Final Results
ITIS Holdings PLC
22 June 2004
ITIS Holdings plc (the 'Company' or 'ITIS')
Preliminary results for the Year ended 31st March 2004
ITIS Holdings plc; a leading UK road traffic information and data specialist, is
pleased to announce its preliminary results for the year ended 31st March 2004.
Highlights
• £3.25m three year contract with the Department for Transport for the
supply of historic traffic data for England's Strategic Road Network;
• New contracts with Bentley, BMW, Ford Motor Company, Land Rover, Lexus,
Nissan, Saab and Subaru for RDS-TMC dynamic traffic service. Existing
contract with Toyota renewed;
• Estimotion acquisition completed in December 2003 has successfully led to
the first Government sponsored trials for traffic information using mobile
phone handover technology. The first trial is in Scotland through a new
partnership with O2 UK and the second trial is with a major network operator
in the Benelux region;
• Turnover up 85% to £7.06m (2003: £3.82m);
• Loss after taxation before exceptional costs reduced by 15% to £5.40m
(2003: £6.38m); Loss after taxation and exceptional costs of £0.75m (2003:
£1.05m) reduced by 17% to £6.14m (2003: £7.43m);
• Year end cash balance remains strong at £6.05m (£7.54m at 30th September
2003) with substantially reduced cash outflow forecast for this current
year.
Stuart Marks, Chief Executive ITIS Holdings plc commented:
'Since flotation nearly four years ago, ITIS has developed into a highly
respected traffic data specialist gaining contracts with significant
organisations in the automotive, telco and Government sectors. With the
recently acquired Estimotion technology we are now entering into an exciting and
high growth period, attracting new partners and customers in the UK and opening
international markets where this can be done without diverting resource from the
core business. We are particularly pleased with the large number of new
manufacturers who have awarded us contracts for our RDS-TMC service and we view
this as a significant endorsement of our traffic data quality. Cash outflow and
overheads are now firmly under control and, following a period of substantial
investment, the Directors remain confident that the company will reach
profitability within current cash reserves.'
Financial Overview
For the year ended 31st March 2004 turnover increased by 85% to £7.06m (2003:
£3.82m). As a result of the increase in revenues, the loss after taxation
before exceptional costs for the year was reduced to £5.40m (2003: £6.38m). The
exceptional costs of £0.75m relate to the impairment of a fixed asset no longer
used by the group and a provision for onerous leases (2003: exceptional costs of
£1.05m related to licence costs written off and costs associated with the
renegotiation of a commission agreement). The loss after taxation after
exceptional costs was reduced to £6.14m (2003: £7.43m).
Our Interim Results, announced on 17th November 2003, reported a cash balance of
£7.54m as at 30th September 2003 and promised a much reduced cash usage in the
second half of the year. We are pleased to report that this has been achieved
and, as at 31st March 2004 the cash balance remains strong at £6.05m. ITIS'
considerable investment in operational infrastructure means it is capable of
supporting incremental business without the need to increase its fixed cost
base. During the first two months of the new financial year our losses and cash
usage were down substantially when compared with the same period last year and
we expect our cost base to remain relatively static as the volume of business
and users increases.
The Directors are confident that ITIS has sufficient cash reserves to reach
profitability whilst developing the business in the UK and internationally.
Business Review
Our Market
With the exception of NavTrak, the Company's strategy has been to remain
hardware independent and to specialise in providing traffic data in a suitable,
industry standard format to those organisations that control the relationship
with the end user customer. This is why we have focussed our investments in
RDS-TMC and IVR telephone services and why we are working closely with
Government to establish how our data collection techniques can be developed to
suit its needs.
The automotive industry is committed to the development and standardisation of
its own hardware solutions. Although the take up of certain telematics devices
has been disappointing, this has largely been due to their irrelevance to the
end user customer, but also because of the increase in operating complexity and
associated costs. In our market, the industry has embraced traffic enabled
satellite navigation and we will continue to see system costs reduced or
standardised at lower end model ranges. An example of this is the recent launch
of the Ford Mondeo Zetec Nav which features satellite navigation as standard.
