Ithaca Energy Share Discussion Threads

[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.

[utterly pointless] 26/11/2008 09:21

I am sure everyone who has bought a company and then sold the shares understands the desire to have their sell decision proven right.

[tom306] 26/11/2008 09:09

UP
perhaps it's just that I read what they said. They had NO borrowing facility last year. Question my agenda all you want but tell me where I have said anything about ITIS that I have not tried to substantiate.

As for my agenda, I bought into ITIS in February this year at around 48p and got out at a big loss. As we speak, the bid price is 6p, to say I am unimpressed with their performance would put it mildly.

[utterly pointless] 26/11/2008 08:52

Tom: I agree the results are poor - and the attempts to spin the results are woeful. But you undermine your credibility (at least in my eyes) by overstating your own case. ITIS doesn't, for example, as you suggest, "need to arrange a borrowing facility." It has one and is likely to have had for some time. You obviously know more about ITIS than I do but I find it difficult to read what you say with a neutral eye because you seem to have an agenda. Up to you whether you want to be seen as a deramper or board expert but for the moment I have you pinned down as the former.

[tom306] 26/11/2008 08:40

Sorry, Lucky, but those results particularly the fall in cash were worse than most expected hence the sharp fall in the share price At the AGM on 24 September Sir Trevor Chinn said "The Company remains cash positive with a strong balance sheet....." Few would agree that the balance sheet is now that strong and the need to arrange an £8m borrowing facility tends to support that.

Certainly, UK performance was as bad as expected but the bullish talk about the international business is yet to be supported by revenue. Overseas performance was much worse than most expected. At just £325k (4% of total revenue) overseas revenue fell in absolute and relative terms to around half of the previous 6 months.

In the Annual Report to March 2006, ITIS stated that "our partnership with Delcan.NET in the US is proving very successful". The current reality is that the USA generated no revenues at all and in fact they had to write back revenues earned in the past.

They also said in the same report that "we remain optimistic about opportunities in Europe and are involved in a number of advanced negotiations for the provision of traffic information" Again the reality is that two and a half years later, revenues in Europe were £227k, less than half of the previous 6 months and 30% down on the six months before that. There is as yet no momentum and in the meantime TomTom and Navteq are motoring on if you excuse the pun.

[lucky punter] 26/11/2008 07:12

The interims were much as expected and reflective of the current shareprice. The management are going to have to trim costs radically and button down the hatches until international revenue can be relied upon. Trafficlink performed well although I still believe they paid far to much for it. The premature provision of a dividend may well bite them now as cash becomes tough to find although they are secure with a finance stream of £8 million.
My expectation was for a breakeven year this year and they should be able to achieve this. I suspect and hope that the share price dips a bit through these tough times to reduce risk on the buy.

[russianlinesman] 24/11/2008 19:43

That's actually a good quality debate for a BB. Personally I tend to Tom's camp, and have ended up overall up on ITH having bought at 30p, sold 1/2 of my holding at 80p (and the rest at 20p and 13p oops).

I like ITH, but just think the results for this year with the lack of income from the 2 lost contracts, and the new car market, will be very poor. Overseas income may take 2 financial years to make up.

A merger of ITH and TFC (if they can bear it) might be the best chance to increase some margins - before TFC takes ITH down with it by undercutting - a concern I had as soon as TFC began their RDS offering. Am not sure any of the competitors would need to buy ITH.

[lucky punter] 24/11/2008 16:57

Tom
You are very transparent and very boring.
Do you think the future for traffic information lays with the in car device or the mobile device. Is there just one mobile operator in every country. Itis offer a method of collecting and delivering the data for those mobile operators. The recommendations are robust, recent and from very credible sources. Those sources do not just use Itis data much depends on the environment they are working in but they do use Itis data. Itis are rolling this out around the world through established local partners. Which bit of this are you having trouble with.
Just how much did you lose on Trafficmaster, how much have you lost on Itis. Just one thing, do not let it cloud your judgement.

[tom306] 24/11/2008 16:23

LP
ITIS don't have the sole patent for floating car data, they have patents on their version of floating car data, a version that was dropped by the UK DOT last year for that of a competitor. FCD was originally developed and patented in Germany by Mannesmann and Tegaron, even BMW Germany has a version. Don't take my word for it, look see at

or even Google it.

