iTouch plc Preliminary results for the year ended 31 December 2001
Announcement posted by iTouch 23 Mar 2002
Full year revenues of 15.0m (AUD$38.1m), up 260% on 2000
iTouch plc, a leading Wireless Applications Service Provider (WASP), today announces its preliminary results for the year ended 31 December 2001.
The results show strong growth throughout 2001, with revenues up 260% on 2000. The Group, which listed on the London Stock Exchange in August 2000, ended the year with cash of 36.1m (AUD$91.6m).
Highlights
2001 Revenue 15.0m (AUD$38.1m) + 260% (1)
Corporate SMS Customers H2 678 (AUD$1720.3) 39+ 75% (2)
SMS Messages H2 4.6m (AUD$11.7m) + 54% (2)
Cash (3) 36.1m (AUD$91.6m)
Fourth Quarter Cash Outflow (4) 1.5m (AUD$3.8m)
Notes
1.Growth is 2001 v 2000.
2.Customers and messages are monthly average data for H2 2001. Growth is H2 2001 v H1 2001.
3.As at 31 December 2001.
4.Excluding acquisition costs
Ivan Fallon, Chairman, said:
iTouchs first full financial year as a listed company has been an excellent one, achieving revenues of 15.0m (AUD$38.1m) compared to 4.2m (AUD$10.65m) in the previous period. We have now had six consecutive quarters of good growth, with revenues of 5.0m (AUD$12.68m) in the fourth quarter, our best yet. Cash outflow (excluding acquisitions) in the final quarter was 1.5m (AUD$3.8m) and we ended the year with cash of 36.1m (AUD$91.6m).
The current year has started well, we are in a strong financial position and we are making good progress towards our goal of achieving profitability.
2001 Statement
Group Results Summary
iTouch has had another excellent year. We have achieved further growth in Voice (formerly referred to as IVR) and SMS with revenues growing in both our corporate and consumer businesses. Actual revenues in the year to 31 December 2001 were 15.0m (2000: 4.2m), of which 5.0m was achieved in the fourth quarter.
Our corporate business continues to build. We had an average of 678 SMS Corporate customers during the second half of 2001, an increase of 75% over the first half of 2001. The average number of SMS Corporate messages sent per month was 2.1m in the second half, an increase of 72% on the first half, with strong growth in Australia (largely from the Telequity acquisition), South Africa and the UK. Business Mobility (previously referred to as Mobile Office) products are being marketed in all countries and local sales teams have received encouraging product feedback. In the second half we averaged over 52 customers for Business Mobility and related mobile services and products, including Mainfreight, Telstra-Saturn, Milkvend customers, Livestock Improvement Corporation, Chubb, Cadbury, Courier Post and Belfast Telegraph and we are well positioned to benefit from growth in orders worldwide once global market conditions improve.
Our consumer business has also had a good year. Monthly Consumer SMS messages averaged 2.5m in the second half, an increase of 42% on the first half, reflecting growth in South Africa and Ireland, offset by fewer messages in the UK. Voice in the second half was well ahead of the previous half year with over 2.5m call minutes on average per month, a 177% rise on the first half. Growth was strong in the UK (boosted by the acquisition, in October 2001, of the Interactive Voice business from Thus plc), Australia as a result of the Telequity acquisition, as well as in Ireland and South Africa where we managed the Big Brother votelines.
We continue to work very closely with mobile network operators and now have 16 contractual relationships in the following countries:
Country Network Operator
UK Vodafone and BT Cellnet
Ireland Vodafone and Digifone
South Africa Vodacom and MTN
Australia Telstra, Optus, Vodafone and Orange
New Zealand Telecom NZ and Vodafone
Israel Cellcom, MIRS, Pelephone and Orange
In addition, our revenue sharing and licensing venture with MIH Asia has the following 4 contractual relationships with network operators:
Country Network Operator
Thailand AIS
Indonesia Excelcomindo, Indosat and Satelindo
Revenues for the year to 31 December 2001 were 15.0m, 260% up compared to the period to 31 December 2000. Revenue growth was generated organically (revenue from continuing operations, excluding acquisitions, for 2001 was 11.9m, up 195%) and was supplemented by strong performances in the businesses we acquired in the year. In 2001, Group Voice revenues increased 153% to 5.0m, whilst Group SMS revenues were up 495% to 6.1m. Other Group revenues were 3.9m, up 236%. The gross profit in 2001 was 8.1m and the gross margin was 54%. Second half 2001 revenues totalled 9.1m, 52% up on first half 2001 revenues. Voice revenue in the second half was up 137% on the previous half, SMS revenue declined in the second half by 1% (with growth in Australia offset by a slower second half, due to market conditions, in the UK and Ireland) and other revenues were up 77%. The gross profit was 5.0m in the second half, an increase of 1.8m (56%) on the first half. The gross margin in the second half was 55%.