We expect other volume manufacturers to follow with similar models this year and
for ITIS to be the RDS-TMC service provider.
Because we are a service and information business, we do not sell our own
navigation system hardware either in the aftermarket or to vehicle
manufacturers. We believe that the market will be dominated by manufacturer
developed and installed technology at one end and hand held devices such as PDAs
at the other. As PDAs become more powerful and affordable, we have seen
navigation become a key application supported by a large number of software
providers. ITIS is successfully targeting both ends of the spectrum with its
low cost RDS-TMC service. We have already signed supplier deals with many of
the leading vehicle manufacturers and are in advanced negotiations to provide
traffic data across a wide range of other devices.
Our telephone traffic services, branded as AA Roadwatch, are available across
all mobile phone networks, whilst Vodafone and T-Mobile have their own unique
short dial numbers. We have recently enhanced the menu functionality and
quality of information given, and as a result have seen longer call durations
leading to revenue growth.
New Business
This past year has seen considerable new business activity. We have won a
significant contract from the Department for Transport for historic data and
also RDS-TMC contracts from six leading automotive manufacturers. Since the
start of the current financial year we have won further contracts from Land
Rover and Nissan, whilst Toyota have renewed their existing contract with us.
Both Land Rover and Nissan undertook rigorous evaluations of the RDS-TMC service
prior to awarding us with the business and we recognise this as a significant
endorsement of the quality of traffic data that we supply.
RDS-TMC
Three years ago ITIS developed and launched Europe's first commercial RDS-TMC
service in the UK. Since then the Company has single-handedly developed this
market and invested heavily alongside the vehicle manufacturers, mapping
companies and navigation hardware suppliers. We now have contracts with
Bentley, BMW, Ford Motor Company, Land Rover, Lexus, Nissan, Saab, Subaru,
Toyota and Volkswagen Group. We also supply TMC to all of the leading
manufacturers in the navigation aftermarket - Alpine, Clarion, Kenwood,
Panasonic, Pioneer and Siemens VDO. There are now over 40,000 cars equipped
with RDS-TMC in the UK and we expect this to grow substantially in the current
financial year and beyond. As TMC is standardised on the manufacturer's
navigation system, the service is offered at no cost to the driver and ITIS is
paid directly by the manufacturer.
RDS-TMC is a broadcast service and to date we have invested heavily in
infrastructure and in the quality of our traffic information and its delivery.
Whilst we will continue to enhance our service, our operational costs will
remain fixed ensuring that profitability grows as new customers share the
existing infrastructure.
RDS-TMC is not a new technology, the original concept created in 1984 with EC
funded trials between 1992 and 1995. The first service was launched in Germany
in 1997 and trials followed in the UK between 1997 and 2000. Our Technical
Director, Danny Woolard, has been involved with RDS-TMC for over ten years and
is Chairman of the industry body, The TMC Forum.
We deliver RDS-TMC nationally via the Classic FM radio network under an
exclusive licence issued to us by Ofcom which expires in 2012. This enables us
to send all the data to one source for onward distribution to 40 local
transmitters and is an extremely cost effective and reliable way of broadcasting
data across the entire UK.
During this current financial year we will maintain our dominant position by
launching new services to further enhance the driver experience. We believe
that these enhancements combined with our experience, technical knowledge and
overall customer satisfaction will maintain our leadership in this market.
Finally, because of our success in the UK, we have been approached both by
Government and the private sector in other countries to assist either in the
setting up or management of RDS-TMC services.
