jaguar, Land Rover, Renault and Nissan.
Contracts with General Motors and the DfT were not renewed. Whilst progress has been made in replacing the revenue and profit from these
lost contracts and we do expect growth from existing customers, these contract losses will impact on the performance in the UK in this
current financial year.
It is too early in the year to comment on whether the crisis in the credit market will affect our revenues from new car sales and the
personal navigation device (PND) market, though penetration of navigation systems in the car, which is still our largest market, is less
than 10% of all new vehicles sold. We are seeing evidence of our traffic service becoming bundled as standard on more PND devices, and we
continue to win new customers, notably Garmin and Nokia. ITIS has been selected as the UK data provider for Nokia's delivery of real time
traffic reports to their mobile handsets with built in GPS. This contract is part of a European wide solution via Arc Transistance. ARC
Transistance was founded in 1991 by the 8 major automobile clubs in Europe, including the UK.
Revenues from our IVR (Interactive Voice Response) business were flat this year which we believe to be partly attributable to lack of
significant promotion from the mobile networks and the dramatic increase in navigation systems equipped with RDS-TMC which provide high
quality information to the driver. However we are working on introducing some new services and content to users which takes advantage of the
Trafficlink data and broadcast facility. We expect the first of these to be available next month.
ITIS is extending its association with Mobile Commerce, a leading mobile content aggregator and distributor, enabling companies to
deliver content to mobile users via Mobile Commerce's best of breed mobile content delivery platform. The latest development will bring
ITIS's content to AA mobile users. In addition, ITIS has recently developed bespoke IVR telephone services delivering real time traffic
content, enhanced by live studio additional broadcast bulletins, for both Mobile Commerce and BSKYB. This follows on previous and ongoing
IVR associations with both ClearChannel (The Hound brand) and the RBS Group (Tracker brand).
ITIS continues to provide several UK Local Government authorities with both live and historic traffic speed and journey time information
to be used as part of their local transport planning. Our data set has now been enhanced by incident data from Trafficlink and this will
help in providing higher quality predictive journey time information. Additionally, various expert traffic consultants including
JourneyDynamics, Kingswood MapMechanics and Faber Maunsell have been provided with ITIS's floating vehicle data (FVD�) for use in traffic
planning, logistic and traffic congestion monitoring applications. The public sector is under considerable cost pressure and we therefore
expect that sales made to local Government will generate only modest revenues.
Working with Global Traffic Network's new European subsidiary, ITIS and Trafficlink will be delivering content to the Highways Agency
radio station. Global Traffic Network are the leading provider of custom traffic and news reports to radio and television stations in Canada
and Australia.
ITIS continues to develop products for Government and industry using the historic dataset now including information from Trafficlink.
This combined database is unique and we are having considerable success in selling information to those who wish to provide better
predictions on journey times and to create their own products where the combination of historic and real time information provides a
superior experience for the customer.
We continue to attract new visitors and members to our own traffic website, www.keepmoving.co.uk. One particularly successful new
service has been the availability of live cameras on the site so that users can look at both speed and flow data and live pictures side by
side.
TRAFFICLINK
ITIS acquired Trafficlink on 6th December 2007. Trafficlink is the UK's leading distributor of traffic incident and travel information
to broadcasters, business and Government. Key customers include the BBC, the Highways Agency and through an exclusive agreement with UBC
Media, 185 commercial radio stations.
Trafficlink gathers, edits and broadcasts traffic and travel information from a network of seven regional offices (London, Bristol,
Birmingham, Cardiff, Manchester, Middlesbrough, Edinburgh) that operate 24 hours per day, 7 days a week. REGIS, Trafficlink's data
aggregation tool, covers the entire UK road network as well as all forms of public transport and aggregates real-time traffic and travel
information from over 5,000 CCTV cameras, police forces, government agencies, local councils and other sources.
The acquisition enables ITIS to expand its strong presence within the UK market, adding value to existing services and enriching both
companies' content offerings to customers. Whilst the previous arrangements between ITIS and Trafficlink have been commercially successful
for both parties, ITIS believes that the pace of development and increasingly competitive environment made it the right time to control end
to end data quality and extend its business model.
