Ithaca Energy Regulatory News (ITH)

15 Nov 2007 07:02

ITIS Holdings PLC15 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 ispleased to announce its interim results for the six months ended 30 September2007. 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 deliveredrecord half year revenues and profits from continuing operations and we arevigorously working to increase our market share in the UK. Our strong progressin international markets demonstrates that our technologies, combined with ourproven commercial model in the UK, make ITIS an attractive partner overseas.Our strategy remains to increase revenues from these international activitieswhilst ensuring steady growth from the UK business. ITIS continues to be an outstanding success story in the technology sector and Iam proud of all our achievements and the loyal staff who have contributed somuch towards this. We have consistently grown profits and revenue and been cashaccretive since 2004 and have not required any further funding since listing inOctober 2000. We remain focussed on increasing shareholder value and buildingupon 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 continuingoperations* increased 23% to £8.09m (2006: £6.57m). This increase in revenuecame predominantly from the Group's UK business - from traffic data sales toRDS-TMC customers; from data sales to local and central Government and otherthird party organisations; and from customers using the Group's various mobiletelephone information services. The Group continued to invest heavily in itsresearch and development centre in Israel during the period, spending £0.55m(2006: £0.46m). On a Group basis, profit before taxation from continuing operations* increased23% to £2.18m (2006: profit before taxation £1.76m). These results againdemonstrate that the Group's operational infrastructure is capable of supportingincremental 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 perordinary share were 2.2p, up 22.2% (2006: 1.8p). Cash balances at 30th September 2007 strengthened to £13.0m (representing 13pper share), against £11.6m at 31st March 2007. During the period the Group hasspent 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 Groupcontinues its expansion in the UK and abroad. A similar amount will be spent inthe second half of the year to 31st March 2008, funding additional computerequipment to store data and host services in the data centre. Soaring demandfor online services has led to a boom in third party data centres and by takingthis facility "in house" we believe that we will be able to better address ourneeds and be insulated from the regular price increases imposed by data centreoperators. As outlined in a circular sent to shareholders on 29th October 2007 and in theCompany's Preliminary Results to 31st March 2007, the Company is seekingshareholder approval to cancel its share premium account, which would have theeffect of creating a substantial distributable reserve which will be availablefor the payment of dividends. If the resolution to cancel the Company's sharepremium account is passed by shareholders, the Company will then seek theconfirmation of the High Court of Justice Chancery Division to the cancellationof the share premium account. On the current timetable, the cancellation wouldbecome effective on 24th January 2008. Once this is effective, ITIS intends topay a maiden dividend of 1.5p per share. The discontinued operations relate to the sale on 26th March 2007 of NavTrakLimited ("NavTrak"), the Group's stolen vehicle tracking subsidiary, to CobraAutomotive Technologies spa. Adoption of IFRS The 31st March 2007 comparative figures are now shown as unaudited as they arenow presented in accordance with IFRS. The adoption of IFRS has resulted indisclosure and presentational changes only and has not made necessary therestatement 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. Oursustained leadership in this competitive market is proof that ITIS possessesstrong management, high quality information and scaleable systems. Our focushas been on supporting our customers by becoming an integral part of theirnavigation solutions rather than by competing with them in developing andmarketing our own navigation platforms. ITIS continues to dominate the delivery of real-time traffic information tofactory-fitted navigation systems, personal navigation devices ("PNDs") andmobile phones with over 1.25m users. Our service is established with sixteencar manufacturers: BMW, Ford, Jaguar, Land Rover, Lexus, MINI, Mercedes-Benz,Mitsubishi, Nissan, Porsche, Renault, Rolls Royce, Saab, Subaru, Toyota andVolvo. Aftermarket and portable device customers include Active Pilot, Clarion,Co Pilot, Fujitsu, Harman Becker, Mio, Navicore, Navman, Pioneer (new contractrecently signed extending our agreement until 2012), Road Angel, Route 66,Siemens VDO, Snooper, Sony Europe, Telmap, Telenav, TomTom, ViaMichelin and WayFinder. Whilst most of the PND relationships are direct, some come through ourrelationship with ARC Europe (an association of eight major autoclubs in Europe,including the AA) where ITIS is the exclusive traffic information provider inthe UK. Our contract with the Department for Transport to provide them with historicdata finishes in February 2008. We are working hard towards replacing therevenue and profit associated with this contract in the next financial yearalthough it is too early to give precise details about how much of thisshortfall will be replaced in the UK. ITIS is now working with the Norwich Union, on a revenue share basis, to processde-personalised data derived from their "Pay As You Drive"TM insurance productsand to provide the public sector with historical traffic analysis that will helpmeasure congestion and assist with network monitoring. ITIS will offer combinedand separate datasets to local government and transport consultants throughoutthe UK and will manage processing, display and delivery of the data. Since launching the Floating Vehicle Data Service in 2001 ("FVD") we havedeveloped a comprehensive historic data set which will be valuable to all ourcustomers as they seek to improve the journey