iTouch plc

iTouch plc
iTouch plc
Preliminary Results & Acquisition of Movilisto
Full year ended 31 December 2002
25 March 2003
iTouch plc
I ndex
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
2
iTouch plc
Wayne Pitout
Chief Executive Officer
3
iTouch plc
Highlights
4
•
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 ¼P
* Before exceptional items
iTouch plc
2002 operational highlights
5
•
Successful running of TV view er empow erment show s in UK and USA
including “I ’m a Celebrity… get me out of here!” and “American I dol 2”
•
Partnership w ith Carphone Warehouse signed in the UK for delivery of
mobile value added services
•
Relationships w ith 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
iTouch plc
John Miller
Chief Financial Officer
6
iTouch plc
Financial highlights – 2002 v 2001
Full Year 2001
Full year 2002
% Change
£15.0m
£33.6m
124%
EBITDA Loss (1)
(£10.1m)
(£8.8m)
13%
Operating Loss (1)
(£16.8m)
(£16.2m)
3%
Net Cash at 31 December
£36.1m
£24.5m
Revenue
(1)
7
Before exceptional items
iTouch plc
Full year Profit and Loss
FY 2001 £m
FY 2002 £m
Actual revenue
15.0
33.6
COGS
(6.9)
(21.3)
Gross profit
8.1
12.3
Selling costs
(2.9)
(3.0)
General admin costs
(15.4)
(18.1)
Excluding Exceptional items
(10.1)
(8.8)
Includes £0.2m forex loss in Q4
Depreciation
(0.7)
(1.9)
Three quarters of improvement
Goodwill amortisation
(5.3)
(5.0)
Share incentive scheme
(0.5)
(0.5)
EBITDA
(1)
Exceptional Items
- Impairment of goodwill
Restructuring charge £0.3m
-
(30.0)
Israel write-down £0.4m
- Other
(0.8)
(1.4)
Advertising commitment £0.5m
Associates/ JV
(0.4)
(0.2)
Fixed-line Telco provider £0.3m
EBIT
(18.0)
(47.8)
My Wealth exceptional + £0.2m
1.9
1.3
LBT
(16.1)
(46.5)
Tax
-
(0.1)
LAT
(16.1)
(46.6)
0.2
0.1
(15.9)
(46.5)
- basic
5.6p
16.2p
- adjusted
3.0p
2.7p
Interest
Minority interest
Retained loss
LPS
8
(1) Before exceptional items
Based on 287,995,550 shares
iTouch plc
Quarterly Profit and Loss
2001
£m
Q1
Revenue
2.6
Q2
3.4
2002
Q3
4.0
Q4
5.0
Q1
5.3
Q2
Q3
Q4
8.3
10.3
9.7
(1)
1.4
1.8
2.3
2.6
2.7
3.0
3.2
3.5
Gross margin
52%
54%
57%
53%
51%
36%
31%
36%
EBITDA
(2.0)
(2.9)
(2.6)
(2.7)
(3.0)
(2.6)
(1.7)
(1.5)
LBT
(3.3)
(4.3)
(4.6)
(3.9)
(4.5)
(4.0)
(3.4)
(3.4)
Gross profit
(1)
(2)
(3)
9
Drop in gross margin due to single, large Voice contract
Before exceptional items
Includes forex loss of £0.2m
(2)(3)
(2)(3)
(2)
iTouch plc
Revenue and EBI TDA
11
10.5
10
9.5
9
8.5
8
7.5
7
6.5
6
5.5
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Revenue
EBITDA Losses
Q1
Q2
Q3
Q4
* Q1 2003 is market consensus forecast
10
* * Q4 2002 includes £0.2m forex charge
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4 * *
Q1E*
iTouch plc
Revenue by region
Full Year 2002
Full Year 2001
Africa
6%
Africa
18%
Asia
Pacific
20%
Asia
Pacific
26%
11
Europe
56%
Europe
74%
iTouch plc
Revenue by product
Q4
2002
365%
2,411
6,712
178%
5,157
*
(16%)
1,375
1,579
15%
3,895
5,119
31%
1,237
1,403
13%
15,030
33,614
124%
5,023
9,694
93%
£ 000’s
FY
2002
Voice
5,023
23,338
Data
messaging
6,112
Other Data
Total
12
Q4
2001
FY
2001
* Year on year decline is a function of decline in Data Messaging in H2 2001. Revenue grew each quarter in 2002.