Shortly prior to the acquisition, Trafficlink's contract with the BBC was renewed for three years to provide traffic and travel
information to all local and national BBC stations. Trafficlink is the contracted supplier of Traffic and Travel news to the BBC. The
service includes streaming of live data to BBCi and Ceefax. Information and editorial support to BBC TV, BBC Radios 2 and Five Live and BBC
Local Radio. Live bulletins to BBC Local Radio and BBC Wales and recorded audio for BBCi. Trafficlink also works with the BBC on new and
innovative ways to bring up to the minute travel news to the BBC audience across a variety of platforms. Trafficlink has been a supplier of
Traffic news to the BBC since November 1998, and the current contract runs until 2011.
A further major contract for which the company was bidding did not materialise and therefore it is now unlikely that there will be any
payment of deferred consideration.
Our customers have reacted well to our acquisition of Trafficlink and we are working actively with a number of them to find ways of
using the unique combination of high quality incident data with speed and flow information to add value to what is provided already. In
particular with the increased focus on green motoring and multi-modal travel, Trafficlink is in a very strong position to fuse road traffic
and public transport information to create a complete journey management dataset.
INTERNATIONAL
We are extremely pleased with the momentum we are now achieving with our international business and we have partnerships developing
throughout the world which leads us to believe that revenues will grow significantly year on year. Since we first started deploying our
Cellular Floating Vehicle Data (CFVD�) platform awareness of this technology has become more widespread leading to greater knowledge from
the mobile operators and in turn more willingness from them to work with companies like ITIS.
Our business model is to find licencees or develop joint ventures in order to minimise risk and have strong local representation. We
also need to work closely with mobile operators in each country and consequently the Company has to make certain investments in order to
bring the technology to market and generate revenues within an acceptable timescale. The upside of this is that once the system becomes
fully operational, the model becomes profitable.
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 has enabled us uniquely to roll out nationwide systems quickly and reliably.
In July last year Dr Gary Gates was promoted to the board as International Development Director and Gary has successfully built a strong
team around him with responsibility for business development and partner support.
Europe, Middle East and Africa (EMEA)
Our business model in this region has produced a profit for the first time mainly from the Belgian market and the pilot in Spain. Our
second nationwide CFVD� system (the first being in Israel) is now fully operational in Belgium and Be-mobile, our licensee, is generating
on-going revenues through a wide range of contracts with the media, mobile operators and navigation system vendors. A major share holder in
Be-mobile is Touring (Belgium's largest motoring club) whilst cellular data is provided through an exclusive 5 year deal with Proximus, the
largest mobile operator in Belgium.
In Spain we successfully completed a pilot project using data from the Telefonica mobile network which was showcased at 3GSM, the
largest mobile event in the world and we are exploring this market further with potential local partners. In the Republic of Ireland our
licensee, iTraffic, is working with O2 Telefonica Ireland and will be launching a fully commercial service early next year. In Israel our
business continues to develop strongly and we are supplying traffic information on IVR to the two largest mobile operators, Orange IL and
Cellcom, and to Telmap, a leading provider of navigation solutions. In the Czech Republic we have successfully completed a pilot with our
local partner CEDA using network data from T-mobile and commercial discussions are underway for the next phase of this project.
In Russia we have appointed a licensee and have already started to identify suitable customers and a mobile operator. Moscow suffers
from very bad traffic congestion and this coupled with the recent boom in navigation systems there gives us confidence that this will be an
important market for our technology.
In South Africa we have formed a joint venture with Altech Netstar, the leading stolen vehicle tracking and fleet management company in
Africa. We are currently rolling out our technologies and a range of services which will closely replicate our UK services.
Americas
As previously announced, a new contract with revised milestones has now been signed between Delcan, our partner in America, and Missouri
Department of Transportation (MoDOT) to enable ITIS to supply Statewide real time traffic information. We expect the financial contribution
to be modest and there is no guarantee that MoDOT will commit to the full extent of the contract.
Whilst the roll-out of technology in the US has been slower then we have hoped we have identified several projects in Canada and South
America and we are currently in the process of working with mobile operators and potential licensees to work out the business case and
timescales for deployment in these countries.
