LONDON TTP Communications plc (Cambridge, England) bucked the trend among suppliers to the mobile communications sector with strong sales and profits for the year ended March 31st 2003.
Sales were up 22% to £49.2million ($78.4 million) while pre-tax profits increased by 16% to £6.6million. On the back of the results, the company announced R&D investment went up by 9% during the year to £18.6 million.
Licence income fell slightly, from £25.7million to £23.6million, reflecting the fact that last year's income benefited from a small number of very large orders taken in the 2001 financial year. In terms of orders taken licensing activity was up 8% in value terms with 18 new licences sold, the same number as the previous year.
However, income from royalties more than doubled (up by 128% to £12.3m) due to growth in both hardware and software royalties as more customers created products during the year using TTPCom's technology. This follows an acceleration of royalties in the second half of the previous year.
During the year, TTPCom signed its first EDGE licence and 11 GPRS licences bringing the total GPRS licences signed todate to 33.
Revenues at the ip.access business grew from £74k to £459k, but this was lower than expected and is mainly due to the trials in Russia and China, two of the early markets for the technology, taking longer than anticipated. Systems acceptance testing with T-Mobile in the US is under way.
Dr Tony Milbourn, TTPComs's managing director said development of the company's EDGE solution absorbed 'considerable investment' during the year. "We have developed a complete technology suite and undertaken deep inter-operability
testing with both infrastructure vendors and US operators. As EDGE terminals appear on the US networks we expect to see quiet acceptance of the technology elsewhere."
He said the company has started to build on the intellectual property for wireless LANs that it acquired from Cadence. "We see scope for new products to support IEEE 802.11 extensions for higher bandwidth and security. In the longer term it is our
intent to integrate this WiFi technology with our cellular solution and ip.access to take full advantage of the emerging need for terminals that support both standards."
Headcount over the year increased from 325 to 391 including the 11 specialists lists hired from Cadence subsidiary Tality to work on WLAN developments.
Looking ahead, Milbourn said "underlying growth rates will be much the same as in the year just ended, but headline sales growth will be held back by the need to replace the
buy-out of a chipset royalty stream". It is also likely to be adversely impacted by exchange rates as sterling has
strengthened against the dollar by roughly 10% over the last year.
"The net effect of these one-time factors is expected to restrict revenue growth rates in 2004 and to keep profits generated in TTPCom largely unchanged year-on-year.
Group profit growth is likely to be driven by continued loss elimination at ip.access."