iTouch plc
NFOD
Q4 2002
FY 2001
FY 2002
Average
Average
Average
Average
Voice
Minutes (k)
3,532
2,500
1,681
2,813
Consumer Data
Messages (k)
2,428
3,309
2,136
2,624
Corporate Data
Users
733
776
534
769
2,272
5,307
1,687
3,435
Messages (k)
13
Q4 2001
iTouch plc
Exceptional charges
•
Restructuring costs of £0.3m
•
The renegotiation of a fixed- line netw ork operator service deal in the UK
resulted in a charge of £0.3m
•
The Group settled an advertising commitment by w ay of a one-off
payment of £0.5m
•
Write dow n of outstanding goodw ill relating to iTouch I srael and full
provision against the funding loan and trade debtor balances
•
14
Goodw ill I mpairment
–
Goodwill review at year end, charge £30m
–
Impairment of goodwill relating to pre-I PO acquisitions
–
Speed up time to operating profit and lower amortisation charges
iTouch plc
Wayne Pitout
Chief Executive Officer
15
iTouch plc
iTouch business model
Content
Applications/ Services
I NFORMATI ON
ENTERTAI NMENT
MESSAGI NG
Sport
Financial
New s
Phone
Personalisation
Games
Voting/ Polling
Chat
Promotions
Channels
Print, Radio & TV
Operators
Portals
Handsets
Retail
Direct
‘8181’
16
iTouch plc
I nformation services
17
•
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
iTouch plc
Entertainment services
•
Device personalisation:
–
Ringtones (mono & polyphonic)
–
Operator logos, picture messages and screensavers
•
Licensing for Java games & MMS I mages
•
Partner w ith premium content ow ners, 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
–
•
19
Text messaging
Mobile Marketing
–
FMCG Brands and short term promotions
–
Builds marketing communities
–
Targeted profiling of ‘difficult’ youth market
iTouch plc
Enabling platform
Content and services
•
Single, scalable platform
API
Ability to integrate 3 rd party
•
Economies of scale
Connectivity
Distribution
20
Billing
Enables global partners
Channel Partner
Mngmnt
•
Customer Care
Multiple distribution channels
CRM
•
Reporting
platforms/ products
Content Mngmnt
Enabling Technology
Application Routing
•
iTouch plc
Channel strategy
Operators
21
Media
Portals
Retail & Handset
Direct
iTouch plc
Revenue model
Voice
Usage Fee
Mobile Data
I nformation &
I nteractive
Services
SMS
I nformation
Services
Smart
Messaging
( Ringtones)
Java
Games
Messaging
( Voting)
•
•
•
•
•
•
•
•
Retail Pack
Dow nload a Ringtone
£1.50/ min
PRS Number
090 6522 3303
£1.00/ min
Content
10% royalty
Premium SMS
8181
Content
£1.50/ message
22
95p/ message
iTouch plc
Acquisition strategy
•
•
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 w orking w ithin stringent criteria
–
Stable businesses, EBITDA accretive with ability to scale
Critical Mass
Product Enhancing
New Territory
HGL ( Business Mobility)
Telequity ( Australia)
Thus ( UK)
Telescope ( UK)
m4 ( UK)
Movilisto ( Spain)
23
iTouch plc
Movilisto business
•
Founded April 2001, revenues in 2002 ¼P(%,7'$¼P
•
Leading provider of premium SMS applications and services in Spain & Portugal
•
Services
– device personalisation (ringtones, screensavers)
– entertainment (games, horoscopes, alerts)
– messaging (mobile chat & mobile marketing)
– TV voting
•
Direct to market w ith ‘7777’ short code brand
•
2002 full year operating Data
– ~ 30% of Spanish premium SMS market
– ~ 60m downloads
– ~ 150m SMS messages sent
24
* Subject to final audit confirmation
iTouch plc
Rationale for transaction
•
Roll out of premium SMS business model into iTouch operating companies
•
Extension of iTouch global content deals into Spain & Portugal
•
Economies of scale ( single platform)
•
European consolidation, grow th in European premium SMS market
•
Group attains EBI TDA positive position
Spanish premium SMS market generated ~ ¼PLQ
iTouch plc
Fit w ith iTouch business model
Content
Applications/ Services
I NFORMATI ON
ENTERTAI NMENT
MESSAGI NG