Asia Pacific
We are particularly excited by the business we are generating in Asia Pacific region. In Australia our licensee Traffic Intelligence, in
conjunction with major partners, has commenced the design stage of a national traffic service which will be launched in the second quarter
of the financial year ending 31 March 2009 and will cover approximately 70,000km of roadway. The service will use a combination of data
sources including the ITIS CFVD� technology. Intelematics, our RDS-TMC licensee in Australia, successfully launched a commercial RDS-TMC
service this year. In Singapore, we are pleased to collaborate with SingTel on their latest Live Traffic Services, which enables customers
to view real-time traffic information. The service also provides estimated travelling time and costs for customers' easy reference. The
services will be demonstrated at CommunicAsia2008. SingTel is Asia's leading communications group providing a portfolio of services
including voice and data services over fixed, wireless and Internet platforms. It has a network of 37 offices in 19 countries and territories throughout Asia Pacific, Europe and the United States.
Together with its regional partners, SingTel is Asia's largest multi-market mobile operator, serving more than 185 million mobile customers
in eight markets.
Our partnership with ITOCHU is progressing well and we are working closely with them throughout the Asia Pacific region. We have identified
opportunities in most countries but in particular Malaysia, Thailand, Taiwan and China. In China we are demonstrating our technology in four
regions as part of an initiative with a mobile operator to use CFVD� to provide high quality traffic data throughout China. If successful
this has the potential to be a large part of our business in Asia we do not expect major revenues in the near future as the Olympic games
will prevent any technical work occurring on the mobile network during this period.
CURRENT TRADING AND PROSPECTS
We are encouraged by the rate of growth of our International business and ITIS's position as a world leader in the traffic information
market. The Board views with great confidence the profitable expansion of ITIS into new markets.
ITIS Holdings plc
Preliminary announcement of results for the year ended 31 March 2008
Consolidated income statement
2008 2007
� �
Continuing operations
Revenue 18,322,831 14,171,896
Cost of sales (6,342,440) (4,910,605)
__________ __________
Gross profit 11,980,391 9,261,291
Operating costs (7,672,342) (5,902,548)
__________ __________
Operating profit 4,308,049 3,358,743
Interest receivable and similar 493,620 312,127
income
Interest payable and similar (8,986) (707)
charges
__________ __________
Profit before tax 4,792,683 3,670,163
Current tax on ordinary activities (106,680) (5,737)
Deferred tax (charge) credit (1,486,544) 1,491,830
__________ __________
Total tax on profit on ordinary (1,593,224) 1,486,093
activities
__________ __________
Profit for the financial year from 3,199,459 5,156,256
continuing operations
Discontinued operations
Profit for the financial year from - 4,289,589
discontinued operations
__________ __________
Profit for the financial year 3,199,459 9,445,845
__________ __________
Basic and diluted earnings per 3.2 5.2
share from continuing operations
(pence)
Basic and diluted earnings per 3.2 9.6
share from continuing and
discontinued operations (pence)
__________ __________
Consolidated statement of recognised income and
expense
2008 2007
� �
Profit for the financial year 3,199,459 9,445,845
Currency translation difference 527 (1,649)
__________ __________
Total recognised income and expense for the financial 3,199,986 9,444,196
year
__________ __________
Attributable to:
Equity holders of the parent 3,199,986 9,444,196
__________ __________
Consolidated balance sheet at 31 March 2008
2008 2007
� �
Non-current assets
Goodwill 9,315,548 -
Other intangible assets 2,288,700 684,838
Property, plant and equipment 1,885,005 932,997
Deferred tax asset 5,286 1,491,830
Other receivables 552,854 98,337
__________ __________
14,047,393 3,208,002
__________ __________
Current assets
Trade and other receivables 6,322,318 4,690,805
Cash and cash equivalents 1,964,522 11,571,102
__________ __________
8,286,840 16,261,907
__________ __________
Total assets 22,334,233 19,469,909
__________ __________
Current liabilities
Trade and other payables (4,193,130) (3,291,283)
__________ __________
Net current assets 4,093,710 12,970,624
__________ __________
Non-current liabilities
Other payables (69,039) (61,396)
