Interim Results
ITIS Holdings PLC
15 November 2007
ITIS Holdings plc ('ITIS' or the 'Company')
Interim Results for the six months ended 30 September 2007 (unaudited)
ITIS Holdings plc, a leading road traffic information and data specialist is
pleased to announce its interim results for the six months ended 30 September
2007.
HIGHLIGHTS
• Revenue from continuing operations* up 23% to £8.09m (six months ended
30th September 2006: £6.57m)
• Profit before taxation from continuing operations* up 23% to £2.18m
(six months ended 30th September 2006: £1.76m)
• Cash balance increased to £13.0m from £11.6m at 31st March 2007
• Company intends to pay a maiden dividend of 1.5p per share, subject to
court and shareholder approval. Approvals expected by 24th January 2008
• New joint venture with Altech Netstar in South Africa
• Continued strong progress in international markets
Stuart Marks, Chief Executive of ITIS, commented: 'Once again we have delivered
record half year revenues and profits from continuing operations and we are
vigorously working to increase our market share in the UK. Our strong progress
in international markets demonstrates that our technologies, combined with our
proven commercial model in the UK, make ITIS an attractive partner overseas.
Our strategy remains to increase revenues from these international activities
whilst ensuring steady growth from the UK business.
ITIS continues to be an outstanding success story in the technology sector and I
am proud of all our achievements and the loyal staff who have contributed so
much towards this. We have consistently grown profits and revenue and been cash
accretive since 2004 and have not required any further funding since listing in
October 2000. We remain focussed on increasing shareholder value and building
upon our past successes to make ITIS a global leader in traffic information.'
FINANCIAL OVERVIEW
For the six months ended 30th September 2007, Group revenue from continuing
operations* increased 23% to £8.09m (2006: £6.57m). This increase in revenue
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 £0.55m
(2006: £0.46m).
On a Group basis, profit before taxation from continuing operations* increased
23% to £2.18m (2006: profit before taxation £1.76m). 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 1.6p, down 11.1% (2006:
1.8p), due to the partial release of the deferred tax asset of £0.61m (2006:
£nil). Ignoring the deferred tax asset release, basic and diluted earnings per
ordinary share were 2.2p, up 22.2% (2006: 1.8p).
Cash balances at 30th September 2007 strengthened to £13.0m (representing 13p
per share), against £11.6m at 31st March 2007. During the period the Group has
spent almost £0.5m on the purchase of a data centre for the Group in the UK.
The data centre will host the Group's IT systems and services as the Group
continues its expansion in the UK and abroad. A similar amount will be spent in
the second half of the year to 31st March 2008, funding additional computer
equipment to store data and host services in the data centre. Soaring demand
for online services has led to a boom in third party data centres and by taking
this facility 'in house' we believe that we will be able to better address our
needs and be insulated from the regular price increases imposed by data centre
operators.
As outlined in a circular sent to shareholders on 29th October 2007 and in the
Company's Preliminary Results to 31st March 2007, the Company is seeking
shareholder approval to cancel its share premium account, which would have the
effect of creating a substantial distributable reserve which will be available
for the payment of dividends. If the resolution to cancel the Company's share
premium account is passed by shareholders, the Company will then seek the
confirmation of the High Court of Justice Chancery Division to the cancellation
of the share premium account. On the current timetable, the cancellation would
become effective on 24th January 2008. Once this is effective, ITIS intends to
pay a maiden dividend of 1.5p per share.
The discontinued operations relate to the sale on 26th March 2007 of NavTrak
Limited ('NavTrak'), the Group's stolen vehicle tracking subsidiary, to Cobra
Automotive Technologies spa.
Adoption of IFRS
The 31st March 2007 comparative figures are now shown as unaudited as they are
now presented in accordance with IFRS. The adoption of IFRS has resulted in
disclosure and presentational changes only and has not made necessary the
restatement of any balances (see notes 1 and 2).
UK BUSINESS REVIEW
For the period under review, ITIS derived 94% of its revenues from the UK. Our
sustained leadership in this competitive 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
navigation solutions rather than by competing with them in developing and
marketing our own navigation platforms.