iTouch is still in the early stages of development and, as expected, is incurring losses at the operating level. The loss before amortisation, depreciation and share incentive scheme charges was 10.1m in the year (2000: 9.1m). After net interest income of 1.9m, share incentive scheme charges of 0.5m, depreciation of 0.7m, a charge for amortisation of 5.3m, share of associate/JV losses of 0.4m and an exceptional charge (mainly accelerated goodwill amortisation) of 0.8m recorded on the disposal of the Groups holding in Digital Mall, the loss in the year on ordinary activities before tax was 16.1m. This compares with a loss on ordinary activities before tax of 15.3m in 2000.
The loss before amortisation, depreciation and share incentive scheme charges for the second half was 5.3m. This compares to a loss of 4.9m in the first half, reflecting additional one-off integration costs in the fourth quarter, following the acquisition of the Interactive Voice business from Thus plc. After net interest income of 0.8m, share incentive scheme charges of 0.1m, depreciation of 0.4m, a charge for amortisation of 2.5m, share of associate/JV losses of 0.2m and an exceptional Digital Mall charge of 0.8m, the loss in the second half on ordinary activities before tax was 8.5m. Cost control has continued to be firm, with savings achieved against budget in discretionary areas.
The basic loss per share for the year was 5.6p and the adjusted loss per share was 3.0p, after adjusting for amortisation charge, share incentive scheme charge, the exceptional charge and depreciation charge. The Group had cash of 36.1m as at 31 December 2001. Cash outflow for 2001, excluding acquisitions, was 7.7m. No dividend is proposed. Total headcount at the end of December stood at 482, up from 407 at 30 September 2001, largely reflecting the acquisition of the Interactive Voice business less the disposal of our interest in Digital Mall.
Australasia
iTouch Australia had an excellent second half with revenue growth of over 155% compared to the first half. Our consumer business continues to build. Smart Messages revenues were up 246% in the second half and we provide services on Vodafone, Optus, Orange and Telstra as well as the NineMSN and Yahoo web portals. WAP revenues increased by 349% in the second half; we now provide services to all of the key mobile operators in the Australian market. On the corporate side, we now have 132 Corporate Data customers, including a number of high profile companies in the Research, Finance, Transportation, Freight, Sports and Telecommunications sectors and revenues rose 170% half-on-half. A new web based SMS Corporate service was launched in quarter three in conjunction with a major network operator. Business Mobility corporate solutions are being marketed actively with strategic partners and we are currently implementing a number of mobility solutions for clients, including a freight delivery and dispatch solution for Mainfreight.
In July 2001 we acquired a 75% interest in Telequity (Pty) Limited, an Australian telecommunications company. Telequity provides voice and data services to consumers and corporate customers. Services include data based paging, voice based credit card recharging for pre-paid mobile customers, Voice services and a call centre. The acquisition provides us with:
one of the top four corporate IVR bureaux in Australia;
new strategic and contractual relationships with major media and network operators in Australia; and
an opportunity to rollout the iTouch range of mobile services through Telequitys customer base.
The integration of Telequity into iTouch Australia has gone well. Telequity achieved revenue of over 1.4m (AUD$3.5m) in the second half, mainly from Commerce, Voice and SMS Corporate revenues. Principal customers include Optus, Network 7, RAC, HBF and West Australian Police.
In quarter four, due to local market conditions, the decision was taken to refocus iTouch New Zealands operations on selling Business Mobility solutions. The consumer products previously offered by iTouch New Zealand are now being supplied by iTouch Australia. iTouch New Zealand revenue doubled in quarter four with excellent growth in Business Mobility revenues (up 228% quarter-on-quarter). In the fourth quarter, we had an average of 19 customers for Business Mobility and related mobile services and products including Cadbury, Phoenix Freight, Courier Post and Chubb.
iTouch Business Mobility (formerly Holliday Group)
iTouch Business Mobility, one of the top software developers in the world for handheld Palm OS and Pocket PC, has been driving the Business Mobility international marketing effort hard throughout the year. Feedback from iTouch countries has been positive and, despite difficult market conditions in 2001, the well established New Zealand business has continued to grow. Initial orders have also been received by iTouch companies in South Africa, Australia, Ireland and the UK. As expected, iTouch Technology Solutions (the original Holliday business of electronic product development and consultancy) had lower sales in the second half. Following a large one-off sale of hardware in quarter two, the main sales focus in the second half has been on Business Mobility. iTouch had an average of 52 customers for Business Mobility and related mobile services in the second half including Telstra-Saturn and Meridian Energy. We have built a solid network of channels to market in our countries of operation, and we are well positioned to benefit from growth in orders worldwide once global market conditions improve.
