2002 q4 prilim results lores - investis...
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iTouch plc
iTouch plcPreliminary Results & Acquisition of Movilisto
Full year ended 31 December 2002
25 March 2003
iTouch plc
Wayne Pitout – Chief Executive Officer
• 2002 operational highlights
John Miller – Chief Financial Officer
• Financial highlights
• Revenue analysis
• Exceptional items
Wayne Pitout – Chief Executive Officer
• Strategy overview
• Movilisto transaction
Appendices
I ndex
2
iTouch plc
3
Wayne PitoutChief Executive Officer
iTouch plc
• Revenues increased 124% to £33.6m (2001: £15.0m)
• Full year EBI TDA loss* improved by 13% to £8.8m (2001: £10.1m)
• Acquisitions of Telescope and m4 Group in UK (H2 2002)
• I ncreased routes to market for data services
• Net cash position at year end £24.5m
• Proposed acquisition of Movilisto for maximum consideration of ¼��P
Highlights
* Before exceptional items4
iTouch plc
• Successful running of TV viewer empowerment shows in UK and USA including “I ’m a Celebrity… get me out of here!” and “American I dol 2”
• Partnership with Carphone Warehouse signed in the UK for delivery of mobile value added services
• Relationships with handset manufacturers to deliver premium content including Siemens, Samsung & Motorola
• Voice brands to mobile services
• Migration to single global platform resulting in cost efficiencies throughout the Group
• Exclusive licensing agreements signed for premium movie and music content including Spiderman, EMI & Zomba Records
2002 operational highlights
5
iTouch plc
6
John MillerChief Financial Officer
iTouch plc
% ChangeFull year 2002Full Year 2001
3%(£16.2m)(£16.8m)Operating Loss (1)
13%(£8.8m)(£10.1m)EBITDA Loss (1)
£24.5m
£33.6m
£36.1m
£15.0m
Net Cash at 31 December
124%Revenue
Financial highlights – 2002 v 2001
(1) Before exceptional items
7
iTouch plc
Full year Profit and Loss
1.31.9Interest
(0.1)-Tax
(46.6)(16.1)LAT
16.2p
2.7p
(46.5)
0.1
(46.5)
(47.8)
(30.0)
(1.4)
(0.2)
(0.5)
(5.0)
(1.9)
(8.8)
(18.1)
(3.0)
12.3
(21.3)
33.6
FY 2002 £m
(18.0)EBIT
5.6p
3.0p
(15.9)
0.2
(16.1)
-
(0.8)
(0.4)
(0.5)
(5.3)
(0.7)
(10.1)
(15.4)
(2.9)
8.1
(6.9)
15.0
FY 2001 £m
Gross profit
General admin costs
LPS
- basic
- adjusted
Retained loss
Minority interest
LBT
Exceptional I tems
- Impairment of goodwill
- Other
Associates/JV
Share incentive scheme
Depreciation
Goodwill amortisation
EBITDA (1)
Selling costs
COGS
Actual revenue
(1) Before exceptional items
Excluding Exceptional items
Includes £0.2m forex loss in Q4
Three quarters of improvement
Based on 287,995,550 shares
Restructuring charge £0.3m
Israel write-down £0.4m
Advertising commitment £0.5m
Fixed-line Telco provider £0.3m
My Wealth exceptional + £0.2m
8
iTouch plc
Quarterly Profit and Loss
(3.4)
(1.5)
36%
3.5
9.7
Q4
20022001
(3.4)(4.0)(4.5)(3.9)(4.6)(4.3)(3.3)LBT
(1.7)(2.6)(3.0)(2.7)(2.6)(2.9)(2.0)EBITDA
31%36%51%53%57%54%52%Gross margin
3.23.02.72.62.31.81.4Gross profit
10.38.35.35.04.03.42.6Revenue
Q3Q2Q1Q4Q3Q2Q1£m
(1) Drop in gross margin due to single, large Voice contract (2) Before exceptional items(3) Includes forex loss of £0.2m
(1)
(2)(3)
9
(2)(3)
(2)
iTouch plc
Revenue and EBI TDA
00.5
11.5
22.5
33.5
44.5
55.5
66.5
77.5
88.5
99.510
10.511
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1E*
Revenue
EBITDA Losses
* Q1 2003 is market consensus forecast
* * Q4 2002 includes £0.2m forex charge
* *
10
iTouch plc
Revenue by region
11
Full Year 2001
Africa 18%
Europe 56%
Asia Pacific
26%
Full Year 2002
Europe 74%
Asia Pacific
20%
Africa 6%
iTouch plc
124%
31%
(16%)
365%
9,694
1,403
1,579
6,712
Q4 2002
93%
13%
15%
178%
5,023
1,237
1,375
2,411
Q42001
33,61415,030Total
5,1193,895Other Data
5,1576,112Data messaging
23,3385,023Voice
FY 2002
FY 2001£ 000’s
Revenue by product
12
*
* Year on year decline is a function of decline in Data Messaging in H2 2001. Revenue grew each quarter in 2002.