ITIS continues to dominate the delivery of real-time traffic information to
factory-fitted navigation systems, personal navigation devices ('PNDs') and
mobile phones with over 1.25m users. Our service is established with sixteen
car manufacturers: BMW, Ford, Jaguar, Land Rover, Lexus, MINI, Mercedes-Benz,
Mitsubishi, Nissan, Porsche, Renault, Rolls Royce, Saab, Subaru, Toyota and
Volvo. Aftermarket and portable device customers include Active Pilot, Clarion,
Co Pilot, Fujitsu, Harman Becker, Mio, Navicore, Navman, Pioneer (new contract
recently signed extending our agreement until 2012), Road Angel, Route 66,
Siemens VDO, Snooper, Sony Europe, Telmap, Telenav, TomTom, ViaMichelin and Way
Finder. Whilst most of the PND relationships are direct, some come through our
relationship with ARC Europe (an association of eight major autoclubs in Europe,
including the AA) where ITIS is the exclusive traffic information provider in
the UK.
Our contract with the Department for Transport to provide them with historic
data finishes in February 2008. We are working hard towards replacing the
revenue and profit associated with this contract in the next financial year
although it is too early to give precise details about how much of this
shortfall will be replaced in the UK.
ITIS is now working with the Norwich Union, on a revenue share basis, to process
de-personalised data derived from their 'Pay As You Drive'TM insurance products
and to provide the public sector with historical traffic analysis that will help
measure congestion and assist with network monitoring. ITIS will offer combined
and separate datasets to local government and transport consultants throughout
the UK and will manage processing, display and delivery of the data.
Since launching the Floating Vehicle Data Service in 2001 ('FVD') we have
developed a comprehensive historic data set which will be valuable to all our
customers as they seek to improve the journey times associated with their
routing engines. We are involved in a number of manufacturer-led initiatives
which will lead to the use of our historic information on the location code
tables provided to our RDS-TMC customers.
We are pleased to announce today that Dr Stephen Ladyman, Member of Parliament
for South Thanet will be joining ITIS as a special advisor to the Company. Dr
Ladyman was previously Minister of State for Transport from May 2005 until June
2007, during which time he was involved with all matters related to road
transportation in the UK. He will advise the Company on strategy and new
product development and will represent the Company where relevant with foreign
governments.
In July we announced that, through our partnership with 4 Digital Group, we had
secured exclusive access to data capacity (channel bandwidth) on the UK's second
National Digital Radio multiplex for 12 years. ITIS will provide a range of
traffic information services aimed at factory-fitted and portable navigation
systems.
This exclusive agreement will enable ITIS not only to provide continuity of its
quality service to its existing customer base throughout the transition period
of analogue to digital radio switchover, but also will enrich and increase our
dynamic content offering.
INTERNATIONAL BUSINESS REVIEW
ITIS was an early adopter of using vehicles as probes to detect traffic flow and
along with our cellular derivative of this, we have created the most
commercially successful traffic business of this type anywhere. We support
national operations in the UK, Israel, and Belgium and many other city based
pilot schemes which we are confident will lead to further country wide systems.
Floating Vehicle Data (FVD) and Cellular Floating Vehicle Data (CFVD) have now
become recognised technologies and are associated with high quality, but
relatively low cost traffic information. ITIS in turn is recognised as the
market leader in this area.
We are forming a new Joint Venture to be called 'Netstar Traffic' in South
Africa with Altech Netstar. Altech Netstar is a wholly owned subsidiary of the
JSE listed Altech Group and is the leading stolen vehicle tracking and recovery
business in Southern Africa, with a subscriber base of over 450,000 vehicles.
Netstar also is an established provider in the vehicle fleet management
business. Netstar Traffic will shortly be deploying ITIS' technology throughout
South Africa and will provide commercial services to the automotive, mobile and
Government sectors.
Our business in Asia is developing quickly. To accelerate this further, ITOCHU
Corporation will be collaborating with us to promote CFVD and FVD businesses
through their active development of Intelligent Transport Systems in Japan,
Taiwan and other countries in Asia. ITOCHU are a global trading company with
headquarters in Japan and 133 offices overseas.
In Australia, Intelematics, which licenses our TMC technology, successfully
launched a TMC service 'SUNA Traffic Channel' in the summer and is now working
with a number of OEMs and leading PND manufacturers with a pre-Christmas
consumer launch planned on a number of PND devices. The service is distributed
both as a broadcast RDS-TMC service, and a complementary XML-TMC service
supporting networked devices and web portals. Traffic Intelligence continues to
make good progress in Australia and we expect to commence work on a major new
cellular project in the next few months.
