RNS Number : 4233W
Imaginatik PLC
11 June 2008
11 June 2008
Imaginatik Plc
("Imaginatik" or the "Company")
Preliminary Results for the year ended 31 March 2008
Imaginatik plc (AIM: IMTK), a leading provider of collaborative innovation and problem-solving software and processes, announces its
Preliminary Results for the year ended 31 March 2008.
Financial Highlights
* Turnover up 27% to �3.16m (2007: �2.49m)
* Operating loss reduced to �0.13m (2007: Operating loss �1.04m)
* Operating profit in H2 of �0.34m (H2 2007: Operating loss �1.20m)
* Annual recurring revenues up 28% to �1.81m (2007: �1.41m)
* Cash and cash equivalents of �1.09m (2007: �0.86m)
Corporate Highlights
* Continued growth of blue chip customer base with the addition of customers in high technology, financial services, consumer goods
and aerospace
* Signing of global reselling agreement with IBM
* Strategic equity investment from Pfizer Inc of �0.5m
* Release of version 8 of Idea Central in September 2007
* Named as Technology Pioneer 2008 by the World Economic Forum
Chief Executive, Mark Turrell commented: "After our first full year as a public company we are in better shape than ever. In the last
year we have developed the business to make it more efficient, better at selling and more scalable by focusing on becoming the software
provider of choice for the innovation industry and by building a partner assisted sales operation. As a result, in the second half year I am
pleased to report that we have delivered our first operating profit of �0.34m on revenues of �2.0m.
"We look forward to the continued acquisition of new annual fee paying clients, helping us further build on our recurring revenue base.
We believe we are now well positioned to maintain the current momentum and to build on the opportunity in front of us."
For further information please contact:
Imaginatik plc Tel: 020 7917 2975
Mark Turrell, CEO / Shawn Taylor, CFO
WH Ireland Tel: 0121 265 6330
Tim Cofman / Katy Birkin
ICIS Tel: 020 7651 8688
Tom Moriarty / Caroline Evans-Jones
Chairman's Statement
I am pleased to report that the year ended 31 March 2008 has been a successful year for the Company, with a more focused operation and
an enhanced product set. I am particularly pleased that we were able to meet our challenging profit target in the second half of the
financial year. This is a great credit to our employees and the merits of our software and services.
We have continued to grow our customer base, adding nine new customers on annual licences, and importantly increasing our footprint into
several of our existing customers including Cargill, Pfizer, Solvay and Whirlpool.
Of particular note has been Pfizer's endorsement of our technology. In February 2008 we announced the equity investment by Pfizer of
�500,000 in Imaginatik to support further development of our Idea Central software and the purchase of an additional 10,000 new licences of
Idea Central, bringing the total number of subscribers within Pfizer to 25,400. We are immensely proud of what is proving to be an excellent
reference site for us in the pharmaceutical industry.
The global reseller agreement signed with IBM in August 2007 is yet another endorsement from one of the world's leading companies of the
power of our software. This has already resulted in solid revenue generation with business from market leading companies in retail,
pharmaceuticals and investment banking. The agreement is providing a growing number of well-qualified leads from what is an expanding
geographical footprint, and we will continue to develop the relationship in line with our drive to increase sales through our partners.
Once again this year our expertise has been recognised through several prestigious awards, in particular we were delighted to be named
Technology Pioneer 2008 by the World Economic Forum, a clear demonstration that we have cutting edge enterprise software that has universal
application across all industries, placing Imaginatik at the forefront of the collaborative innovation industry.
I would like to thank our employees and customers around the world for their continued support, and look forward to another successful
year of growth as we endeavour to capitalise on our increased scalability, enhanced partner reach and the continuing development of the
innovation market.
Howard Marshall
Non-Executive Chairman
11 June 2008
Chief Executive's Review
Imaginatik's first full year as a public company has seen the management team focus on further developing the operations of the Company
and the manner in which it interacts with both customers and partners in order to best capitalise on the fast evolving innovation
marketplace.
During the year we focused our efforts on securing larger multi-year contracts, winning a number of new clients in the period in
industries covering aerospace, high technology, financial services, consumer goods and healthcare. We achieved further penetration into a
number of existing clients including Cargill, Pfizer, Solvay and Whirlpool. As a result, our annual recurring revenue base has increased to
�1.81m, a 28% increase on a year ago, covering over 50% of our 2008 cost base.
