RNS Number:1734Y
Imaginatik PLC
12 June 2007
Imaginatik Plc
("Imaginatik" or the "Company")
Preliminary Results for the year ending 31 March 2007
Imaginatik plc (AIM: IMTK), a leading provider of Innovation and Collaborative
Problem Solving software and process, announces its first preliminary results
since its successful admission to trading on AIM in December 2006.
Financial Highlights
* Turnover up 77% to #2.5m (2006: #1.4m)
* Operating loss before exceptionals of #0.4m (2006: profit #0.05m)
* Loss before tax of #1.1m (2006: profit #0.02m)
* Cash at bank and in hand of #0.9 (2006: #0.14)
* Company raised #1.5m (net of expenses) in December 2006 by way of a placing
Corporate Highlights
* Consolidation of industry leading position with addition of GE Aviation, IBM,
KPMG and Lexmark as clients, among others
* Appointment of UK MD; with 4 pilot projects signed in the UK and Europe, post
period end
* Total number of active customers on pilot and long term contracts at year end
was 50, (2006: 37)
* Strengthening of the partnership with IBM
Chief Executive, Mark Turrell commented: "This has been a year of transition,
establishing the foundations for further growth supported by a successful IPO on
AIM. Whilst the process of the IPO was time consuming and did have a temporary
adverse effect on the operational performance of the business, the Directors
consider the IPO an integral part of the Company's business development plan.
With the progress that has been made since the start of 2007, and the changing
dynamics of the market, we look forward to continued success in the future.
"Since we came to market, we have signed further European projects and
strengthened relationships with our European partners, enhancing our capacity to
assist major global organisations to innovate. This is partly a function of our
success in bringing our offering to the market, but also the result of a much
greater appreciation by the market of the business benefits that can be derived
from tapping into the 'collective genius' within organisations."
For further information please contact:
Imaginatik plc Tel: 020 7917 2975
Mark Turrell, CEO / Shawn Taylor, CFO
WH Ireland Tel: 0121 616 2101
Tim Cofman / Katy Birkin
ICIS Tel: 020 7651 8688
Tom Moriarty / Laura Cocker
Chairman's Statement
Imaginatik was admitted to the market in December 2006 and I am delighted to be
able to report to shareholders on a successful year.
Since its inception in 2000, Imaginatik has grown into an international company,
providing market leading innovation technology and services to some of the
world's top organisations. In the last year we have expanded our offices in both
the UK and US, and this year achieved revenue growth of almost 80% to #2.5m.
We are the leading global provider of innovation and problem-solving technology
and services. No other company has our depth of experience in this field, and
this is undoubtedly the key to our continued growth. The innovation market is
growing at pace, both in the US, which continues to be our core market, and now
also in the UK and Europe. Our blue chip client base continues to grow and
includes companies such as AstraZeneca, Chevron, Cargill, Coca Cola, Colgate
Palmolive, General Electric, Hewlett-Packard, IBM, Merck, Pfizer, Weyerhaeuser
and Whirlpool. We intend to continue this momentum into the next financial year
and beyond.
The successful IPO in December of last year gave us the funds to invest in
further marketing and people, enabling us to capitalise on our market-leading
position. I am delighted to welcome Geoff Carss as UK Managing Director with
additional responsibility for the Company's strategic partner programme. Since
joining us in January 2007, Geoff has driven a successful programme here in the
UK, increasing our UK client base to 6 companies, all of which are currently
working on pilot programmes. We hope to update shareholders on progress with
these pilots in the coming months.
We were very proud to be given the Queen's Award for International Trade in
April 2007 in recognition of our substantial growth in overseas earnings and our
commercial success. This is a great endorsement of our fast developing business.
I would like to take this opportunity to thank our employees, partners and
shareholders for their continued support. The current year has started slower
than we would have liked but we are still looking forward to further progress
for the full year.
Howard Cleveley Marshall
Non-Executive Chairman
12 June 2007
Chief Executive's Review
The year ended 31 March 2007 has seen the achievement of a significant milestone
in the development of Imaginatik. The Board took the decision to list on AIM at
an early stage in our development, in order to gain access to funding and give
us the additional credibility of being a public company as we looked to enter
the next stage of our growth. Following our flotation and fund raising in
December 2006, our efforts have now turned to the execution of our growth
strategy, and the delivery of our award winning software to an ever increasing
number of global clients.
In order to achieve scale in the business, we have increased our headcount from
17 people at 31 March 2006 to 35 at 31 March 2007. The growth was mainly within
sales, marketing, development and customer support, with the geographical split
of the Company remaining evenly divided between the US and UK.