iTouch plc
NFOD
2,6242,1363,3092,428Messages (k)Consumer Data
769
3,435
2,813
FY 2002
Average
534
1,687
1,681
FY 2001
Average
776
5,307
733
2,272
Users
Messages (k)
Corporate Data
2,5003,532Minutes (k)Voice
Q4 2002
Average
Q4 2001
Average
13
iTouch plc
Exceptional charges
• Restructuring costs of £0.3m
• The renegotiation of a fixed-line network operator service deal in the UK
resulted in a charge of £0.3m
• The Group settled an advertising commitment by way of a one-off
payment of £0.5m
• Write down of outstanding goodwill relating to iTouch I srael and full
provision against the funding loan and trade debtor balances
• Goodwill I mpairment
– Goodwill review at year end, charge £30m
– Impairment of goodwill relating to pre-IPO acquisitions
– Speed up time to operating profit and lower amortisation charges
14
iTouch plc
15
Wayne PitoutChief Executive Officer
iTouch plc
iTouch business model
I NFORMATI ON
SportFinancial
News
Applications/ ServicesENTERTAI NMENT
PhonePersonalisation
Games
MESSAGI NG
Voting/ PollingChat
Promotions
Content
Channels OperatorsPrint, Radio & TV RetailPortals Direct
‘8181’
Handsets
16
iTouch plc
I nformation services
• Well established Voice brands & services
• SMS push and pull
• Management of WAP portals on behalf of operators
• 2002 yearly total traffic:
– 34 million Voice call minutes (not including Messaging)
– 73 million SMS sent
17
iTouch plc
Entertainment services
• Device personalisation:
– Ringtones (mono & polyphonic)
– Operator logos, picture messages and screensavers
• Licensing for Java games & MMS I mages
• Partner with premium content owners, e.g. EMI , Universal
Pictures, Zomba Records
18
iTouch plc
Messaging services
• I nteractive voting
– Pop Idol and American Idol
– ‘I ’m a Celebrity …’ and American Idol 2 (Voice and SMS)
– Comic Relief (Voice and SMS for Pledges)
• Chat
– Text messaging
• Mobile Marketing
– FMCG Brands and short term promotions
– Builds marketing communities
– Targeted profiling of ‘difficult’ youth market
19
iTouch plc
20
Enabling platform
Connectivity
API
Cust
omer
Car
e
Billi
ng
Appl
icat
ion
Rou
ting
Chan
nel P
artn
er
Mng
mnt
CRM
Cont
ent
Mng
mnt
Rep
ortin
g
Enabling Technology
Distribution
Content and services
• Single, scalable platform
• Ability to integrate 3rd party
platforms/ products
• Multiple distribution channels
• Enables global partners
• Economies of scale
iTouch plc
Operators Media Portals Retail & Handset
Channel strategyDirect
21
iTouch plc
Revenue model
22
PRS Number 090 6522 3303
Premium SMS 8181
£1.50/ min
£1.50/ message
10% royalty
Content
Content
Download a Ringtone
£1.00/ min
95p/ message
••Retail Pack
••••Usage Fee
Java Games
Smart Messaging
(Ringtones)
SMS I nformation
Services
I nformation & I nteractive
Services
Mobile Data
•
•
Messaging (Voting)
Voice
iTouch plc
Acquisition strategy
m4 (UK)
Thus (UK)
Movilisto (Spain)
HGL (Business Mobility)
Telescope (UK)
Telequity (Australia)
New TerritoryProduct EnhancingCritical Mass
• Mobile data market ready for consolidation:
– Delay in expected mobile data revenue generators – Premium SMS, GPRS & 3G
– Number of high profile players facing difficulty
• Focused M&A team working within stringent criteria
– Stable businesses, EBITDA accretive with ability to scale
23
iTouch plc
Movilisto business
• Founded April 2001, revenues in 2002 ¼��P ��(%,7'$�¼����P• Leading provider of premium SMS applications and services in Spain & Portugal
• Services
– device personalisation (ringtones, screensavers)
– entertainment (games, horoscopes, alerts)
– messaging (mobile chat & mobile marketing)
– TV voting
• Direct to market with ‘7777’ short code brand
• 2002 full year operating Data
– ~ 30% of Spanish premium SMS market
– ~ 60m downloads
– ~ 150m SMS messages sent
24 * Subject to final audit confirmation
iTouch plc
Rationale for transaction
• Roll out of premium SMS business model into iTouch operating companies
• Extension of iTouch global content deals into Spain & Portugal
• Economies of scale (single platform)
• European consolidation, growth in European premium SMS market
• Group attains EBI TDA positive position
Spanish premium SMS market generated ~ ¼���P�LQ�����
iTouch plc
Fit with iTouch business model
26
I NFORMATI ON
SportFinancial
News
Applications/ ServicesENTERTAI NMENT