MIH
Our licensing and revenue-sharing venture with MIH Asia BV, the Asian arm of the Nasdaq listed MIH Limited, continues to develop. MIH/iTouch provides wireless data services to mobile customers in Indonesia, through the Excelcomindo, Indosat and Satelindo networks and in Thailand through the AIS network.
Management
The management team has been strengthened and deepened over the past year. With effect from 1 April 2002, Wayne Pitout, one of the two founding partners, will take on the wider responsibility of Chief Executive Officer, while Avi Azulai, Managing Director, will concentrate on long-term strategy and the development of the next generation of products. Neil Canetty-Clarke, the former Chief Financial Officer who took the group successfully through the IPO process, has taken up a senior position at Granada. John Miller, previously Group Financial Controller, has been appointed acting Chief Financial Officer. Each of the country operations is now headed up by an experienced Managing Director, with strong teams beneath them, and the Labs development operation in Cape Town is run by the very capable Deon Botha. The team will be further strengthened with the addition of a new IT Director in 2002.
Outlook
iTouch has had an excellent year. We have grown our existing base in the UK, Ireland, South Africa and Australasia, and supplemented this with key acquisitions to enhance our scale, product offering and technological capabilities.
Revenue will again increase in the first half of 2002, significantly helped by the recent acquisition in the UK of the Interactive Voice business. Our focus for 2002 is to continue to drive both consumer and corporate sales through our WASP model, to enable us to become the dominant player in our key markets; to contain costs rigorously; and to complete the integration of the Interactive Voice business into iTouch UK. Although general telecommunications market conditions remain difficult we have confidence in our products and we remain well positioned in the mobile sector with an international business, a strong cash position and a fully funded business plan.
Ivan Fallon
Chairman
19 March 2002
The results show strong growth throughout 2001, with revenues up 260% on 2000. The Group, which listed on the London Stock Exchange in August 2000, ended the year with cash of 36.1m (AUD$91.6m).
Highlights
2001 Revenue 15.0m (AUD$38.1m) + 260% (1)
Corporate SMS Customers H2 678 (AUD$1720.3) 39+ 75% (2)
SMS Messages H2 4.6m (AUD$11.7m) + 54% (2)
Cash (3) 36.1m (AUD$91.6m)
Fourth Quarter Cash Outflow (4) 1.5m (AUD$3.8m)
Notes
1.Growth is 2001 v 2000.
2.Customers and messages are monthly average data for H2 2001. Growth is H2 2001 v H1 2001.
3.As at 31 December 2001.
4.Excluding acquisition costs
Ivan Fallon, Chairman, said:
iTouchs first full financial year as a listed company has been an excellent one, achieving revenues of 15.0m (AUD$38.1m) compared to 4.2m (AUD$10.65m) in the previous period. We have now had six consecutive quarters of good growth, with revenues of 5.0m (AUD$12.68m) in the fourth quarter, our best yet. Cash outflow (excluding acquisitions) in the final quarter was 1.5m (AUD$3.8m) and we ended the year with cash of 36.1m (AUD$91.6m).
The current year has started well, we are in a strong financial position and we are making good progress towards our goal of achieving profitability.
2001 Statement
Group Results Summary
iTouch has had another excellent year. We have achieved further growth in Voice (formerly referred to as IVR) and SMS with revenues growing in both our corporate and consumer businesses. Actual revenues in the year to 31 December 2001 were 15.0m (2000: 4.2m), of which 5.0m was achieved in the fourth quarter.