Floating Vehicle Data
ITIS operates the world's largest commercial Floating Vehicle Data system (FVD)
which is recognised by academics and commercial customers as providing high
quality coverage of the UK's Strategic Road Network and urban areas. Vehicles
equipped with devices to report back speed and location include HGVs, coaches,
LGVs, passenger cars and AA patrol vehicles. Whilst FVD provides real time
information to support our driver services, ITIS maintains a data warehouse of
all speed, location and time records for analysis of historic congestion and
journey times. The warehouse continues to grow by over 4 million observations
per day and houses some 2 billion records.
Public Sector Contracts
On the 9th February 2004 we announced a major three year contract with the
Department for Transport worth £3.25m to supply historic congestion monitoring
data following a rigorous external evaluation of our data. The public sector
has grown to become an important part of our business and our FVD is uniquely
positioned to offer the type of data which many organisations need when making
transport decisions. As part of the agreement, all local authorities will
receive certain levels of information from ITIS; however we are able to up-sell
further more detailed information as well as real time traffic information. To
this end, we have already reached agreement with a number of authorities and are
in negotiation with other organisations who have seen value in our information.
These include Gifford Consultants who will use ITIS data in order to generate
origin and destination information for a traffic model that is being produced in
connection with the New Mersey Crossing project. The Strategic Rail Authority
(SRA) has acquired ITIS data, collected from National Express Coaches, in order
to compare journey times with rail journeys along selected key corridors.
Midland Expressway Limited will be using ITIS data to compare journey times for
the new M6 toll road with nearby alternative routes.
NavTrak
Whilst NavTrak's compatibility with the Group remains under review, trading in
the last year has been strong and we have seen growing demand for the product
continue into this financial year. We now have over 9,000 customers largely as
a result of our manufacturer endorsements. NavTrak ADR is standard on all new
Ferrari and Maserati vehicles, is the only approved vehicle tracking system for
the Land Rover range whilst on the Bentley Continental GT NavTrak is pre-wired
on the production line and we enjoy over 95% take up. Bentley have chosen
NavTrak as their only approved tracking system in Europe and we will start
selling NavTrak from September in Belgium and Holland through a local
distributor whilst other countries will be serviced from the UK in order to
leverage our existing facility.
During the year the NavTrak operation was restructured, our licensing agreement
with Minorplanet was terminated and management continue to seek further
opportunities to reduce the cost base.
Estimotion
In December 2003 the Group acquired certain assets of Israel based Estimotion
Inc and Estimotion Ltd ('Estimotion') for an initial consideration of US$0.3m.
The maximum consideration for the company based on an earn-out agreement over
the next three years is a further $4.2m. The Board has been extremely pleased
with how quickly the technology has been accepted by mobile operators and
customers and is excited by the quality and volume of enquiries that Estimotion
is now generating. This leads us to believe that during the course of this
current year Estimotion technology will be operating commercially in several
large markets outside the UK.
Estimotion uses 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 and thereby ensuring that there are no issues with
privacy. Cellular networks already collect 'handover' information as part of
their day to day operations and ITIS can therefore quickly deploy this
technology in new markets given that there is no major city in the world that
does not support a mobile phone network. There are useful parallels between FVD
and the cellular approach and we believe that our experience in commercialising
FVD and understanding the dynamics of using moving objects for traffic flow
gives us credibility in the new markets which we are entering. Moreover
Estimotion enables us to continue to lead the way in the automated collection
and analysis of traffic data but on wider scale than previously and to new
levels of granularity and accuracy.
On Thursday 17th June 2004 we announced an agreement with O2 UK to promote and
deploy the Estimotion technology as part of a project to provide the Scottish
Executive with real time incident detection data and journey time information.
This implementation is the first step towards a proposed nationwide roll out
which will for the first time provide a cost effective method of generating
accurate information in the urban environment as well as on the Strategic Road
Network. Furthermore we are in negotiations with potential business partners in
four other countries and are confident that revenues will quickly follow any
trial deployments. Our business model will be either to licence the software in
return for an annual fee and revenue share or to find local partners, probably
the networks themselves, and to use our experience of the UK traffic market to
create joint services. An example of this would be an IVR based traffic
information service where the network would promote the service to their
customers whilst ITIS would provide the software and raw data.