Products and Services
Idea Central is a software platform that enables our customers to solve business
challenges rapidly and efficiently, providing benefits to the business in real,
measurable, ways. During the year our product development has been focused on
further increasing the scalability as well as the usability of our software,
while better aligning the processes and systems to human behaviour. To that end
- in conjunction with a partner we have worked with for a number of years - we
developed Orchid, an additional software module that incorporates an innovation
personality test which integrates with the existing Idea Central software
environment. This is a module that further helps differentiate the Company from
its competitors. The second release of the Orchid module will be launched in the
next few months.
Early in 2007, we took the decision to accelerate an investment in our server
capacity, laying the foundations for the future scaling of the business. This
additional server capacity directly enabled us to support our first event for
over 100,000 users post year end with Hewlett-Packard.
Customer Growth
We saw a significant increase in customer numbers over the period, with an
additional 8 customers moving from pilot contracts onto an annual contract
during the year, bringing the total number of customers on annual contracts to
38. At the end of the period we had 12 companies on pilot contracts with us,
compared to 6 at the end of March 2006, and we will be working to move them onto
annual contracts in the current financial year.
Of particular note was the evolution of General Electric's account from a pilot
project to an annual contract. Also of significance was a project carried out by
Pfizer, a long-standing customer, which initiated the first open deployment of
our Idea Central software, allowing people outside of the organisation to take
part in its Pfizer Incubator programme, via an online portal.
At the Imaginatik User Group Conference held in Boston in May 2007, Whirlpool
announced that within a two month period the use of Idea Central had resulted in
the identification of $38m of cost savings - a great endorsement of the power of
our software and innovation process.
Another client to benefit from our technology is Weyerhaeuser, which in the
first two years of using Idea Central delivered $40m in net benefits. Chevron
has also benefited from the use of our software, as it was able identify seven
key initiatives to boost customer loyalty for the Chevron franchise network.
The Board believe that we are currently on average approximately 3% deployed
across all of the organisations in which we have an installation of our
software. Part of our growth strategy therefore is to continue to work with
existing customers on extending our reach into other areas of these
organisations, including via the development of their open innovation platforms.
During the period, Dow Chemical, Pfizer and Weyerhaeuser all increased their
number of annual licences and their use of our system.
Partnering and Reselling
A significant development towards the end of the year has been the introduction
of our strategic partner programme. In this financial year our partnership with
IBM in particular has had a material impact on our business. We currently have a
master service agreement with IBM in both the US and in Europe, allowing us to
partner on specific opportunities. We are now examining ways in which we can
further strengthen that relationship and expect to be able to update
shareholders in due course.
We are also in the process of identifying additional consulting alliance
partners. We anticipate that this initiative will enable us to speed up the
sales cycle, justify a higher price point and enable the winning of larger
revenue deals, whilst reducing our go-to-market cost and the overhead required
for the delivery of our services.
Sales Strategy and Market
As stated in our Admission Document we are seeing a considerable increase in the
level of interest in innovation as a business process. This market dynamic is
being jointly driven at board level and from within IT departments as well as by
sales, marketing and HR departments, all of which are increasingly being given a
remit to develop an innovation infrastructure. The pressure to innovate is
growing as company boards are seeing the real and substantial benefits being
achieved by their competitors who have invested in this area, as they seek to
increase margins and gain competitive advantage.
With this in mind, and by focusing on developing the right partner channels, we
have been able to rapidly gain access to the very top levels within major global
organisations.
We continue to build a large pipeline of opportunities both in the US and Europe
and are confident of our ability to convert these opportunities and maintain
high rates of growth in the coming year.
Marketing Activities
As a result of a growing awareness of the innovation market, the number of
specific innovation related conferences has significantly increased in the last
year. We sponsored and helped organise the first major UK innovation conference,
hosted by the Financial Times in December 2006, and also sponsored the Front End
conference in Munich in January 2007, the Front End conference in Boston in May
2007 and the World Innovation Forum in New York in June 2007. The funding from
the IPO has enabled us to expand our presence at these conferences and take a
more prominent sponsorship position. We have also seen a significant increase in
the number of attendees at our semi-annual user group events, with attendance up
threefold on the meetings held in 2006.
In the last few months we have begun a series of webinars aimed at new prospects
as well as existing clients, as a means of demonstrating our capabilities and
differentiating ourselves from our competitors.
Geographic Expansion
Since the appointment in January 2007 of Geoff Carss as UK Managing Director, we
have seen a significant increase in opportunities within the UK and Europe. Post
year end we have signed pilot contracts with several major UK organisations,
including COSI, KPMG, Norwich Union, as well as a project for the internal use
of our system within IBM.
We are seeing new opportunities in the Australasian market through IBM, as well
as in Western Europe. The level of penetration of our type of technology remains
extremely low in the majority of markets and we expect to quickly benefit from
our first-mover advantage.