Our Belgium licensee, Be-mobile, has now deployed a nationwide probe data system
using cellular data from Proximus, the largest mobile operator in Belgium. This
is the first nationwide cellular deployment outside Israel and marks a
significant milestone for the company. Be-mobile will be launching commercial
radio traffic broadcasting, IVR and internet services in Belgium this month. We
are pleased as well with the progress that we are making in Ireland, the Czech
Republic and Spain.
On the 6th December 2005, the Company announced that an agreed form contract
with the Missouri Department of Transportation ('MODOT') had been approved by
the Missouri Highways and Transportation Commission. Since then we have updated
shareholders as to our progress here, which at times has been much slower than
we would have liked. In recent months encouraging progress has been made and we
are now working to a new delivery plan and have started to supply real-time
information for evaluation by MoDOT on some key roads. We remain committed to
delivering America's first State wide CFVD application in the near future and
will continue to update our shareholders on our progress in this area.
CURRENT TRADING & PROSPECTS
In recent months there has been industry consolidation with favourable press
comment about the growing navigation market and the appetite from both operators
and device manufacturers for Location Based Services. ITIS is very well placed
to take advantage of this growth around the world and will maximise its existing
relationships to ensure that we remain at the forefront of this fast moving
market.
ITIS enjoys a reputation for innovation, high levels of data quality and
commercial success. These attributes have ensured that across a wide variety of
markets ITIS has been sought out as a 'partner of choice' by significant players
in their respective local markets. ITIS has invested significant financial and
personnel resources in its international business to capitalise on this position
and we are beginning to see the results of this investment. As these
relationships develop, the board expect the international business to become an
increasing proportion of revenue and profits in the next few years.
The Board is encouraged by the Group's performance overall and we remain
confident that our strategy of closely managing the UK business whilst
generating increasingly significant international revenues will provide an
exciting platform for further growth.
Footnote
* Revenue previously reported in 6 months ended 30th September 2006 of £8.89m
included £2.32m relating to NavTrak Limited, the Group's stolen vehicle
tracking subsidiary, which was sold on 27 March 2007. Under IFRS, only
continuing revenue is shown on the face of the profit and loss account, with
all amounts relating to discontinued operations being presented as a single
line item following profit after taxation from continuing operations.
Profit before taxation previously reported in the 6 months ended 30th
September 2006 of £1.78m included £0.02m contributed by NavTrak Limited.
Consolidated income statement
Note Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Continuing operations
Revenue 6 8,086,716 6,566,506 14,171,896
Cost of sales (2,832,824) (2,294,073) (4,910,605)
__________ __________ __________
Gross profit 5,253,892 4,272,433 9,261,291
Operating costs (3,413,997) (2,625,283) (5,902,548)
__________ __________ __________
Operating profit 1,839,895 1,647,150 3,358,743
Profit on sale of discontinued operations - - 4,056,923
Interest receivable and similar income 336,060 111,631 312,127
Group interest payable and similar charges - - (707)
__________ __________ __________
Profit before tax 2,175,955 1,758,781 7,727,086
Current tax on ordinary activities - - (5,737)
Deferred tax (charge) credit (609,267) - 1,491,830
__________ __________ __________
Tax on profit on ordinary activities (609,267) - 1,486,093
__________ __________ __________
Profit for the period from continuing operations 1,566,688 1,758,781 9,213,179
Discontinued operations
Profit for the period from discontinued operations - 20,523 232,666
__________ __________ __________
Profit for the period 6 1,566,688 1,779,304 9,445,845
__________ __________ __________
Attributable to:
Equity holders of the parent 1,566,688 1,783,340 9,445,845
Minority interest - (4,036) -
__________ __________ __________
6 1,566,688 1,779,304 9,445,845
__________ __________ __________
Consolidated income statement (continued)
Note Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
Earnings per share
Basic and diluted earnings per share from continuing 3 1.6 1.8 5.2
operations (pence)
