Ithaca Energy Share Discussion Threads

[cheshiremoggie] 30/11/2008 21:36

I notice that the TomTom share price is down from €61 to about €4.5 this year. The worry (among others) seems to be the level of debt held by the company. That makes the drop in this share look small(ish).

This recession will be an opportunity for some and the death knell for others. Which is which is rather difficult to tell at the moment but a high level of debt would not be a good sign - the complete opposite of the last 10 years!

CM.

[lucky punter] 28/11/2008 16:29

CM
Is the armageddon coming or has it been through already. Clearly the issues have not blown through yet but we appear to be in quiet times.
I would suggest that even if there is more to come the market is now so low that it may have little impact. Greed and fear, where are we. My fear has greatly reduced and I have started to buy again but only very cautiously. The trouble is that many did not sell in the first place so will not be able to support the recovery with cash.

[cheshiremoggie] 28/11/2008 16:24

A good question might be : How are TomTom and Navteq going to be affected by the recession? TomTom for instance has a good deal of its business in the consumer hardware business. Are people really going to be buying these in the same numbers as before and will TomTom still be a profitable company throughout the depression.
Will TomTom be investing large sums in new business areas during the coming economic meltdown?
The coming armageddon will affect almost all companies I would guess and being large does not guarantee success - ask Citigroup.

Dont want to depress anyone though.

CM.

[tom306] 28/11/2008 16:02

LP
Don't disagree that a divi is not priced in "at the moment" (I didn't say it was) but it has been for much of the time since it was announced and yes a maiden does set up an expectation for the future. I think we also agree that current trading and cash show such any expectation for 2009 is likely to be misplaced.

ITH may or may not have potential but the market has been marking it down consistently for over a year now, despite optimistic noises about the international opportunites, so those who see it as a bargain still don't see risk/reward in their favour yet, you included. It will come down to whether or not there really is an international business model and if they can they get it up running and generating revenues and cash before TomTom and Navteq mobilise their own fast growing resources. I guess that is where we came in......

[utterly pointless] 28/11/2008 15:51

Yes... now at what point should I crystallise my (huge) loss... any suggestions?

[lucky punter] 28/11/2008 15:35

UP Clearly there is some interest and a small amount of persistant volume.

[utterly pointless] 28/11/2008 13:08

i rather think that the wider market is not thinking about itis at all... but i certainly agree with you that no-one with their head screwed on straight is expecting another dividend

[lucky punter] 28/11/2008 12:14

A dividend is clearly not priced into the share price at the moment and every holder must be expecting to get zero this year. The maiden dividend was to increase the profile of the company but it also builds in an expectation of the future. I often sell up when the company pays the maiden dividend because expansion costs cash and my investment strategy concerns growth not dividends.
I think the wider market views Itis in the current financial climate as a bargain because it will respond to economic recovery and recovery is never stronger than immediately after a recession.
You say that Itis now have problems in the UK but their business is much like an estate agent. In the right market its a license to print cash but when the market turns down they are hit hard. It does not make the business of selling houses any less profittable on the next run but clearly the time to buy in is when its on its knees.

[tom306] 28/11/2008 11:27

Clearly, the payment of a maiden dividend just when the company was using cash to buy Trafficlink was not the smartest thing the board has done. With hindsight, why was the entire Trafficlink acquisition in cash? Many thought at the time it was a sign of strength but I am no longer so sure. It could be they were negotiating from a position of weakness given the problems they now have in the UK.

However, the share price has benefited from the 1.5p dividend for some time. Now that the 2009 one looks to be in doubt and given the problems in the UK and falling overseas revenues, the current price is probably about right.

[lucky punter] 28/11/2008 10:33

Tom
I cannot see any reason to spread profits with a dividend when there are no profits to spread.
The overseas costs are based around forming the contracts and deploying the technology. This does cost money but is extremely small when considered against the reward. I am sure they are pushing on with the best of the prospects even if some of the more marginal markets have to wait.
They will definately have to pay more than 8 million as many of the larger holders are in at much higher levels. The market can see that Itis will recover strongly with market conditions and as such presents fantastic leverage for your cash. The recent drop has not put buyers off, the fear/greed balance is heavily at play in the markets and its tipping towards Greed.

[tom306] 28/11/2008 10:01

Whilst I agree they would have to pay more than 8 million, how much more will depend upon how high debt is at the time. There was nothing in the interims to indicate improved trading in the short term and whilst they are working with partners overseas, it is still not cheap to set up abroad, a fact they themselves have acknowledged. So unless they are not going to pay a 2009 dividend, it looks as if they may have to use at least part of the new facility.

[lucky punter] 28/11/2008 09:19

Tom
I did say that I would be buying over the next 3 to 6 months. The activity will not be for several months yet but they are right, they are not looking to raise cash and have a tiny cap so why bother listing and paying 175k a year in fees for nothing. It will cost them a bit more than 8 million though.

[tom306] 27/11/2008 23:29

But you better get in quick ......


ITIS 'to be taken private'
Kevin Feddy - Manchester Evening News
27/11/2008


TRAFFIC information business ITIS Holdings looks set to be taken private after it lost a third of its market value.