Financial Review
Turnover for the year ended 31 March 2007 grew by 77% to #2,491,708 (2006:
#1,410,610). This was driven by increased sales into the customer base, and
additional customer acquisition in the US, UK and Europe. Revenue split between
the geographies was 95% USA and 5% UK and Europe (2006: USA 86%, UK 14%).
The operating loss before exceptional items for the year was #432,567, moving
from a profit of #46,618 in the previous year. This result was driven by
increased staff costs and operating charges, including the costs of the improved
server capacity. There were exceptional costs of #611,930 (2006: #nil) in
respect of share awards provided to the key management team responsible for the
future development of the business. We incurred an interest charge of #92,930
(2006: #28,977) which arose mainly from the interest charged on various loan
notes provided to the Company by certain employees and other individuals. These
loan notes were converted into equity at the time of the IPO. This resulted in a
loss before tax of #1,128,976 for the year (2006: profit of #17,641). Cash at
bank and in hand at the year end was #862,446 (2006: #142,426).
We raised #1.5 million (net of expenses) in December 2006 via a placing of
27,793,345 ordinary shares at 7.5p per share, to fund the continued development
of the business through the addition of further sales executives, marketing
resources and implementation staff in both the US and UK, enabling the Company
to take advantage of the expanding market for its products.
Board Appointments
I would like to thank Howard Marshall, our Non-executive Chairman, and Paul
Morland and Phil Nutburn, our Non-executive Directors, for their time and
ongoing support and guidance during the IPO process, and I look forward to their
continuing support as we seek to grow our business.
Current Trading and Prospects
This has been a year of transition, establishing the foundations for further
growth supported by a successful IPO on AIM. Whilst the process of the IPO was
time consuming and did have a temporary adverse effect on the operational
performance of the business, the Directors consider the IPO an integral part of
the Company's business development plan. With the progress that has been made
since the start of 2007, and the changing dynamics of the market, we look
forward to continued success in the future.
Since we came to market, we have signed further European projects and
strengthened relationships with our European partners, enhancing our capacity to
assist major global organisations to innovate. This is partly a function of our
success in bringing our offering to the market, but also the result of a much
greater appreciation by the market of the business benefits that can be derived
from tapping into the 'collective genius' within organisations.
Mark Turrell
Chief Executive
12 June 2007
Preliminary announcement of results for the year ended 31 March 2007
Consolidated profit and loss account
Results before
Exceptional Exceptional
Note items items 2007 2006
# # # #
Turnover 2,491,708 - 2,491,708 1,410,610
Other external charges (176,664) - (176,664) (61,582)
Staff costs 2 (1,693,704) (611,930) (2,305,634) (791,649)
Depreciation written off tangible fixed assets (18,626) - (18,626) (2,888)
Other operating charges (1,035,281) - (1,035,281) (507,873)
______ ______ ______ ______
Operating (loss)/profit (432,567) (611,930) (1,044,497) 46,618
Interest receivable 8,451 - 8,451 -
Interest payable (92,930) - (92,930) (28,977)
______ ______ ______ ______
(Loss)/profit on ordinary
activities before taxation (517,046) (611,930) (1,128,976) 17,641
Taxation - -
______ ______
(Loss)/profit on ordinary
activities after taxation
transferred to reserves (1,128,976) 17,641
______ ______
(Loss)/earnings per share: Basic and diluted 3 (2.43p) 1,102.56p
______ ______
All amounts relate to continuing activities.