Sport
Financial
New s
Phone
Personalisation
Games
Voting/ Polling
Chat
Promotions
Channels
Print, Radio & TV
26
Operators
Portals
Handsets
Retail
Direct
iTouch plc
Deal structure
Maximum consideration
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Minimum consideration
¼PZRUNLQJFDSDWFRPSOHWLRQ
I mmediate payment
12 month earn-out
24 month earn-out
27
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¼PFDVK
~ ¼PZRUNLQJFDSLWDO
¼PFDVKVKDUHV
- target ¼P(%,7'$
¼PFDVKVKDUHV
- target ¼P(%,7'$
¼PFDVKVKDUHV
- target ¼P(%,7'$
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- target ¼P(%,7'$
iTouch plc
iTouch and Movilisto proforma – 2003
FY iTouch
2002 ( ¼m)
FY Movilisto
2002( ¼m)
**
Post
completion
Estimate* * *
2003 ( ¼m)
Revenue
50.4
31
93.5
103.8
EBI TDA *
( 13.2)
12.9
5.9
10.2
( LBT) / PBT *
( 22.9)
12.6
( 4.5)
( 0.2)
*
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
Annualised
Estimate * * * *
2003 ( ¼m)
iTouch plc
iTouch comparison to peer group – 2003
Estimated
2003 ( ¼m)
iTouch w ith
Movilisto *
Buongiorno /
Vitaminic1
Aspiro2
Acotel3
Wapme 4
Revenue
93.5
54.0
19.0
36.0
11.5
EBI TDA
5.9
0.0
( 0.2)
7.9
( 0.5)
( 4.5)
n/ a
( 2.0)
8.1
( 7.8)
( LBT) / PBT
* iTouch with Movilisto annualised from May 1 2003 completion date
29
1
Source: 4 February 2003, Buongiorno – Vitaminic merger press release, with turnover taken as midpoint of estimated range
2
Source: IBES estimates from Bloomberg as at 21/03/03
3
Source: Multex Global Estimates, 24/07/02, and ARC Associates estimates
4
Source: IBES estimates from Bloomberg as at 21/03/03, and ARC Associates estimates
iTouch plc
iTouch and Movilisto – revenue breakdow n
By geographic region*
By class of business*
Asia Pacific
12%
Africa
4%
Voice
40%
Data
60%
Europe
84%
30
* Based on FY2002 iTouch results and Movilisto 2002 results
iTouch plc
Market opportunity
Market driven by a number of factors
31
–
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 w ill generate
betw een £265m & £850m in 2003
iTouch plc
iTouch at a glance
32
•
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 w ell positioned for mobile future w ith:
–
Fully funded business model
–
Powerful international relationships
–
Strong cash position
iTouch plc
Wayne Pitout
Chief Executive Officer
John Miller
Chief Financial Officer
4 th Floor
The Tow er Building
11 York Road
London SE1 7NX
Phone + 44 ( 0) 20 7803 1660
Fax + 44 ( 0) 20 7803 1661
33
iTouch plc
iTouch plc
Appendices
iTouch plc
iTouch positioning in the w ireless market
Messaging /
Community
Ringtones /
Icons
Entertainment /
Gaming
Marketing/Alerts
MCommerce
UCP (Uboot)
Portal/
Community
Movilisto
Kiwee
Buongiorno
iTouch
Acotel
Wireless Application
Services Provider /
Content Aggregator
12Snap
WES
Flytxt
Aspiro
K Mobile
Source: Nomura
DigitalRum
35
UPaid
Empower
K Mobile
Cash-U
End2End
WIN
Digital Bridges
Hotsip
Mobileway
In-Fusio
Digiplug
Freever
Application
Infrastructure
Provider
Akumiitti
iTouch plc
I nternational reach
United Kingdom
I reland
Spain
I srael
Portugal
Country
Network
Ireland
Vodafone, O2, Met eor
UK & N.Ireland
Vodafone, O2, T-Mobile, Orange
45m
Aust ralia
Telst ra, Opt us, Vodafone, Orange
12m
Sout h Africa
Vodacom, MTN, Cell C
11m
New Zealand
Vodafone, Telecom NZ
2m
Israel
Thailand
Spain
Port ugal
Cellcom, Pelephone, MIRS, Orange
AIS, DTAC, Orange
Telefonica, Vodafone, Amena
TMN, Vodafone, Opt imus
36
3m
6m
8m
31m
7m
* Number of registered users per country
Source Informa Telecoms Group
Thailand
South Africa
Users*
Australia
New Zealand
iTouch plc
Headcount
April
March
2002
2003
Group
76
25
PLC
21
12
Technical Development & Support
55
13
Consumer
379
295
South Africa
65
49
Ireland
32
22
UK
136
120
140 †
43
Spain
-
35
Portugal
-
8
iTouch Global Services
6
18
49
49
504
369
Australia & New Zealand
Corporate
Totals
37
† I ncludes call centre staff