Shares in the Altrincham-based group plunged 4p to 8p, valuing the business at just over £8m.

The M.E.N. understands advisers have been called into look at options for the company, which could be sold to a trade buyer or undergo a management buyout.

ITIS, which is listed on AIM, has seen its shares slide from a year-high of 50p.

One industry source said: "It's a good business but the shares have not reflected this and in many ways it is pointless being listed on the stock market. There could well be some corporate activity in the new year."

Chief executive Stuart Marks declined to comment on the speculation.

He said 14 posts out of a 250-strong workforce had been axed this month as ITIS looks to drive down costs. The business, which gathers information about traffic flows and congested routes and distributes the data via in-car navigation systems, announced pre-tax losses of £988,000 for the six months to September 30, compared with profits of £2.175m in the same period last year. Revenues climbed from £8m to £8.3m.

It earns money when drivers call on their mobile phones for traffic flow information, and by installing its technology in new cars. It also sells information to government departments and other organisations, including radio stations.

Mr Marks said: "Given the strength of our business model and our consistent earnings growth in recent years, trading levels in the first half of this year are, of course, disappointing.

"We have successfully renewed all contracts that ended in the period and have won new business.

"However, new car sales are at their lowest level since 1991 and the suddenness with which those sales deteriorated together with our fixed costs has contributed significantly to the fall in our results.

"This was combined with an unprecedented rise in fuel prices, which led to a reduction in callers to our service due to below-average levels of congestion."

[tom306] 27/11/2008 23:19

LP
I like your style! You're talking them up but not backing them with your cash. See, we actually share part of that strategy. :-)

[lucky punter] 27/11/2008 23:07

Restas
A lack of diversification is not an issue when you have the whole world as your market place. TFC have been forced to re invent themselves with limited success. I do agree regarding the divi and that was the reason I sold out long ago.
The industry is consolidating by partnership as well as targeted acquisitions. I have confidence in the Itis business model and its ability to generate income. I have confidence that they can replicate this success around the world. Not as the only Traffic info provider but as one traffic info provider.

[restassured] 27/11/2008 15:25

The problems for ITIS are actually getting their products past the testing stage.It has always been one thing to claim you have superior products,but another to generate profits out of them.
A lack of diversification.
A naive management, that wasted precious capital by paying a dividend before the company was firmly established.
They are now a loss making company whose revenues fell by a quarter.

One glimmer of hope is the industry is about to consolidate and that makes them a potential target.
Having said that,there are more interesting assets with proven technologies out there,which will be higher on any predators shopping list.

[mazarin] 27/11/2008 12:21

As a long term holder of CYH & TFC and formerly ITH, I read with interest all recent comments of the above contributors. I found them helpful and informative, so thanks to those concerned, its refreshing to read a good debate, particularly when the sp's disappointingly down, however, I really do believe telematics will eventually make money, but the real problem is when?

I was considering getting back into ITH, but decided to await Interim report before doing so. I recall when LP got back in last time, the share price did move in his favour.

[lucky punter] 26/11/2008 19:44

Itis business model is exposed to tough times and the revenue drop off was to be expected. They were very slow in responding to the obvious with attempts to reduce costs only in the last two months, I guess it took them six months to think about it.
The company need to organise their direction with regards to the rest of the world, clearly the product has some appeal and that is where the value should lay for new investors. The benchmark has been set low in terrible market conditions, once the true share price reflects that fact then this looks value.
With regards to the cash situation the company have recognised the need to protect themselves in uncertain times.
I made a very small buy a couple of days ago but will wait to see where this goes before adding further.

[cheshiremoggie] 26/11/2008 12:13

Everyone has an agenda - its perfectly natural.

A £1m loss is not good even if most of it was 'exceptional'
Still, the company is still generating cash which is good - although the decision to pay £1.4m dividend thus eating up far more cash than was generated looks particularly stupid.

Interesting to note that congestion is down in the UK - it would seem to be a sensitive predictor of economic conditions - maybe ITIS could market that info as such?

CM

[flyfisher] 26/11/2008 11:17

adam, they have already said that the deferred consideration is unlikely to be paid , due to a large expected contract not being won.

[adam] 26/11/2008 10:18

what is Itis worth then?

I am looking at these again, but last time I bought at 7p was in the dot-com bust and they were a discount to a substantial cash balance. I agree with Tom that they will be taken out, and I would think at a premium to this price, unless they over-paid by a very substantial amount for Traffic Link. Surely worth at least £16m then?

• Initial cash payment of £10.5 million (from existing resources) and
deferred, performance-related cash consideration of up to £6.0 million by June
2009.

How much of the deferred cash consideration is due? If the full whack, then this might pose a problem.

[flyfisher] 26/11/2008 09:45

tom , thanks for your posts, accurate and insightfull.
no position

[utterly pointless] 26/11/2008 09:35

No, but it demonstrates your potential agenda. As well you know.

[tom306] 26/11/2008 09:29

And the relevance of your point is?

No doubt my desire to show how "clever" I was to get out at a big loss completely invalidates the points I have raised.