Neither does ITIS have sole patents on using mobile telephony to detect traffic speeds. TomTom/TeleAtlas (through Generics and Vodafone), Navteq/Nokia and others have similar capabilities.

Let me repeat in case you missed this also, TFC is not the real competition long term so please don't throw out smokescreens to hide the paucity of your research.

Where I do agree with you is that the UK providers are likely to be taken out. Unlike you, I don't think the predators will be willing to pay a substantial premium.

[lucky punter] 24/11/2008 12:04

Tom
I appreciate all of that, Navteq providing a solution is not the end of business for Itis. These solutions are all inter related and just because Navteq are producing a solution does not make it all Navteqs work. The Itis product used by Telefonica will not be called Itis anything but Telefonica something. I think you need to do some research into who is supporting who's platforms. Floating vehicle data is a patented idea belonging to Itis.
Itis have entered an anonymous world of solution provision in markets other than the UK, solution providers are not listed in the small print of high profile releases. I suggest you know all this already which is why you work so hard to push the share price down. Are you the same Tom that used to post on TFC with Pilgrim74 at 60p saying how they would rule the world and be worth £10 by christmas. Agenda, agenda agenda.
Best of luck, I will add over the next 3 to 6 months once things become clearer.

Maybe you are tasked for this, think I will stick around to find out:
This acquisition is a first - but significant - pace into the consolidation of traffic information companies across Europe. It is likely that NAVTEQ will not stop after only one acquisition. The Nokia subsidiary is currently working on a project with Telefonica in Spain, but covering major countries such as United Kingdom or France will be key for NAVTEQ. Indeed, Dutch competitor TomTom-Tele Atlas is launching this month its HD traffic solution in Great Britain, Germany, France and Switzerland; Netherlands was already covered and Belgium will be very soon.



Next step: United Kingdom?
Likely acquisition candidates for NAVTEQ could be for example one of the two providers of traffic information in the United Kingdom: ITIS Holding and Trafficmaster which are both listed on the London Stock Exchange and under valuated like many other companies these days. ITIS Holding current market capitalization is £13.08 million while its revenue in the year closing 31 March 2008 was £18.32m with profit before taxation of £4.79m. Trafficmaster's market capitalization is £15.71 million while its 2007 revenue was £48,4 million and operating profit £5,4 million.

[tom306] 24/11/2008 11:22

Sorry, you either missed my point or chose to misinterpret it. I do not see Trafficmaster as the main competition, the fact they are winning highly profitable contracts off ITIS should be a worry but if you want to take the risk then its your money. Before you do so, I suggest you research the websites of the big boys. If you are not "impressed" then I suggest you should be. I attach a few samples you may have missed - two relate to ITIS customers/partners you have already mentioned. Many more can be found on the Navteq website. And TomTom are following a similar strategy. Good luck.


Barcelona, Spain– February 13, 2008 – NAVTEQ (NYSE: NVT), a leading global provider of digital map data for vehicle navigation and location-based solutions, announced today an agreement with Telefónica for the cooperative innovation of new mobile traffic products for European markets. This relationship is a milestone in the first phase of NAVTEQ Traffic™ presence in Europe, and initial products are targeted for Barcelona and Madrid. NAVTEQ Traffic currently serves the United States and Canada with comprehensive real-time and historical traffic data services and technology.


New York – November 17, 2008 – NAVTEQ, a leading global provider of digital map data for location-based solutions and vehicle navigation, will showcase innovative new traffic probe data programs including a Nokia probe data application that significantly advances traffic monitoring at the 2008 ITS World Congress in New York, November 16-20th (Booth 401 at the Javits Convention Center).

Chicago, IL- September 5, 2007 – NAVTEQ Corporation (NYSE: NVT), a leading global provider of digital maps for vehicle navigation and location-based solutions, today announced with Mercedes-Benz USA (MBUSA) that NAVTEQ Traffic RDS (Radio Data System) is now available as a standard, lifetime traffic service in all 2008 Mercedes-Benz S-Class and CL-Class automobiles. This marks the first lifetime traffic service offering by an automotive manufacturer delivered via NAVTEQ Traffic RDS, and included as a standard feature with navigation. The 2008 Mercedes-Benz S-Class and CL-Class are now available for sale at U.S. dealers.