__________ __________ __________
Basic and diluted earnings per ordinary share (pence) 3 1.6 1.8 9.6
__________ __________ __________
Consolidated statement of recognised income and expense
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Profit for the financial period 1,566,688 1,779,304 9,445,845
Currency translation difference - 2,078 (1,649)
__________ __________ __________
Total recognised income and expense for the period 1,566,688 1,781,382 9,444,196
__________ __________ __________
Attributable to:
Equity holders of the parent 1,566,688 1,785,418 9,444,196
Minority interest - (4,036) -
__________ __________ __________
Consolidated balance sheet
Note 30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Non current assets
Intangible assets 541,541 502,515 684,838
Property, plant and equipment 1,226,323 925,874 932,997
Deferred tax asset 882,563 - 1,491,830
Other receivables - 27,500 98,337
__________ __________ __________
2,650,427 1,455,889 3,208,002
__________ __________ __________
Current assets
Inventories - 283,442 -
Trade and other receivables 6,450,163 4,982,087 4,690,805
Cash and cash equivalents 12,962,933 7,169,519 11,571,102
__________ __________ __________
19,413,096 12,435,048 16,261,907
__________ __________ __________
Total assets 22,063,523 13,890,937 19,469,909
__________ __________ __________
Current liabilities
Trade and other payables (4,267,139) (4,924,240) (3,291,283)
Provisions - (36,290) -
__________ __________ __________
(4,267,139) (4,960,530) (3,291,283)
__________ __________ __________
Net current assets 15,145,957 7,474,518 12,970,624
__________ __________ __________
Non current liabilities
Other payables (37,083) (516,732) (61,396)
__________ __________ __________
Total liabilities (4,304,222) (5,477,262) (3,352,679)
__________ __________ __________
Net assets 17,759,301 8,413,675 16,117,230
__________ __________ __________
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
Retained earnings (25,873,499) (34,955,537) (27,440,187)
Other reserve 331,790 54,967 256,407
__________ __________ __________
Equity attributable to equity holders of the parent 5 17,759,301 8,400,440 16,117,230
Minority interest - 13,235 -
__________ __________ __________
Total equity 17,759,301 8,413,675 16,117,230
__________ __________ __________
Consolidated cash flow statement
Note Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Net cash from operating activities 4 1,565,408 1,817,740 4,790,792
__________ __________ __________
Investing activities
Interest received 336,060 111,631 312,127
Proceeds on sale of subsidiary - - 3
Costs of disposal - - (164,484)
Net cash balances disposed of with subsidiary undertaking - - (4,153)
Repayment of loans owed by subsidiary - - 2,199,997
Proceeds on disposal of property, plant and equipment - - 17,749
Purchases of property, plant and equipment (509,637) (459,428) (894,958)
Purchases of intangible assets - - (381,820)
__________ __________ __________
Net cash (used in) from investing activities (173,577) (347,797) 1,084,461
__________ __________ __________
Net increase in cash and cash equivalents 1,391,831 1,469,943 5,875,253
Cash and cash equivalents at beginning of period 11,571,102 5,697,498 5,697,498
Effect of foreign exchange rate changes - 2,078 (1,649)
__________ __________ __________
Cash and cash equivalents at end of period 12,962,933 7,169,519 11,571,102
__________ __________ __________
Notes
1. Accounting policies
The Group has previously prepared its financial statements under UK Generally
Accepted Accounting Principles ('UK GAAP'). Following a revision in the AIM
Rules, the Group is required to prepare its 2008 consolidated financial
statements in accordance with International Financial Reporting Standards
(IFRS).
Accordingly these interim accounts have been prepared using accounting policies
consistent with the accounting policies set out below. Management expect these
policies to apply in the Group's first IFRS Annual Report for the year ending 31
March 2008. Adoption of these policies has resulted in disclosure and
presentational changes only and has not made necessary the restatement of any
balances.
The rules for first time adoption of IFRS are set out in IFRS 1 'First time
adoption of International Financial Reporting Standards'. IFRS 1 requires that
IFRS be applied retrospectively unless a specific exemption is applied. In
preparing this financial information, the Group has adopted the following
exemptions:
• to apply IFRS 2 'Share based payment' to those share options granted
after 7 November 2002 that had not vested by 1 April 2006; and
• to deem cumulative translation differences for all foreign operations
to be zero as at the opening IFRS balance sheet date.