Estimotion underlines our position as a leading traffic data specialist which
uses existing infrastructure to collect information and large brands to
distribute it in a relevant format. The Board strongly believes that this
exciting technology, which can be aligned to any cellular network, provides huge
scope for developing our business in a low cost, low risk manner.
Board Change
Giles Harridge, the Managing Director of NavTrak, resigned from the Board on
21st June 2004. The Board would like to thank him for his important
contribution in making NavTrak a leading brand in stolen vehicle tracking.
Current Trading and Prospects
The Board believes that the efforts of the last few years have now resulted in a
focused, well managed and fast growing business. There is great demand for all
of our services and with an expanding and prestigious customer base we are well
positioned to reach profitability. We can confirm that we are in active
discussions with most of the vehicle manufacturers who are currently not
customers and are confident that more announcements will follow in due course.
We are pleased to report that we have seen a strong start to the current
financial year and that we see no reason why this will not continue. During the
first two months of the new financial year our losses and cash usage were down
substantially when compared with the same period last year and we expect to
continue to see cash usage decline as a result of growing revenues and a stable
cost base.
Contact:
Stuart Marks, Chief Executive ITIS Holdings plc - 07768 454700
Ginny Pulbrook, Director Citigate Dewe Rogerson - 0207 282 2945
ITIS Holdings plc
Preliminary results for the year ended 31 March 2004
Consolidated profit and loss account
2004 2003
£ £
Group turnover 7,057,890 3,821,977
Exceptional direct costs (362,583) (1,050,000)
Other cost of sales (6,496,959) (5,346,229)
Cost of sales (6,859,542) (6,396,229)
________________ ________________
Gross profit (loss) 198,348 (2,574,252)
Distribution costs (235,786) (201,573)
Exceptional items (383,790) -
Other administration expenses (6,066,367) (5,435,271)
Administrative expenses (6,450,157) (5,435,271)
________________ ________________
Group operating loss (6,487,595) (8,211,096)
Interest receivable and similar income 270,902 544,615
Interest payable and similar charges (1,607) (2,893)
________________ ________________
Loss on ordinary activities before taxation (6,218,300) (7,669,374)
Tax on loss on ordinary activities 75,558 241,431
________________ ________________
Loss on ordinary activities after taxation (6,142,742) (7,427,943)
Minority interests (2,308) -
_______________ _______________
Loss for the financial year (6,145,050) (7,427,943)
_________ _________
p p
Basic and diluted loss per ordinary share
(6.3) (7.5)
_________ _________
All activity has arisen from continuing operations.
Consolidated statement of total recognised gains and losses
2004 2003
£ £
Loss for the financial year (6,145,050) (7,427,943)
Currency translation difference 2,194 -
_______________ _______________
Total recognised losses relating to the year (6,142,856) (7,427,943)
_________ _________
Consolidated balance sheet
2004 2003
£ £
Fixed assets
Intangible assets 981,062 395,138
Tangible assets 414,077 814,016
________________ ________________
1,395,139 1,209,154
________________ ________________
Current assets
Stocks 156,914 768,865
Debtors
- due within one year 2,705,050 2,741,985
- due after more than one year 817,186 953,438
Cash at bank and in hand 6,046,068 11,153,945
________________ ________________
9,725,218 15,618,233
Creditors: Amounts falling due within one year (4,539,723) (3,727,608)
________________ ________________
Net current assets 6,001,665 11,890,625
________________ ________________
Total assets less current liabilities 6,580,634 13,099,779
Creditors: Amounts falling due after more than one year (1,294,189) (1,565,662)
Provisions for liabilities and charges (328,319) -
________________ ________________
Net assets 4,958,126 11,534,117
_________ _________
Capital and reserves
Called-up share capital 5,186,286 5,186,286
Share premium account 37,342,877 37,342,877
Profit and loss account (37,573,345) (30,995,046)