PhonePersonalisation
Games
MESSAGI NG
Voting/ PollingChat
Promotions
Channels OperatorsPrint, Radio & TV RetailPortals DirectHandsets
Content
iTouch plc
27
Deal structure
Maximum consideration ¼��P���ZRUNLQJ�FDS�DW�FRPSOHWLRQ
Minimum consideration ¼��P���ZRUNLQJ�FDS�DW�FRPSOHWLRQ
I mmediate payment ¼��P�VKDUHV��LVVXHG�DW���S�¼�P�FDVK~ ¼��P�ZRUNLQJ�FDSLWDO
12 month earn-out ¼�P�FDVK�VKDUHV- target ¼��P�(%,7'$¼��P�FDVK�VKDUHV- target ¼��P�(%,7'$
24 month earn-out ¼�P�FDVK�VKDUHV- target ¼��P�(%,7'$¼��P�FDVK�VKDUHV- target ¼��P�(%,7'$
iTouch plc
iTouch and Movilisto proforma – 2003
12.6
12.9
31
FY Movilisto
2002(¼m)
(0.2)
10.2
103.8
Annualised Estimate
2003 (¼m)
(4.5)(22.9)(LBT) / PBT *
(13.2)
50.4
FY iTouch
2002 (¼m)
Post completion
Estimate 2003 (¼m)
5.9EBI TDA *
93.5Revenue
* Before exceptional items
* * Numbers to be confirmed by final audit
* * * Estimates for the enlarged iTouch Group are market consensus plus Movilisto rated as zero growth for 8 months of 2003
* * * * Estimates for the enlarged iTouch Group are market consensus plus Movilisto rated as zero growth for all of 2003 28
* * * * * * ** *
iTouch plc
29
(7.8)8.1(2.0)n/ a(4.5)(LBT) / PBT
(0.5)7.9(0.2)0.05.9EBI TDA
11.536.019.054.093.5Revenue
Wapme4Acotel3Aspiro2Buongiorno /
Vitaminic1iTouch with Movilisto *
Estimated 2003 (¼m)
* iTouch with Movilisto annualised from May 1 2003 completion date1 Source: 4 February 2003, Buongiorno – Vitaminic merger press release, with turnover taken as midpoint of estimated range2 Source: IBES estimates from Bloomberg as at 21/03/033 Source: Multex Global Estimates, 24/07/02, and ARC Associates estimates4 Source: IBES estimates from Bloomberg as at 21/03/03, and ARC Associates estimates
iTouch comparison to peer group – 2003
iTouch plc
30
iTouch and Movilisto – revenue breakdown
Asia Pacific12%
Africa4%
Europe84%
Voice40%
Data60%
By geographic region* By class of business*
* Based on FY2002 iTouch results and Movilisto 2002 results
iTouch plc
Market opportunity
31
Market driven by a number of factors
– Premium SMS billing and same short codes across all networks
– Increasing network operator outpayments
– Enhanced functionality (Polyphonic, MMS and Java enabled handsets)
According to Strand Consulting, the PSMS market in the UK will generate between £265m & £850m in 2003
iTouch plc
iTouch at a glance
• I nternational reach – 120m+ mobile users
• Future opportunities:
– new billing models
– new multimedia handsets
– new markets
– new channels
• Proven track record
• Mobile data market consolidator
• Very well positioned for mobile future with:
– Fully funded business model
– Powerful international relationships
– Strong cash position
32
iTouch plc
Wayne Pitout Chief Executive Officer
John Miller Chief Financial Officer
4th Floor
The Tower Building
11 York Road
London SE1 7NX
Phone + 44 (0) 20 7803 1660
Fax + 44 (0) 20 7803 1661
33
iTouch plc
iTouch plcAppendices
iTouch plc
iTouch positioning in the wireless market
Source: Nomura35
In-Fusio
Digiplug
iTouch
Buongiorno
Akumiitti
WES
Movilisto
Cash-U
Empower
Messaging / Community
Ringtones / Icons
Entertainment /Gaming
Marketing/Alerts
Portal/Community
Wireless Application Services Provider / Content Aggregator
Application Infrastructure Provider
MCommerce
Flytxt
Mobilew
ay
WIN
DigitalR
um
UP
aid
Freever
Aspiro
Acotel
Digital BridgesHotsip
K M
obile
K Mobile
12Snap
Kiwee
UCP (Uboot)
End2End
iTouch plc
I nternational reachCountry Network Users*Ireland Vodafone, O2, Meteor 3m
UK & N.Ireland Vodafone, O2, T-Mobile, Orange 45m
Aust ralia Telst ra, Optus, Vodafone, Orange 12m
Sout h Africa Vodacom, MTN, Cell C 11m
New Zealand Vodafone, Telecom NZ 2m
Israel Cellcom, Pelephone, MIRS, Orange 6mThailand AIS, DTAC, Orange 8mSpain Telefonica, Vodafone, Amena 31mPort ugal TMN, Vodafone, Opt imus 7m
36
Portugal
New Zealand
* Number of registered users per countrySource Informa Telecoms GroupThailand
Australia
Spain
South Africa
United Kingdom
I srael
I reland
iTouch plc
Headcount
37
8-Portugal
35-Spain
186iTouch Global Services
43140 †Australia & New Zealand
369504Totals
1355Technical Development & Support
2576Group
1221PLC
49
120
22
49
295
March2003
49Corporate
136UK
32Ireland
65South Africa
379Consumer
April 2002
† Includes call centre staff