Strategic Investment
A key development in the year was the strategic investment in Imaginatik by Pfizer, taking a 6.45% stake in the enlarged share capital
of the Company for an investment of �500,000. This funding further strengthened the Company's balance sheet providing capital for our
company at a critical growth phase enabling us to expand our enterprise social networking and collaboration technology and strengthen the
sales team ahead of FY09 (the fiinancial year ended 31 March 2009).
Pfizer is a long-standing customer of Imaginatik which derives significant benefit from the use of our system. The investment represents
an excellent endorsement of our technology and overall business vision.
Financial Review
Turnover for the year ended 31 March 2008 grew by 27% to �3.16m (2007: �2.49m). This was driven by increased sales into the existing
customer base and the further sign up of additional blue chip clients, several of which have been converted from pilot programmes. Of the
�3.16m revenue this year, �1.7m has been up-sell business and recurring revenues, an increase of 41% (2007: �1.2m). This provides Imaginatik
with much greater stability and revenue visibility going into FY09. The revenue split between geographies was 83% USA and 17% Rest of World,
reflecting a strategy of balancing revenues (2007: USA 94%, Rest of World 6%), although the USA is likely to remain our most important
revenue generating market.
Imaginatik has maintained a tight control of costs over the financial year and total operational costs excluding the exceptional item
from 2007 have increased only 13% to �3.29m (2007: �2.92m). This has helped the Company to narrow the loss on ordinary activities for the
year to �140,000 (2007: �518,000, excluding an exceptional item of �611,000 which was in connection with the issue of shares to key members
of the management team upon IPO).
Revenues in the second half year improved significantly on the first half year, following the improved performance of the sales team and
higher second half weighting of annual renewals. This weighting of revenues towards the second half of the financial year is likely to be
repeated in FY09. The second half year generated over �2.0m in revenues and with our cost base tightly contained we were able to generate an
operating profit of over �0.34m at a net operating margin of 16%.
Cash and cash equivalents at the year end was �1.09m (2007: �0.86m) and net total equity attributable to shareholders has risen to
�1.06m (2007: �0.61m).
Sales and marketing
As our software becomes more mainstream we are seeing more new business derived from our reach into existing clients. In this financial
year the level of our up-sell business increased significantly on last year. This demonstrates the increasing value being associated with
Idea Central by our customers. Up-sell into the existing client base is therefore a key focus for our sales team, as we believe the
opportunities to extend our reach within our customers, most of whom are multi-national organisations, to be significant.
Idea Central continues to be available as Software as a Service (SaaS), in line with the latest trends in enterprise software provision.
This model is very much in demand from within the industry, particularly given the current macro-economic climate, since there is a tighter
relationship between usage and cost and is an efficient delivery mechanism for the provider.
The sales team are oriented towards software sales and working with partners with a reduced emphasis on innovation strategy consulting.
We have worked to recruit top quality management to run the group, and invested in process technology to support the sales activity on a
global basis.
As evidence of the increased appetite for our technology we have seen a marked increase in the number of people attending our regional
and national User Groups. The last one was held in Boston in April 2008 with approximately 125 attendees from a broad mix of clients,
partners and prospects.
With increased focus, more customers and a greater awareness of the value proposition offered to our clients, in the last year we have
seen a significant improvement in average price per seat for new subscription clients. In the year we have added a further nine new clients
on an annual subscription, the same number as the previous year, but at double the value being �750,000 of annualised revenue versus
approximately �400,000 last year.
We signed 23 new pilot programmes during the year, a 15% increase on last year with eight pilots moving to an annual licence (2007: 6)
and 16 ongoing at the end of the period (FY07: 15). In line with our increased average price per seat these new contracts are being signed
at significantly higher values than previously.
Customer case studies
Idea Central continues to deliver significant results for some of the world's leading organisations. Some examples of projects
implemented over the year through the use of our software are as follows;
* Pfizer - has run over 100 projects or campaigns using Idea Central across R&D and most recently in sales, marketing and IT. Some
of the most successful uses of Imaginatik's software include the identification of Phase 3 Starts, leading to clinical trials, which yielded
over 100 development candidates, and one funded project with a net present value of $100 million; and external "open innovation" use of Idea
Central, run in partnership with the Scripps Institute to route scientific Scripps-generated documents for review by Pfizer scientists
across R&D and to track and manage outcomes internally and with their research partner.
