Preliminary Results
ITIS Holdings PLC
08 June 2006
ITIS Holdings plc ('ITIS' or the 'Company')
Preliminary Results for the year ended 31st March 2006
ITIS Holdings plc, a leading road traffic information and data specialist is
pleased to announce its preliminary results for the year ended 31st March 2006.
HIGHLIGHTS
• Full year profit before tax £1.66m (2005: loss of £1.35m) excluding an
exceptional item. Profit before taxation including an exceptional profit
of £0.33m was £1.99m (2005: loss of £1.35m).
• Turnover up 39% to £14.10m (2005: £10.16m) excluding an exceptional item.
The turnover including the exceptional item was £14.40m (2005: £10.16m)
• Year end cash balance remains strong at £5.70m (2005: £3.41m)
• UK business continues to experience strong growth and is highly profitable
• Interest remains high in Cellular Floating Vehicle Data ('CFVD') from the
US and other countries
• First revenues from Missouri CFVD contract now expected to commence during
the latter part of the current financial year
Stuart Marks, Chief Executive of ITIS commented: 'We are delighted with these
results and, in particular, to announce our first full year of profitability.
Our business in the UK is particularly strong and, through a combination of our
largely fixed cost base and a growing number of customers, is becoming
substantially profitable. Whilst the timing of new contracts is difficult to
predict, we remain encouraged about our overseas expansion, particularly in the
US, and believe that demand for our services will only increase as road traffic
congestion worsens around the world.'
FINANCIAL OVERVIEW
For the year ended 31st March 2006, pre-exceptional turnover increased by 39% to
£14.06m (2005: £10.16m). Exceptional turnover of £354,000 (2005: nil) represents
income from UK customers relating to the year ended 31st March 2005 that was not
declared to the Group until after the publication of the 2005 financial
statements. The costs related to this exceptional turnover were £23,000 and the
Group therefore recorded an exceptional profit in the year ended 31st March 2006
of £331,000 (2005: nil).
Turnover for the year ended 31st March 2006 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.
With the majority of its cost base fixed, the UK business made a pre-exceptional
profit before taxation of £2.58m (2005: loss £0.76m) and a post exceptional
profit before taxation of £2.92m (2005: loss £0.76m). These results again
demonstrate that the Group's operational infrastructure is capable of supporting
incremental business without substantial increases to its cost base.
The Group continued to invest heavily in its research and development centre in
Israel during the year, spending £871,000 (2005: £548,000).
On a Group basis, pre-exceptional profit before taxation was £1.65m (2005: loss
before taxation £1.35m), rising to £1.99m (2005: loss of £1.35m) on a post
exceptional basis. Basic and diluted earnings per share were 2.1p (2005: loss
per ordinary share of 1.3p).
The year-end cash balance remains strong at £5.70m (2005: £3.41m).
UK BUSINESS REVIEW
Since ITIS shares were admitted to trading on the AIM Market in 2000, the
Company has become one of the UK's leading providers of traffic information and
has experienced a period of substantial growth leading to its first full year of
profitability in 2006. The turnaround in our UK business from a loss of £0.76m
in the year ended 31st March 2005 to a pre tax profit of £2.58m for the year
under review demonstrates the robustness of our business model, the quality of
our service and the advantages of our high operational gearing.
Our traffic business began in early 2002 with the launch of our commercial
RDS-TMC service in the UK initially supported by BMW and Toyota. We have since
developed TMC into a business which now provides traffic information to
seventeen car manufacturers and to seventeen personal navigation devices and
aftermarket systems. We believe there are now over 250,000 users of our traffic
information through these channels and we expect continued growth.
Floating Vehicle Data ('FVD'), which covers the entire UK road network, has
proven itself to be of very high quality. This unique data set is at the heart
of our real time and historic information and is presented in various formats
dependant on the requirements of the end user. FVD predominantly generates road
speed and flow information and is supplemented with a rich incident data feed
provided to us, under an exclusive agreement, by Trafficlink, the UK's leading
provider of incident based traffic information.
Under the terms of our partnership with the AA, we support both web based and
mobile phone services under our exclusive use of the AA Roadwatch brand. Mobile
phone users can access our real time traffic information across all the major
networks using unique short dial numbers. During the year under review, we have
added greater functionality such as places of interest and specific incident
reports to enrich the quality of the service.
We continue to focus NavTrak, our stolen vehicle tracking business, on the very
top end of the prestige car market and now factory install our system for
Bentley, Ferrari and Maserati. This has enabled us to concentrate on quality
engineering and customer service at a price point which sustains profitability.