Preliminary announcement of results for the year ended 31 March 2007
Reconciliation of movements in shareholders' funds
2007 2006
# #
(Loss)/profit for the year (1,128,976) 17,641
Shares issued at nominal value 72,875 -
Share premium arising on issue 1,690,235 -
Share-based payments 446,949 -
________ ________
Net increase in shareholders' funds 1,081,083 17,641
________ ________
Opening shareholders' deficit (469,600) (487,241)
________ ________
Closing shareholders' funds/(deficit) 611,483 (469,600)
________ ________
Preliminary announcement of results for the year ended 31 March 2007
Consolidated balance sheet
Note 2007 2006
# # # #
Fixed assets
Intangible assets 207,510 -
Tangible assets 91,991 8,504
_____ _____
299,501 8,504
Current assets
Debtors 797,993 477,732
Cash at bank and in hand 862,446 142,426
________ ________
1,660,439 620,158
Creditors: amounts falling due
within one year (1,309,400) (936,391)
________ ________
Net current assets 351,039 (316,233)
________ ________
Total assets less current assets 650,540 (307,729)
Creditors: amounts falling due
after more than one year (39,057) (161,871)
________ ________
Net assets 611,483 (469,600)
________ ________
Capital and reserves
Called up share capital 72,876 1
Share premium account 4 1,690,235 -
Profit and loss account 4 (1,151,628) (469,601)
________ ________
Shareholders' funds/(deficit) 611,483 (469,600)
________ ________
Preliminary announcement of results for the year ended 31 March 2007
Consolidated cash flow statement
2007 2006
Note # # # #
Net cash outflow from operating
activities 5 (379,024) (76,392)
Returns on investments and
servicing of finance
Interest received 8,451 -
Interest paid (105,041) (14,875)
_______ _______
Net cash outflow from returns
on investments and servicing of finance (96,590) (14,875)
Taxation
Corporation tax received - 7,198
Capital expenditure
Purchase of tangible fixed assets (102,113) (11,392)
Purchase of intangible fixed assets (54,510) -
_______ _______
Net cash outflow from
capital expenditure (156,623) (11,392)
_______ _______
Net cash outflow before financing (632,237) (95,461)
Financing
Inception of loans - 293,474
Loan repayments (120,712) (6,654)
Net proceeds of shares issued 1,472,969 -
_______ _______
Net cash inflow from financing 1,352,257 286,820
_______ _______
Increase in cash 720,020 191,359
_______ _______
Preliminary announcement of results for the year ended 31 March 2007
Notes to the preliminary announcement
1. Results and accounting policies
The preliminary results have been prepared under the historical cost convention,
in accordance with applicable Accounting Standards in the United Kingdom and
with the group's accounting policies as will be set out in the financial
statements for the year ended 31 March 2007. The preliminary results were
approved by an authorised committee of the Board on 11 June 2007 and are
unaudited.
The financial information contained in this unaudited preliminary announcement
does not constitute statutory accounts as defined by Section 240 of the
Companies Act 1985.
There have been no changes in accounting policy in the year.
2. Exceptional items
2007 2006
# #
Exceptional staff costs 611,930 -
_______ _______
Certain directors and staff were issued shares upon the floatation of the
company in respect of services to the company. In accordance with FRS 20
'Share-based payment' these shares are recognised as an expense in the profit
and loss account with a corresponding increase in equity. The exceptional staff
costs include the fair value of the shares issued together with the related
national insurance and other issue costs.
3. Basic and diluted loss/earnings per share
Basic (loss)/earnings per share (EPS) have been calculated in accordance with
FRS22 'Earnings per share'. The calculation of EPS is based on losses of
#1,128,976 (2006: a profit of #17,641) and on a weighted average number of
ordinary shares in issue during the year of 46,456,587 (2006: 1,600).
The share options issued on admission to AIM are considered to be anti-dilutive,
and therefore diluted EPS equals basic EPS.
4. Reserves
Share Profit
premium and loss
account account
# #
At 1 April 2006 - (469,601)
Loss for the year - (1,128,976)
Premium on shares issued in the year 1,690,235 -
Share-based payments to employees - 446,949
________ ________
At 31 March 2007 1,690,235 (1,151,628)
________ ________
Preliminary announcement of results for the year ended 31 March 2007
Notes to the preliminary announcement (continued)
5. Reconciliation of operating loss/profit to net cash outflow from operating
activities
2007 2006
#'000 #'000
Operating (loss)/profit (1,044,497) 46,618
Depreciation 18,626 2,888
Share based payments 423,982 -
Increase in debtors (320,260) (397,082)
Increase in creditors 543,125 271,184
_______ _______
(379,024) (76,392)
_______ _______
6. Analysis of changes in net funds/debt
Other non
cash
2006 Cashflow changes 2007
# # # #
Bank and cash 142,426 720,020 - 862,446
Debt due within one year:
Bank loans (26,616) 19,995 (20,430) (27,051)
Other loans (98,333) 23,333 75,000 -
Debt due after more than one year:
Bank loans (59,487) - 20,430 (39,057)
Other loans (102,384) 77,384 25,000 -
_______ _______ _______ _______
Net (debt)/funds (144,394) 840,732 100,000 796,338
_______ _______ _______ _______
Non-cash movements to other loans relate to the issue of shares in repayment of
loans.
7. Reconciliation of net cash flow to movement in net funds/(debt)
2007 2006
# #
Increase in cash in the year 720,020 191,359
Cash inflow/(outflow) from bank and other loans 120,712 (286,820)
_______ _______
Change in net funds/(debt) resulting from cashflows 840,732 (95,461)
Non-cash changes to net funds/(debt) 100,000 -
_______ _______
Movement in net funds/(debt) in the year 940,732 (95,461)
Net debt at start of year (144,394) (48,933)
_______ _______
Net funds/(debt) at end of year 796,338 (144,394)
_______ ______
This information is provided by RNS
The company news service from the London Stock Exchange
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