[lucky punter] 24/11/2008 10:32

Tom
They have lost two what you call major contracts (a couple of million pounds) to TFC who are themselves in a worse position than Itis as they are locked to the UK with their installed camera offering. They have been forced to seek new markets where as Itis have the option to expand around the globe. TFC can provide high quality data with their network of sensors and cameras and as such they have won these two contracts but their advantage ends there.
Of course there will be other providers, you real them off as if I should be impressed, they have started late and no doubt will invest millions for the UK market. The patents held by Itis will provide them with huge commercial advantage. Telefonica are themselves a huge group of companies as are Delcan. These are local specialists who know there market and how to exploit it. I say again you may be right but I will go with huge groups who have decided to partner Itis and put up the cash.

[tom306] 24/11/2008 10:22

I'm sorry but I disagree. Data supply in international car markets is all about volume, market share, price and quality. Yes there will be more than one supplier but not many more than two. The only place where ITIS has an established business model is the UK where as they themselves say they are under severe pressure. They have lost two major contracts in the UK, GM and DOT, and are struggling to compensate. These contracts were lost not to TomTom/TeleAtlas or Navteq/Nokia, but to Trafficmaster who are as small as they are. The big boys are only now entering the UK. My bet is that ITIS, as a one product company, will be taken out at nothing like the potential value you attribute.

BTW the contracts to which you refer were awarded when ITIS had the sole RDS TMC offering in the UK. They now have competition which has won the vast majority of new contracts and also claim majority market share. If they are losing ground in their home market why should they be successful elsewhere against even stronger competition?

[lucky punter] 24/11/2008 09:35

Tom
I am not saying that Itis have the market place to themselves, I doubt any 13 million capped company has. Obviously if times were better the share price would be much higher, Itis face challenges and they will not dominate the world for the provision of traffic data but they are building a business which is considerably bigger than the current share price suggests.
The telematics market is littered with failed partnerships but Itis are not in the telematics market they provide data to the telmatics market infact for the rest of the world they will not even do that they will provide the tools for others to provide data or for their own use.
Telefonica, Be-mobile,Delcan, mercedes and the like have not choosen Itis by accident, they like the technology and think they can make money with it. That means that Itis make royality payments, are they all wrong and you are right, lets wait and see.

[tom306] 24/11/2008 08:43

The problem Itis has is one of time. Other, much larger organisations, such as Navteq/Nokia and TomTom/TeleAtlas, have already gained the international momentum that Itis seeks but has not achieved. That is a major threat to a basically one product company which has seen its key UK market come under huge pressure to the extent that it is finding it difficult to replace the lost revenue.

I acknowledge that Itis is trying to expand through much larger partners who will carry the majority of the risk. But that itself poses a huge risk to Itis. We are in the worst economic climate ever experienced. So do I believe those partners will make the substantial investment/take the commercial risks needed for Itis' international success? No I do not and even if they do the initial timeframes will certainly be delayed substantially. The history of telematics is littered with large company/small company partnerships. Few, if any, have delivered value.

[lucky punter] 23/11/2008 22:45

Tom
The partnerships abroad are with very well established partners who are in some cases market leaders. The income structure for the expansion overseas is such that Itis merely offer the product on license so if the venture is not successful then the local operator carries the risk. Itis will of course only make money if the venture is a success but what do they have to lose. It is true than none of the overseas ventures are really adding anything to the balance sheet yet but I have described them as grassroots which I believe to be an accurate assessment. I would be concerned if they were going it alone and shouldering the risk but that just is not the case.
The fact is that Itis have very innovative and scaleable products which has seen a level of demand. Itis are making the product pay in the UK and the challenge is to do that at other locations. The market is rotten and the share price has suffered but Itis are not alone in that. With all I know about this company, the products and the extent of the potential I believe it is heavily undervalue at the current share price although my investment has little to do with these results mid or year end but where the company will go if even 1 in 5 of the overseas partnerships workout and the market improves.
You mention that TomTom and Navteq are making strides, indeed they are and good luck to them.