times associated with theirrouting engines. We are involved in a number of manufacturer-led initiativeswhich will lead to the use of our historic information on the location codetables provided to our RDS-TMC customers. We are pleased to announce today that Dr Stephen Ladyman, Member of Parliamentfor South Thanet will be joining ITIS as a special advisor to the Company. DrLadyman was previously Minister of State for Transport from May 2005 until June2007, during which time he was involved with all matters related to roadtransportation in the UK. He will advise the Company on strategy and newproduct development and will represent the Company where relevant with foreigngovernments. In July we announced that, through our partnership with 4 Digital Group, we hadsecured exclusive access to data capacity (channel bandwidth) on the UK's secondNational Digital Radio multiplex for 12 years. ITIS will provide a range oftraffic information services aimed at factory-fitted and portable navigationsystems. This exclusive agreement will enable ITIS not only to provide continuity of itsquality service to its existing customer base throughout the transition periodof analogue to digital radio switchover, but also will enrich and increase ourdynamic content offering. INTERNATIONAL BUSINESS REVIEW ITIS was an early adopter of using vehicles as probes to detect traffic flow andalong with our cellular derivative of this, we have created the mostcommercially successful traffic business of this type anywhere. We supportnational operations in the UK, Israel, and Belgium and many other city basedpilot schemes which we are confident will lead to further country wide systems.Floating Vehicle Data (FVD) and Cellular Floating Vehicle Data (CFVD) have nowbecome recognised technologies and are associated with high quality, butrelatively low cost traffic information. ITIS in turn is recognised as themarket leader in this area. We are forming a new Joint Venture to be called 'Netstar Traffic' in SouthAfrica with Altech Netstar. Altech Netstar is a wholly owned subsidiary of theJSE listed Altech Group and is the leading stolen vehicle tracking and recoverybusiness in Southern Africa, with a subscriber base of over 450,000 vehicles.Netstar also is an established provider in the vehicle fleet managementbusiness. Netstar Traffic will shortly be deploying ITIS' technology throughoutSouth Africa and will provide commercial services to the automotive, mobile andGovernment sectors. Our business in Asia is developing quickly. To accelerate this further, ITOCHUCorporation will be collaborating with us to promote CFVD and FVD businessesthrough their active development of Intelligent Transport Systems in Japan,Taiwan and other countries in Asia. ITOCHU are a global trading company withheadquarters in Japan and 133 offices overseas. In Australia, Intelematics, which licenses our TMC technology, successfullylaunched a TMC service 'SUNA Traffic Channel' in the summer and is now workingwith a number of OEMs and leading PND manufacturers with a pre-Christmasconsumer launch planned on a number of PND devices. The service is distributedboth as a broadcast RDS-TMC service, and a complementary XML-TMC servicesupporting networked devices and web portals. Traffic Intelligence continues tomake good progress in Australia and we expect to commence work on a major newcellular project in the next few months. Our Belgium licensee, Be-mobile, has now deployed a nationwide probe data systemusing cellular data from Proximus, the largest mobile operator in Belgium. Thisis the first nationwide cellular deployment outside Israel and marks asignificant milestone for the company. Be-mobile will be launching commercialradio traffic broadcasting, IVR and internet services in Belgium this month. Weare pleased as well with the progress that we are making in Ireland, the CzechRepublic and Spain. On the 6th December 2005, the Company announced that an agreed form contractwith the Missouri Department of Transportation ("MODOT") had been approved bythe Missouri Highways and Transportation Commission. Since then we have updatedshareholders as to our progress here, which at times has been much slower thanwe would have liked. In recent months encouraging progress has been made and weare now working to a new delivery plan and have started to supply real-timeinformation for evaluation by MoDOT on some key roads. We remain committed todelivering America's first State wide CFVD application in the near future andwill continue to update our shareholders on our progress in this area. CURRENT TRADING & PROSPECTS In recent months there has been industry consolidation with favourable presscomment about the growing navigation market and the appetite from both operatorsand device manufacturers for Location Based Services. ITIS is very well placedto take advantage of this growth around the world and will maximise its existingrelationships to ensure that we remain at the forefront of this fast movingmarket. ITIS enjoys a reputation for innovation, high levels of data quality andcommercial success. These attributes have ensured that across a wide variety ofmarkets ITIS has been sought out as a "partner of choice" by significant playersin their respective local markets. ITIS has invested significant financial andpersonnel resources in its international business to capitalise on this positionand we are beginning to see the results of this investment. As theserelationships develop, the board expect the international business to become anincreasing proportion of revenue and profits in the next few years. The Board is encouraged by the Group's performance overall and we remainconfident that our strategy of closely managing the UK business whilstgenerating increasingly significant international revenues will provide anexciting 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 operationsRevenue 6 8,086,716 6,566,506 14,171,896Cost 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 - - 4,056,923Interest receivable and similar income 336,060 111,631 312,127Group 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 operationsProfit 