________________ ________________
Shareholders' funds 4,955,818 11,534,117
Minority interests - equity 2,308 -
________________ ________________
4,958,126 11,534,117
_________ _________
Shareholders' funds may be analysed as:
Equity interests 1,737,950 8,316,249
Non-equity interests 3,217,868 3,217,868
________________ ________________
4,955,818 11,534,117
_________ _________
Consolidated cash flow statement
Notes 2004 2003
£ £
Net cash outflow from operating activities 2 (4,975,838) (6,480,904)
________________ ________________
Returns on investments and servicing of finance
Interest element of finance lease rental payments (1,607) (2,893)
Interest received 275,902 726,068
________________ ________________
Net cash inflow from returns on investments and servicing of finance 274,295 723,175
________________ ________________
Taxation
Research and development taxation credit 241,431 -
________________ ________________
Net cash inflow from taxation 241,431 -
________________ ________________
Capital expenditure and financial investment
Purchase of tangible fixed assets (293,375) (147,535)
Sale of tangible fixed assets - 19,950
Purchase of intangible fixed assets (173,570) -
Sale of intangible fixed assets 362,475 -
________________ ________________
Net cash outflow from capital expenditure (104,470) (127,585)
________________ ________________
Cash outflow before financing (4,564,582) (5,885,314)
________________ ________________
Financing
Purchase of own shares under Treasury Regulations (435,443) -
Issue of shares to minorities 147 -
Capital element of finance lease rental payments (110,046) (40,184)
________________ ________________
Net cash outflow from financing (545,342) (40,184)
________________ ________________
Decrease in cash in the year 3 (5,109,924) (5,925,498)
_________ _________
Reconciliation of movements in group shareholders' funds
2004 2003
£ £
Loss for the financial year (6,145,050) (7,427,943)
Other recognised gains and losses relating to the year 2,194 -
Purchase of own shares (435,443) -
________________ ________________
Net reduction in group shareholders' funds (6,578,299) (7,427,943)
Opening group shareholders' funds 11,534,117 18,962,060
________________ ________________
Closing group shareholders' funds 4,955,818 11,534,117
_________ _________
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 2003 or 2004, but is derived from those accounts. Statutory accounts for the year ended 31
March 2003 have been delivered to the Registrar of Companies.
The auditors have reported on the accounts for the years ended 31 March 2004 and 2003: their reports were unqualified
and did not contain a statement under section 273(2) or (3) of the Companies Act 1985.
The financial information set out in this preliminary announcement has been prepared on the basis of the accounting
policies as stated in the accounts for the year ended 31 March 2003.
A copy of the annual report and accounts 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 loss to net cash outflow from operating activities
2004 2003
£ £
Operating loss (6,487,595) (8,211,096)
Depreciation and amortisation of licenses 372,072 338,921
Impairment losses 362,583 -
Decrease (increase) in stocks 611,951 (659,217)
Decrease (increase) in debtors 4,893 (310,305)
(Decrease) increase in creditors (168,061) 2,371,412
Increase in provisions 328,319 -
Profit on disposal of fixed assets - (10,619)
________________ ________________
Net cash outflow from operating activities (4,975,838) (6,480,904)
_________ _________
3. Reconciliation of net cash flow to movement in net funds
2004 2003
£ £
Decrease in cash in the year (5,109,924) (5,925,498)
Cash outflow from decrease in lease financing 110,046 40,184
________________ ________________
Change in net funds resulting from cash flows (4,999,878) (5,885,314)
New finance lease - (500,000)
Translation differences 2,047 -
________________ ________________
Change in net funds in the year (4,997,831) (6,385,314)
Net funds brought forward 10,643,899 17,029,213
________________ ________________
Net funds carried forward 5,646,068 10,643,899
_________ _________
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