ITouch, the mobile phone content provider in which Independent News & Media has a 36.5 per cent stake, has reported pre-tax profits of £2.4 million (€3.4 million) for the first nine months of the year.

This compares to a loss of £5.7 million for the same period of 2003, with the improvement driven in the main by the firm's acquisition of Spain's Movilisto in the middle of last year.

Revenues were up 33 per cent at £56.1 million, year-on-year. When the third quarter is taken alone, sales were 37 per cent stronger at £22.3 million.

Operating profits for the quarter were £1.3 million before an exceptional charge of £200,000. This compared to a loss of £700,000 in the third quarter of 2003. The exceptional charge related an aborted acquisition.

ITouch chief executive, Mr Wayne Pitout, said the third-quarter growth was due mostly to the firm's expansion of its direct channel model.

Jippii, the Finnish mobile entertainment provider acquired by ITouch in August, contributed £1 million to third-quarter sales.

Jippii has given ITouch access to new markets in Eastern Europe, with Russia the largest source of new custom. The firm has also signed a deal with Siemens that will see it providing mobile content to Siemens handsets. Mr Pitout said ITouch continued to seek acquisitions.

He offered shareholders an upbeat outlook statement, predicting that margins would continue to improve as the firm's revenue mix "evolves".

The results as a whole came in ahead of analysts' expectations. ITouch shares fell by 0.25p to 36.25p in London.