Our corporate business continues to build. We had an average of 678 SMS Corporate customers during the second half of 2001, an increase of 75% over the first half of 2001. The average number of SMS Corporate messages sent per month was 2.1m in the second half, an increase of 72% on the first half, with strong growth in Australia (largely from the Telequity acquisition), South Africa and the UK. Business Mobility (previously referred to as Mobile Office) products are being marketed in all countries and local sales teams have received encouraging product feedback. In the second half we averaged over 52 customers for Business Mobility and related mobile services and products, including Mainfreight, Telstra-Saturn, Milkvend customers, Livestock Improvement Corporation, Chubb, Cadbury, Courier Post and Belfast Telegraph and we are well positioned to benefit from growth in orders worldwide once global market conditions improve.
Our consumer business has also had a good year. Monthly Consumer SMS messages averaged 2.5m in the second half, an increase of 42% on the first half, reflecting growth in South Africa and Ireland, offset by fewer messages in the UK. Voice in the second half was well ahead of the previous half year with over 2.5m call minutes on average per month, a 177% rise on the first half. Growth was strong in the UK (boosted by the acquisition, in October 2001, of the Interactive Voice business from Thus plc), Australia as a result of the Telequity acquisition, as well as in Ireland and South Africa where we managed the Big Brother votelines.
We continue to work very closely with mobile network operators and now have 16 contractual relationships in the following countries:
Country Network Operator
UK Vodafone and BT Cellnet
Ireland Vodafone and Digifone
South Africa Vodacom and MTN
Australia Telstra, Optus, Vodafone and Orange
New Zealand Telecom NZ and Vodafone
Israel Cellcom, MIRS, Pelephone and Orange
In addition, our revenue sharing and licensing venture with MIH Asia has the following 4 contractual relationships with network operators:
Country Network Operator
Thailand AIS
Indonesia Excelcomindo, Indosat and Satelindo
Revenues for the year to 31 December 2001 were 15.0m, 260% up compared to the period to 31 December 2000. Revenue growth was generated organically (revenue from continuing operations, excluding acquisitions, for 2001 was 11.9m, up 195%) and was supplemented by strong performances in the businesses we acquired in the year. In 2001, Group Voice revenues increased 153% to 5.0m, whilst Group SMS revenues were up 495% to 6.1m. Other Group revenues were 3.9m, up 236%. The gross profit in 2001 was 8.1m and the gross margin was 54%. Second half 2001 revenues totalled 9.1m, 52% up on first half 2001 revenues. Voice revenue in the second half was up 137% on the previous half, SMS revenue declined in the second half by 1% (with growth in Australia offset by a slower second half, due to market conditions, in the UK and Ireland) and other revenues were up 77%. The gross profit was 5.0m in the second half, an increase of 1.8m (56%) on the first half. The gross margin in the second half was 55%.
iTouch is still in the early stages of development and, as expected, is incurring losses at the operating level. The loss before amortisation, depreciation and share incentive scheme charges was 10.1m in the year (2000: 9.1m). After net interest income of 1.9m, share incentive scheme charges of 0.5m, depreciation of 0.7m, a charge for amortisation of 5.3m, share of associate/JV losses of 0.4m and an exceptional charge (mainly accelerated goodwill amortisation) of 0.8m recorded on the disposal of the Groups holding in Digital Mall, the loss in the year on ordinary activities before tax was 16.1m. This compares with a loss on ordinary activities before tax of 15.3m in 2000.
The loss before amortisation, depreciation and share incentive scheme charges for the second half was 5.3m. This compares to a loss of 4.9m in the first half, reflecting additional one-off integration costs in the fourth quarter, following the acquisition of the Interactive Voice business from Thus plc. After net interest income of 0.8m, share incentive scheme charges of 0.1m, depreciation of 0.4m, a charge for amortisation of 2.5m, share of associate/JV losses of 0.2m and an exceptional Digital Mall charge of 0.8m, the loss in the second half on ordinary activities before tax was 8.5m. Cost control has continued to be firm, with savings achieved against budget in discretionary areas.
The basic loss per share for the year was 5.6p and the adjusted loss per share was 3.0p, after adjusting for amortisation charge, share incentive scheme charge, the exceptional charge and depreciation charge. The Group had cash of 36.1m as at 31 December 2001. Cash outflow for 2001, excluding acquisitions, was 7.7m. No dividend is proposed. Total headcount at the end of December stood at 482, up from 407 at 30 September 2001, largely reflecting the acquisition of the Interactive Voice business less the disposal of our interest in Digital Mall.