* Wal-Mart - We worked with our strategic partner, IBM, to deliver a Sustainability campaign for Wal-Mart called "Tap into our
Power". The goal was to generate $5 million cost saving ideas to reduce electricity consumption in US stores through the implementation of
associate ideas. More than 5,000 associates were involved and hundreds of cost and energy saving ideas were identified and are being
implemented, with savings of over $30 million either realised or underway.
* Weyerhaeuser - Imaginatik implemented Idea Central across the iLevel division of this Fortune 100 Company to support process
improvements, safety, revenue generation and new product development. The internal team ran 29 events with over 90% of locations
participating. The system helped implement over 500 major process innovations, delivering $22.5 million in identifiable bottom line returns,
and created and launched four new products in Q1 2008.
Partnering and Reselling
We continue to work with various partners and in line with our stated strategy of growing this channel to market the partner channel
revenues more than double those achieved in 2007.
We are experiencing good progress with IBM where collaborative software technologies are seen as an exciting growth area for the future.
We are seeing our footprint expand into additional divisions within IBM and other regions, including Europe and Asia Pacific.
During the course of the year we have identified and have contracted business through further consulting alliance partners including CSC
in the UK and TRD in Norway. Both have begun generating revenues for the Company whilst still in the early stages of development.
We have established a certification programme for potential partners. This will help ensure that all partners reach a high level of
competence in the selling and the implementation of our software and should enhance our market penetration.
Market and Competition
The awareness of the concept of collaborative innovation is higher than it has ever been. It is now more generally accepted that
innovation from within is an activity that organisations should be actively pursuing. A greater understanding of collaborative thinking
within businesses has been driven by a greater interest in consumer collaborative behaviour or 'social networking' as it is often called.
Increasingly this whole area of idea management is being referred to as enterprise social networking. Industry research houses are
anticipating significant growth in this area and, being at the forefront of this industry, as evidenced by the awards we have received in
the year, combined with our continued sales and market drive, we expect to be one of the beneficiaries of this expansion in demand.
During the year, Imaginatik's market credibility has been reinforced by significant industry acclaim, with Imaginatik receiving three
major accolades from influential global organisations. In January 2008 the World Economic Forum named Imaginatik a "Technology Pioneer
2008," one of only three UK companies to receive the award, providing us with a wonderful showcase in an environment that is full of the
world's business leaders. Also in January, Imaginatik's Idea Central software was named one of three finalists in the "Best Industry
Solution" category at the IBM Lotus Awards 2008. In February 2008, Imaginatik was selected as a 2008 FiReStarter company by the Strategic
News Service, host of the influential Future in Review (FiRe) technology conference.
Product and Services
During the year we have invested in the further development of Idea Central with the release of Version 8.0 in September 2007. This
supported more social networking activities and was in line with industry trends for Enterprise Web 2.0 software based on open standards.
This has been followed by the release of 8.2 in April 2008, one of the key themes of which is to provide sector specific functionality that
better aligns Idea Central towards the challenges faced by our customers in their various industries. These upgrades have been welcomed by
customers and we will continue to invest in this way to ensure the product is oriented correctly for the evolving market.
Outlook
After our first full year as a public company we are in better shape than ever. In the last year we have developed the business to make
it more efficient, better at selling and more scalable by focusing on becoming the software provider of choice for the innovation industry
and by building a partner assisted sales operation. As a result, in the second half year I am pleased to report that we have delivered our
first operating profit of �0.34m on revenues of �2.0m.
Our goal is for Idea Central to become a ubiquitous asset within organisations designed to enable contribution and participation by its
biggest asset, its people. We believe not only is Idea Central the best way to create and drive a culture of open innovation, it allows for
inclusion and individual recognition in a business culture that increasingly values the economic advantages of being a democratic business.
We can look forward to the continued acquisition of new annual fee paying clients, helping us further build on our recurring revenue
base. We believe we are now well positioned to maintain the current momentum and to build on the opportunities in front of us.