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 9,445,845Minority 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 shareBasic and diluted earnings per share from continuing 3 1.6 1.8 5.2operations (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 9,445,845Currency 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 9,444,196Minority interest - (4,036) - __________ __________ __________ Consolidated balance sheet Note 30 September 30 September 31 March 2007 2006 2007 Unaudited Unaudited Unaudited £ £ £Non current assetsIntangible assets 541,541 502,515 684,838Property, plant and equipment 1,226,323 925,874 932,997Deferred tax asset 882,563 - 1,491,830Other receivables - 27,500 98,337 __________ __________ __________ 2,650,427 1,455,889 3,208,002 __________ __________ __________Current assetsInventories - 283,442 -Trade and other receivables 6,450,163 4,982,087 4,690,805Cash 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 liabilitiesTrade 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 liabilitiesOther 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 reservesCalled-up share capital 5,230,270 5,230,270 5,230,270Share premium account 38,070,740 38,070,740 38,070,740Retained 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 activitiesInterest received 336,060 111,631 312,127Proceeds on sale of subsidiary - - 3Costs of disposal - - (164,484)Net cash balances disposed of with subsidiary undertaking - - (4,153)Repayment of loans owed by subsidiary - - 2,199,997Proceeds on disposal of property, plant and equipment - - 17,749Purchases 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 5,875,253Cash and cash equivalents at beginning of period 11,571,102 5,697,498 5,697,498Effect 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 GenerallyAccepted Accounting Principles ('UK GAAP'). Following a revision in the AIMRules, the Group is required to prepare its 2008 consolidated financialstatements in accordance with International Financial Reporting Standards(IFRS). Accordingly these interim accounts have been prepared using accounting policiesconsistent with the accounting policies set out below. Management expect thesepolicies to apply in the Group's first IFRS Annual Report for the year ending 31March 2008. Adoption of these policies has resulted in disclosure andpresentational changes only and has not made necessary the restatement of anybalances. The rules for first time adoption of IFRS are set out in IFRS 1 'First timeadoption of International Financial Reporting Standards'. IFRS 1 requires thatIFRS be applied retrospectively unless a specific exemption is applied. Inpreparing this financial information, the Group has adopted the followingexemptions: • 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 'InterimFinancial Reporting' in full in the preparation of these consolidated interimfinancial statements. a) Basis of accounting The financial statements have been prepared in accordance with IFRS. Thefinancial statements have been prepared on the historical cost basis. Theprincipal accounting policies adopted are set out below. b) Basis of consolidation The Group financial statements consolidate the financial statements of ITISHoldings plc and its subsidiary undertakings (made up to 30 September). Theresults of subsidiaries acquired are consolidated for the periods from the dateon which control passed. Acquisitions are accounted for under the acquisitionmethod. 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 earnedunder contractual arrangements, this is recognised in line with contractualperformance. Where the right to receive consideration is dependent upon thefulfilment of milestones or other customer-acceptance events, revenue isrecognised 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 isincurred. Development expenditure is also written off, except where thedirectors are satisfied as to the technical, commercial and financial viabilityof individual projects. In such cases, the identifiable expenditure is deferredand 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 provisionfor impairment. Licences are written off over their useful economic life, whichis the period of the licence agreement. Intellectual property is included atcost and amortised on a straight line basis over 5 years, which is theirestimated useful economic life. f) Property, plant and equipment Property, plant and equipment is stated at cost, net of depreciation and anyrecognised impairment loss. Depreciation is charged so as to write off the costor valuation of assets, over their estimated useful lives, using the straightline 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 netrealisable value. Cost comprises direct materials and, where applicable, directlabour costs and those overheads that have been incurred in bringing theinventories to their present location and condition. Net realisable value isbased on estimated selling price, less further costs expected to be incurred tocompletion and disposal. Provision is made for obsolete, slow-moving ordefective 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 leasetransfer substantially all the risks and rewards of ownership to the lessee.Rentals payable under operating leases are charged to income on a straight linebasis over the term of the relevant lease. i) Taxation Current tax, including UK corporation tax and foreign tax, is provided atamounts expected to be paid (or recovered) using the tax rates and laws thathave been enacted or substantively enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Timingdifferences are differences between the Group's taxable profits and its resultsas stated in the financial statements. A net deferred tax asset is regarded asrecoverable and therefore recognised only when, on the basis of all availableevidence, it can be regarded as more likely than not that there will be suitabletaxable profits from which the future reversal of underlying timing differencescan be deducted. Deferred tax is measured at the average tax rates that are expected to apply inthe periods in which the timing differences are expected to reverse, based ontax rates and laws that have been enacted or