We expect to continue to win new business in the UK and to renew existing
contracts as they fall due.
OVERSEAS BUSINESS REVIEW
Our UK customer base and the services we provide to them act as valuable
reference points for our overseas development, especially in countries where
commercial traffic information services are only now beginning to be launched.
Our competitive position is materially enhanced by our ability to offer proven
experience and applications to these new markets.
In many overseas markets, and especially in the US, there has been a marked roll
out of on board navigation systems in the last eighteen months helped greatly by
the falling costs of hardware. Of greater interest to ITIS is the growth in the
number of GPS equipped mobile phones in the US to support the E-911 legislation
that requires a mobile be locatable when an emergency call is placed.
Penetration with some networks is now over 80%. The networks are moving quickly
to provide other Location Based Services of which navigation and traffic
consistently feature in the top three services most required. We believe that
working directly with the mobile phone networks to produce traffic information
from their raw data will enhance their willingness to supply us and will create
a new revenue stream for both ITIS and the networks.
Our partnership with Delcan.NET in the US is proving very successful. Our
similar cultures allowed for an effective handling of our first projects in
Baltimore, Maryland and the current state-wide roll out of CFVD in Missouri. By
partnering with Delcan we have been able to fully explore and develop our
business in the US along side an organisation which already has successful
relationships with many Government Departments Of Transport's ('DOT's'). Our
first goal is the successful delivery of existing projects in order to provide '
proof of concept' and ensure that we achieve a reputation for delivery and
quality. We believe that this approach will enhance negotiations with other
DOT's.
We have stated previously that the quality of our CFVD service and our roll out
plans in the US are dependent upon support from mobile network operators and
ensuring a reliable supply of data from them. In this regard, there have been
some delays on the Missouri project outside of our control. Initial revenues
from this contract are now not expected until the latter part of the current
financial year.
In the US our agreements with mobile network operators are likely to include a
fixed annual payment to ensure the delivery of data to us in a market ready
format. As a consequence, early stage costs of some US projects, including
Missouri will be proportionally higher.
We remain optimistic about opportunities in Europe and are involved in a number
of advanced negotiations for the provision of traffic information. We are very
pleased with the quality of data now being provided in Antwerp, Belgium which
has become an important reference site for us. However, as we are predominantly
focussing on Government agencies and large mobile operators, the exact timing of
when overseas contracts will be awarded is difficult to predict precisely.
Our licensee in Australia, Traffic Intelligence Pty is making excellent progress
and is already working with a major mobile operator. We expect our first
revenues from this region in the current year.
Our office in Israel is now exclusively managing the Group's R&D effort. We
have a very bright and able team there focused on ensuring that we retain a
leading position with our traffic technology.
CURRENT TRADING & PROSPECTS
The Board believes that ITIS has the ability to become a world leader in traffic
information services.
Revenues and profits from the UK business are showing consistent strong growth
and, whilst we are still in the very early stages of developing our overseas
business, our performance in the UK is an excellent indicator of what we are
able to achieve once we have established our presence in a market.
The current financial year has started well and the Board is confident that ITIS
will maintain its exciting high growth.
ITIS Holdings plc
Preliminary announcement of results for the year ended 31 March 2006
Consolidated profit and loss account
2006 2005
£ £
Group turnover 14,416,113 10,159,268
Cost of sales (6,982,244) (6,667,524)
________________ ________________
Gross profit 7,433,869 3,491,744
Distribution costs (106,179) (122,948)
Administrative expenses (5,497,838) (4,890,305)
________________ ________________
Operating profit (loss) 1,829,852 (1,521,509)
Operating profit (loss) before exceptional item 1,498,584 (1,521,509)
Exceptional item 331,268 -
Operating profit (loss) 1,829,852 (1,521,509)
Interest receivable and similar income 158,723 176,943
Interest payable and similar charges (2,123) (1,414)
________________ ________________
Profit (loss) on ordinary activities before taxation 1,986,452 (1,345,980)
Tax on profit (loss) on ordinary activities 93,350 136,417
________________ ________________
Profit (loss) on ordinary activities after taxation 2,079,802 (1,209,563)
Minority interests (5,396) (1,495)
_______________ _______________
Profit (loss) for the financial year 2,074,406 (1,211,058)
_________ _________
p p
Basic and diluted earnings (loss) per ordinary share 2.1 (1.3)
_________ _________
All activity has arisen from continuing operations.