Australasia
iTouch Australia had an excellent second half with revenue growth of over 155% compared to the first half. Our consumer business continues to build. Smart Messages revenues were up 246% in the second half and we provide services on Vodafone, Optus, Orange and Telstra as well as the NineMSN and Yahoo web portals. WAP revenues increased by 349% in the second half; we now provide services to all of the key mobile operators in the Australian market. On the corporate side, we now have 132 Corporate Data customers, including a number of high profile companies in the Research, Finance, Transportation, Freight, Sports and Telecommunications sectors and revenues rose 170% half-on-half. A new web based SMS Corporate service was launched in quarter three in conjunction with a major network operator. Business Mobility corporate solutions are being marketed actively with strategic partners and we are currently implementing a number of mobility solutions for clients, including a freight delivery and dispatch solution for Mainfreight.
In July 2001 we acquired a 75% interest in Telequity (Pty) Limited, an Australian telecommunications company. Telequity provides voice and data services to consumers and corporate customers. Services include data based paging, voice based credit card recharging for pre-paid mobile customers, Voice services and a call centre. The acquisition provides us with:
one of the top four corporate IVR bureaux in Australia;
new strategic and contractual relationships with major media and network operators in Australia; and
an opportunity to rollout the iTouch range of mobile services through Telequitys customer base.
The integration of Telequity into iTouch Australia has gone well. Telequity achieved revenue of over 1.4m (AUD$3.5m) in the second half, mainly from Commerce, Voice and SMS Corporate revenues. Principal customers include Optus, Network 7, RAC, HBF and West Australian Police.
In quarter four, due to local market conditions, the decision was taken to refocus iTouch New Zealands operations on selling Business Mobility solutions. The consumer products previously offered by iTouch New Zealand are now being supplied by iTouch Australia. iTouch New Zealand revenue doubled in quarter four with excellent growth in Business Mobility revenues (up 228% quarter-on-quarter). In the fourth quarter, we had an average of 19 customers for Business Mobility and related mobile services and products including Cadbury, Phoenix Freight, Courier Post and Chubb.
iTouch Business Mobility (formerly Holliday Group)
iTouch Business Mobility, one of the top software developers in the world for handheld Palm OS and Pocket PC, has been driving the Business Mobility international marketing effort hard throughout the year. Feedback from iTouch countries has been positive and, despite difficult market conditions in 2001, the well established New Zealand business has continued to grow. Initial orders have also been received by iTouch companies in South Africa, Australia, Ireland and the UK. As expected, iTouch Technology Solutions (the original Holliday business of electronic product development and consultancy) had lower sales in the second half. Following a large one-off sale of hardware in quarter two, the main sales focus in the second half has been on Business Mobility. iTouch had an average of 52 customers for Business Mobility and related mobile services in the second half including Telstra-Saturn and Meridian Energy. We have built a solid network of channels to market in our countries of operation, and we are well positioned to benefit from growth in orders worldwide once global market conditions improve.
MIH
Our licensing and revenue-sharing venture with MIH Asia BV, the Asian arm of the Nasdaq listed MIH Limited, continues to develop. MIH/iTouch provides wireless data services to mobile customers in Indonesia, through the Excelcomindo, Indosat and Satelindo networks and in Thailand through the AIS network.
Management
The management team has been strengthened and deepened over the past year. With effect from 1 April 2002, Wayne Pitout, one of the two founding partners, will take on the wider responsibility of Chief Executive Officer, while Avi Azulai, Managing Director, will concentrate on long-term strategy and the development of the next generation of products. Neil Canetty-Clarke, the former Chief Financial Officer who took the group successfully through the IPO process, has taken up a senior position at Granada. John Miller, previously Group Financial Controller, has been appointed acting Chief Financial Officer. Each of the country operations is now headed up by an experienced Managing Director, with strong teams beneath them, and the Labs development operation in Cape Town is run by the very capable Deon Botha. The team will be further strengthened with the addition of a new IT Director in 2002.
Outlook
iTouch has had an excellent year. We have grown our existing base in the UK, Ireland, South Africa and Australasia, and supplemented this with key acquisitions to enhance our scale, product offering and technological capabilities.
Revenue will again increase in the first half of 2002, significantly helped by the recent acquisition in the UK of the Interactive Voice business. Our focus for 2002 is to continue to drive both consumer and corporate sales through our WASP model, to enable us to become the dominant player in our key markets; to contain costs rigorously; and to complete the integration of the Interactive Voice business into iTouch UK. Although general telecommunications market conditions remain difficult we have confidence in our products and we remain well positioned in the mobile sector with an international business, a strong cash position and a fully funded business plan.
Ivan Fallon
Chairman
19 March 2002