substantively enacted by thebalance sheet date. Deferred tax is measured on a non-discounted basis. j) Pensions The Group operates a defined contribution pension scheme and the pension costscharged against profits represent the amount of contributions payable to thescheme in the year. Differences between contributions payable and contributionsactually 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 thedate of the transaction. Monetary assets and liabilities denominated in foreigncurrencies at the balance sheet date are reported at the rates of exchangeprevailing at that date. The results of overseas operations are translated at the average rates ofexchange during the period and their balance sheets as at the rates ruling atthe balance sheet date. Exchange differences arising on translation of theopening net assets and results of overseas operations are reported in thestatement of total recognised gains and losses. All other exchange differencesare included in the profit and loss account. l) Share-based payment The Group has applied the requirements of IFRS 2, Share-based Payment. Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants of equity instruments after 7 November 2002 that were unvested as of 1April 2006. The Group issues equity-settled share-based payments to certain employees.Equity-settled share-based payments are measured at fair value (excluding theeffect of non market-based vesting conditions) at the date of grant. The fairvalue determined at the grant date of the equity-settled share-based payments isexpensed on a straight-line basis over the vesting period, based on the group'sestimate of shares that will eventually vest and adjusted for the effect of nonmarket-based vesting conditions. Fair value is measured by use of the Black-Scholes pricing model. The expectedlife used in the model has been adjusted, based on management's best estimate,for the effects of non-transferability, exercise restrictions, and behaviouralconsiderations. 2. Preparation of the interim financial information The summarised results for the six months to 30 September 2007 and thecomparative results for the half year to 30 September 2006 are non-statutoryaccounts within the meaning of Section 240 of the Companies Act 1985 and havenot been reported upon by the auditors under Section 235 of the Companies Act1985. The comparative figures for the year ended 31 March 2007 are an abridged versionof the Company's full accounts adjusted for presentation in accordance with IFRS(see note 1) and, together with other financial information contained in theseinterim results, do not constitute statutory accounts of ITIS Holdings plcwithin the meaning of section 240 of the Companies Act 1985. The statutoryaccounts for the year ended 31 March 2007 have been delivered to the Registrarof Companies. The report of the auditors was not qualified and did not contain astatement 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 5.2operations (p) __________ __________ __________ The profit basis for adjusted earnings per share has been calculated to includeonly continuing operations and to exclude the impact of exceptional items. Areconciliation between profit for the financial period and the profit used tocalculate 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 3,664,426deferred tax credit) __________ __________ __________Adjusted basic and diluted earnings per share from 2.2 1.8 3.7continuing operations excluding in 2007 deferred taxcredit (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 9,445,845Adjustments forDepreciation and amortisation of licences 359,608 308,597 840,023Interest income (336,060) (111,631) (312,127)Share-based payment expense - 28,839 -Finance costs - - 707Income tax expense 609,267 - 5,737Deferred 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 55,190Increase 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 9,445,845Other 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 9,527,011Opening 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 andresults relate to this class of business. The geographical analysis of revenueand 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 18,152,209Discontinued operations - (2,318,009) (4,616,585) _________ _________ _________United Kingdom 7,676,345 6,395,308 13,535,624Mainland Europe 322,490 47,946 310,081U.S.A. - 28,252 67,545Israel 47,879 - 2,820Intersegmental sales 971,000 833,759 1,869,442Other 40,002 95,000 255,826Eliminations (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 4,868,392Mainland 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 95,000 274,613Decell (see note 7) (148,643) - (190,110) _________ _________ _________Operating profit 1,839,895 1,647,150 3,358,743 _________ _________ _________ Other gains and losses - - 4,056,923Interest received 336,060 111,631 312,127Finance costs - - (707) _________ _________ _________Profit before tax 2,175,955 1,758,781 7,727,086 _________ _________ _________Tax (609,267) - 1,486,093Profit 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 AvivDistrict Court by an Israeli Company, Decell Technologies Ltd, and a USCorporation, Decell Inc., against six defendants including ITIS Traffic ServiceLtd. ("ITSL"), a wholly owned subsidiary of the Group. The plaintiffs allege aninfringement 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 strongdefences to the claims asserted in these proceedings and intend to defendvigorously such claims. The Directors believe, having taken advice from legalcounsel, it is unlikely that a liability will arise from this litigation and asa result no contingency in respect of the claim has been provided for in thecompany accounts. An application for security of costs has been made and ITSL will seek to recoverall costs incurred in relation to the proceedings. However the Directors notethere 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 ofthe Company and copies will be available for members of the public uponapplication to the Registered Office at Station House, Stamford New Road,Altrincham, Cheshire, WA14 1EP. This information is provided by RNS The company news service from the London Stock Exchange