Consolidated statement of total recognised gains and losses
2006 2005
£ £
Profit (loss) for the financial year 2,074,406 (1,211,058)
Currency translation difference 1,858 (2,652)
_______________ _______________
Total recognised gains and losses relating to the year 2,076,264 (1,213,710)
_________ _________
Consolidated balance sheet at 31 March 2006
2006 2005
£ £
Fixed assets
Intangible assets 617,812 848,407
Tangible assets 659,746 493,286
________________ ________________
1,277,558 1,341,693
________________ ________________
Current assets
Stocks 374,998 353,551
Debtors
- due within one year 4,300,432 2,963,417
- due after more than one year 40,000 70,000
Cash at bank and in hand 5,697,498 3,413,341
________________ ________________
10,412,928 6,800,309
Creditors: Amounts falling due within one year (4,434,618) (3,797,421)
________________ ________________
Net current assets 5,978,310 3,002,888
________________ ________________
Total assets less current liabilities 7,255,868 4,344,581
Creditors: Amounts falling due after more than one year (601,991) (403,177)
Provisions for liabilities and charges (54,459) (195,493)
________________ ________________
Net assets 6,599,418 3,745,911
_________ _________
Capital and reserves
Called-up share capital 5,230,270 5,186,286
Share premium account 38,070,740 37,342,877
Profit and loss account (36,710,791) (38,787,055)
________________ ________________
Shareholders' funds 6,590,219 3,742,108
Minority interests - equity 9,199 3,803
________________ ________________
Total capital employed - equity 6,599,418 3,745,911
_________ _________
Consolidated cash flow statement for the year ended 31 March 2006
Notes
2006 2005
£
£
Net cash inflow (outflow) from operating activities 2 1,765,284 (1,648,654)
________________ ________________
Returns on investments and servicing of finance
Interest element of finance lease rental payments (2,123) (1,414)
Interest received 158,723 176,943
________________ ________________
Net cash inflow from returns on investments and servicing of finance 156,600 175,529
________________ ________________
Taxation
Foreign tax paid (20,300) (2,579)
Research and development taxation credit 127,124 78,137
________________ ________________
Net cash inflow from taxation 106,824 75,558
________________ ________________
Capital expenditure and financial investment
Purchase of tangible fixed assets (489,566) (296,847)
Sale of tangible fixed assets - 9,200
Purchase of intangible fixed assets - (816,170)
________________ ________________
Net cash outflow from capital expenditure (489,566) (1,103,817)
________________ ________________
Cash inflow (outflow) before financing 1,539,142 (2,501,384)
________________ ________________
Financing
Proceeds on issue of shares 771,847 -
Capital element of finance lease rental payments (28,690) (128,691)
________________ ________________
Net cash inflow (outflow) from financing 743,157 (128,691)
________________ ________________
Increase (decrease) in cash in the year 3 2,282,299 (2,630,075)
_________ _________
Reconciliation of movements in group shareholders' funds for the year ended 31 March 2006
2006 2005
£ £
Profit (loss) for the financial year 2,074,406 (1,211,058)
Other recognised gains and losses relating to the year 1,858 (2,652)
Proceeds on issue of shares 771,847 -
________________ ________________
Net addition to (reduction in) group shareholders' 2,848,111 (1,213,710)
funds
Opening group shareholders' funds 3,742,108 4,955,818
________________ ________________
Closing group shareholders' funds 6,590,219 3,742,108
_________ _________
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 2005 or 2006, but is derived from those accounts. Statutory accounts for the year ended 31
March 2005 have been delivered to the Registrar of Companies.
The auditors have reported on the accounts for the years ended 31 March 2006 and 2005: 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 2005.
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 profit (loss) to net cash inflow (outflow) from operating activities
2006 2005
£ £
Operating profit (loss) 1,829,852 (1,521,509)
Depreciation and amortisation of licenses 552,934 395,419
Increase in stocks (21,447) (196,637)
(Increase) decrease in debtors (1,322,584) 267,399
Increase (decrease) in creditors 867,563 (463,545)
Decrease in provisions (141,034) (132,836)
Loss on disposal of fixed assets - 3,055
________________ ________________
Net cash outflow from operating activities 1,765,284 (1,648,654)
_________ _________
3. Reconciliation of net cash flow to movement in net funds
2006 2005
£ £
Increase (decrease) in cash in the year 2,282,299 (2,630,075)
Cash outflow from decrease in lease financing 28,690 128,691
________________ ________________
Change in net funds resulting from cash flows 2,310,989 (2,501,384)
Other non cash changes - 242,619
Translation differences 1,858 (2,652)
________________ ________________
Change in net funds in the year 2,312,847 (2,261,417)
Net funds brought forward 3,384,651 5,646,068
________________ ________________
Net funds carried forward 5,697,498 3,384,651
_________ _________
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