__________ __________
Total liabilities (4,262,169) (3,352,679)
__________ __________
Net assets 18,072,064 16,117,230
__________ __________
Equity
Called-up share capital 5,230,270 5,230,270
Share premium account - 38,070,740
Retained earnings 12,413,527 (27,440,187)
Other reserve 428,267 256,407
__________ __________
Equity attributable to equity holders of the 18,072,064 16,117,230
parent
__________ __________
Total equity 18,072,064 16,117,230
__________ __________
Consolidated cash flow statement for the year end 31 March 2008
2008 2007
Note � �
Net cash from operating activities 2 3,874,611 4,790,792
__________ __________
Investing activities
Interest received 493,620 312,127
Proceeds on sale of subsidiary - 3
Costs of disposal - (164,484)
Net cash balances disposed of with subsidiary - (4,153)
undertaking
Repayment of loans owed by subsidiary - 2,199,997
Proceeds on disposal of property plant and 136,627 17,749
equipment
Purchases of property plant and equipment (1,347,812) (894,958)
Purchase of intangible assets (16,795) (381,820)
Acquisition of subsidiary (3,010,346) -
__________ __________
Net cash (used in) from investing activities (3,744,706) 1,084,461
__________ __________
Financing activities
Dividends paid (1,417,012) -
Repayment of borrowings (8,320,000) -
__________ __________
Net cash used in financing activities (9,737,012) -
__________ __________
Net (decrease) increase in cash and cash (9,607,107) 5,875,253
equivalents
Cash and cash equivalents at beginning of year 11,571,102 5,697,498
Effect of foreign exchange rate changes 527 (1,649)
__________ __________
Cash and cash equivalents at end of year 1,964,522 11,571,102
__________ __________
Statement of changes in equity for the year ended 31
March 2008
2008 2007
� �
Profit for the financial year 3,199,459 9,445,845
Other recognised gains and losses relating to the 527 (1,649)
year
IFRS2 share option charge 171,860 82,815
Dividends paid (1,417,012) -
__________ _________
Net addition to Group shareholders* funds 1,954,834 9,527,011
Opening shareholders* funds 16,117,230 6,590,219
__________ _________
Closing shareholders* funds 18,072,064 16,117,230
__________ _________
Notes
1. Basis of preparation
The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the years
ended 31 March 2007 or 2008, but is derived from those accounts. Statutory accounts for the year ended 31 March 2007 have been delivered to
the Registrar of Companies.
The auditors have reported on the accounts for the years ended 31 March 2008 and 2007: their reports were unqualified and did not
contain a statement under section 273 (2) or (3) of the Companies Act 1985.
The Group adopted International Financial Reporting Standards in the current year as stated in its interim statement for the six months
ended 30 September 2007. This preliminary announcement has been prepared on the basis of accounting policies consistent with those set out
in the interim statement.
A copy of the annual report and accounts for the year ended 31 March 2008 will be circulated to all shareholders of the company shortly
and copies will also be available for members of the public upon application to the registered office at Fifth Floor, Station House,
Stamford New Road, Altrincham WA14 1EP and on the website www.itisholdings.com.
2. Reconciliation of operating profit to net cash inflow from operating activities
2008 2007
� �
Profit for the year 3,199,459 9,445,845
Adjustments for:
Depreciation of property, plant and equipment 533,955 534,428
Amortisation of intangible assets 393,138 305,595
Interest income (493,620) (312,127)
Share-based payment expense 171,860 82,815
Finance costs 8,986 707
Income tax expense 106,680 5,737
Deferred tax charge (credit) 1,486,544 (1,491,830)
Gain on disposal of discontinued operations - (4,056,923)
Gain on disposal of property, plant and equipment (22,370) (998)
Decrease in provisions - (54,459)
__________ __________
Operating cash flows before movements in working 5,384,632 4,458,790
capital
Decrease in inventories - 55,190
Increase in receivables (833,643) (1,228,628)
(Decrease)/increase in payables (672,267) 1,500,496
__________ __________
Cash generated by operations 3,878,722 4,785,848
__________ __________
Interest paid (8,986) (707)
Foreign tax paid - (18,205)
Research and development tax credit 4,875 23,856
__________ __________
Net cash from operating activities 3,874,611 4,790,792
__________ __________
This information is provided by RNS
The company news service from the London Stock Exchange
END
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