In accordance with AIM rules, the Group has chosen not to apply IAS 34 'Interim
Financial Reporting' in full in the preparation of these consolidated interim
financial statements.
a) Basis of accounting
The financial statements have been prepared in accordance with IFRS. The
financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
b) Basis of consolidation
The Group financial statements consolidate the financial statements of ITIS
Holdings plc and its subsidiary undertakings (made up to 30 September). The
results of subsidiaries acquired are consolidated for the periods from the date
on which control passed. Acquisitions are accounted for under the acquisition
method.
c) Revenue recognition
Group revenue comprises the value of sales (excluding VAT and trade discounts)
of goods and services in the normal course of business. Where revenue is earned
under contractual arrangements, this is recognised in line with contractual
performance. Where the right to receive consideration is dependent upon the
fulfilment of milestones or other customer-acceptance events, revenue is
recognised only when the related conditions have been satisfied.
d) Research and development costs
Expenditure on research is recognised as an expense in the period in which it is
incurred. Development expenditure is also written off, except where the
directors are satisfied as to the technical, commercial and financial viability
of individual projects. In such cases, the identifiable expenditure is deferred
and amortised over the period during which the Group is expected to benefit.
Provision is made for any impairment.
e) Intangible assets
Licences are stated at discounted cost, net of amortisation and any provision
for impairment. Licences are written off over their useful economic life, which
is the period of the licence agreement. Intellectual property is included at
cost and amortised on a straight line basis over 5 years, which is their
estimated useful economic life.
f) Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any
recognised impairment loss. Depreciation is charged so as to write off the cost
or valuation of assets, over their estimated useful lives, using the straight
line method, on the following bases:
Buildings 2%
Fixtures 20% to 33%
Motor Vehicles 33%
Equipment 25% to 33%
g) Inventories
Inventories represent finished goods stated at the lower of cost and net
realisable value. Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Net realisable value is
based on estimated selling price, less further costs expected to be incurred to
completion and disposal. Provision is made for obsolete, slow-moving or
defective items where appropriate.
h) Leases
All leases currently held by the Group are classified as operating leases.
Leases are classified as finance leases only where the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee.
Rentals payable under operating leases are charged to income on a straight line
basis over the term of the relevant lease.
i) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Group's taxable profits and its results
as stated in the financial statements. A net deferred tax asset is regarded as
recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable
taxable profits from which the future reversal of underlying timing differences
can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse, based on
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
j) Pensions
The Group operates a defined contribution pension scheme and the pension costs
charged against profits represent the amount of contributions payable to the
scheme in the year. Differences between contributions payable and contributions
actually paid are shown as either accruals or prepayments in the balance sheet.
k) Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange at the
date of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are reported at the rates of exchange
prevailing at that date.
The results of overseas operations are translated at the average rates of
exchange during the period and their balance sheets as at the rates ruling at
the balance sheet date. Exchange differences arising on translation of the
opening net assets and results of overseas operations are reported in the
statement of total recognised gains and losses. All other exchange differences
are included in the profit and loss account.
l) Share-based payment
The Group has applied the requirements of IFRS 2, Share-based Payment. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested as of 1
April 2006.
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the group's
estimate of shares that will eventually vest and adjusted for the effect of non
market-based vesting conditions.
Fair value is measured by use of the Black-Scholes pricing model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
2. Preparation of the interim financial information
The summarised results for the six months to 30 September 2007 and the
comparative results for the half year to 30 September 2006 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 2007 are an abridged version
of the Company's full accounts adjusted for presentation in accordance with IFRS
(see note 1) 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 2007 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.
3. Basic and diluted earnings per ordinary share
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Profit for the financial period 1,566,688 1,779,304 9,445,845
__________ __________ __________
Weighted average number of ordinary shares in issue 98,442,884 98,442,884 98,620,384
__________ __________ __________
Earnings per share (p) 1.6 1.8 9.6
__________ __________ __________
Basic and diluted earnings per share from continuing 1.6 1.8 5.2
operations (p) __________ __________ __________
The profit basis for adjusted earnings per share has been calculated to include
only continuing operations and to exclude the impact of exceptional items. A
reconciliation between profit for the financial period and the profit used to
calculate the adjusted earnings per share figure is shown below.
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Profit for the financial period 1,566,688 1,779,304 9,445,845
__________ __________ __________
Profit on sale of NavTrak - - (4,056,923)
Discontinued operations: operating profit - (15,721) (221,038)
Interest receivable - (4,802) (11,628)
__________ __________ __________
Adjusted profit (from continuing operations) 1,566,688 1,758,781 5,156,256
__________ __________ __________
Deferred tax credit 609,267 - (1,491,830)
__________ __________ __________
Adjusted profit (from continuing operations, excluding 2,175,955 1,758,781 3,664,426
deferred tax credit)
__________ __________ __________
Adjusted basic and diluted earnings per share from 2.2 1.8 3.7
continuing operations excluding in 2007 deferred tax
credit (pence)
4. Reconciliation of operating profit to net cash inflow from operating activities
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Profit for the period 1,566,688 1,779,304 9,445,845
Adjustments for
Depreciation and amortisation of licences 359,608 308,597 840,023
Interest income (336,060) (111,631) (312,127)
Share-based payment expense - 28,839 -
Finance costs - - 707
Income tax expense 609,267 - 5,737
Deferred tax credit - - (1,491,830)
Gain on disposal of discontinued operations - - (4,056,923)
Gain on disposal of property, plant and equipment - - (998)
Decrease in provisions - (18,169) (54,459)
Minority interest - 4,036 -
__________ __________ __________
Operating cash flows before movement in working capital 2,199,503 1,990,976 4,375,975
Decrease in inventories - 91,556 55,190
Increase in receivables (1,661,021) (690,079) (1,145,813)
Increase in payables 1,026,926 404,363 1,500,496
__________ __________ __________
Cash generated by operations 1,565,408 1,796,816 4,785,848
Interest paid - - (707)
Foreign tax paid - - (18,205)
Research and development tax credit - 20,924 23,856
__________ __________ __________
Net cash inflow from operating activities 1,565,408 1,817,740 4,790,792
__________ __________ __________
5. Reconciliation of movements in consolidated equity
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
Profit for the financial period 1,566,688 1,779,304 9,445,845
Other recognised gains and losses relating to the period - 2,078 (1,649)
Share option charge 75,383 28,839 82,815
__________ __________ __________
Net addition to Group shareholders' funds 1,642,071 1,810,221 9,527,011
Opening Group shareholders' funds 16,117,230 6,590,219 6,590,219
__________ __________ __________
Closing Group shareholders' funds 17,759,301 8,400,440 16,117,230
__________ __________ __________
6. 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
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
United Kingdom 7,676,345 8,713,317 18,152,209
Discontinued operations - (2,318,009) (4,616,585)
_________ _________ _________
United Kingdom 7,676,345 6,395,308 13,535,624
Mainland Europe 322,490 47,946 310,081
U.S.A. - 28,252 67,545
Israel 47,879 - 2,820
Intersegmental sales 971,000 833,759 1,869,442
Other 40,002 95,000 255,826
Eliminations (971,000) (833,759) (1,869,442)
_________ _________ _________
Consolidated 8,086,716 6,566,506 14,171,896
_________ _________ _________
Result
Six months to Six months to Year ended
30 September 30 September 31 March
2007 2006 2007
Unaudited Unaudited Unaudited
£ £ £
United Kingdom 2,536,458 2,280,851 4,868,392
Mainland Europe 85,283 (104,320) (12,460)
U.S.A. (91,184) (167,250) (280,658)
Israel (546,000) (457,131) (1,301,034)
Other 3,981 95,000 274,613
Decell (see note 7) (148,643) - (190,110)
_________ _________ _________
Operating profit 1,839,895 1,647,150 3,358,743
_________ _________ _________
Other gains and losses - - 4,056,923
Interest received 336,060 111,631 312,127
Finance costs - - (707)
_________ _________ _________
Profit before tax 2,175,955 1,758,781 7,727,086
_________ _________ _________
Tax (609,267) - 1,486,093
Profit from discontinued operations - 20,523 232,666
_________ _________ _________
Consolidated 1,566,688 1,779,304 9,445,845
_________ _________ _________
7. Contingent liability
As previously reported, on 30 November 2006 a claim was filed in the Tel Aviv
District Court by an Israeli Company, Decell Technologies Ltd, and a US
Corporation, Decell Inc., against six defendants including ITIS Traffic Service
Ltd. ('ITSL'), a wholly owned subsidiary of the Group. The plaintiffs allege an
infringement of an Israeli patent for which they are claiming NIS12,000,000
(approximately £1.5 million).
Based on advice from legal counsel the Directors believe ITSL has strong
defences to the claims asserted in these proceedings and intend to defend
vigorously such claims. The Directors believe, having taken advice from legal
counsel, it is unlikely that a liability will arise from this litigation and as
a result no contingency in respect of the claim has been provided for in the
company accounts.
An application for security of costs has been made and ITSL will seek to recover
all costs incurred in relation to the proceedings. However the Directors note
there is a risk that some or all of those costs may not ultimately be recovered.
The costs incurred by the Group in the six months to 30 September 2007 were
£148,643 (2006: £nil).
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.
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