Mark Turrell
Chief Executive
11 June 2008
Consolidated income statement for the year ended 31 March 2008
2008 2007
� �
Revenue 3,159,002 2,491,708
Staff costs (2,029,927) (2,305,634)
Depreciation written off tangible non-current (56,820) (18,626)
assets
Amortisation written off intangible non-current (33,992) -
assets
Other external charges (172,407) (176,664)
Other operating charges (996,404) (1,035,281)
Operating loss before financing and taxation (130,548) (1,044,497)
Finance costs (9,099) (84,479)
Loss on ordinary activities before taxation (139,647) (1,128,976)
Taxation expense - -
Loss on ordinary activities for the year (139,647) (1,128,976)
Loss per share: basic and diluted (note 4) (0.12p) (2.43p)
All of the activities of the group are classed as continuing.
Consolidated statement of changes in equity for the year ended 31 March 2008
Share capital Share premium Share option reserve Retained earnings Total
� � � � �
Loss for the period - - - (139,647) (139,647)
Share option charge - - 77,015 - 77,015
Other share-based payments - - - 21,841 21,841
- - 77,015 (117,806) (40,791)
Shares issued 5,306 480,023 - - 485,329
Balance at 1 April 2007 72,876 1,690,235 26,500 (1,178,128) 611,483
Balance at 31 March 2008 78,182 2,170,258 103,515 (1,295,934) 1,056,021
Consolidated balance sheet at 31 March 2008
2008 2007
� � � �
ASSETS
Non-current assets
Property, plant and equipment 59,935 91,991
Intangible assets 99,626 207,510
159,561 299,501
Current assets
Trade and other receivables 885,486 797,993
Cash and cash equivalents 1,090,490 862,446
1,975,976 1,660,439
Total assets 2,135,537 1,959,940
EQUITY AND LIABILITIES
Equity
Issued capital (note 5) 78,182 72,876
Share premium 2,170,258 1,690,235
Share option reserve 103,515 26,500
Retained earnings (1,295,934) (1,178,128)
Total equity attributable to 1,056,021 611,483
equity holders of the parent
Liabilities
Non-current liabilities
Interest-bearing loans and 17,184 39,057
borrowings
17,184 39,057
Current liabilities
Interest-bearing loans and 27,051 27,051
borrowings
Trade and other payables 1,035,281 1,282,349
1,062,332 1,309,400
Total liabilities 1,079,516 1,348,457
Total equity and liabilities 2,135,537 1,959,940
Consolidated cash flow statement for the year ended 31 March 2008
2008 2007
� � � �
Cash flows from operating (210,364) (475,614)
activities (note 6)
Investing activities
Acquisition of property, plant and (24,764) (102,113)
equipment
Acquisition of intangible assets - (54,510)
Net cash used in investing (24,764) (156,623)
activities
Net cash flow before financing (235,128) (632,237)
activities
Financing activities
Net proceeds from the issue of 485,045 1,472,969
share capital
Repayment of borrowings (21,873) (120,712)
Net cash generated from financing 463,172 1,352,257
activities
Net increase in cash and cash 228,044 720,020
equivalents
Opening net cash and cash 862,446 142,426
equivalents
Closing net cash and cash 1,090,490 862,446
equivalents
Notes to the consolidated financial statements
1. General information
This announcement has been agreed with the auditors and was approved by the Board of Directors on 11 June 2008.
The interim financial information has been prepared on the basis of the recognition and measurement requirements of International
Financial Reporting Standards as adopted for use in the European Union ('IFRS') that are effective (or available for early adoption) at 31
March 2008, the first annual reporting date at which Imaginatik is required to use IFRS.
Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement
itself does not contain sufficient financial information to comply with IFRS. A copy of the statutory accounts prepared under IFRS for the
year ended 31 March 2008 will be issued to shareholders prior to the Company's Annual General Meeting.
The financial information set out above does not constitute the company's statutory accounts for the periods ended 31 March 2008 or 2007
as defined in section 240 Companies Act 1985. Statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the
Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2008 will be delivered to the Registrar of Companies in due
course.
2. Basis of preparation
The accounting policies used have been applied consistently to all periods presented in these consolidated financial statements and
comply with applicable IFRS standards and IFRIC interpretations issued and effective at the time of preparing these statements.
The preparation of these financial statements in accordance with IFRS resulted in no significant changes to the accounting policies as
compared with last year's annual financial statements prepared under UK GAAP. They also have been applied by preparing an opening IFRS
balance sheet at 1 April 2006 for the purpose of the transition to IFRS, as required by IFRS 1.
The transition from previous UK GAAP to IFRS had no impact on the net assets, results or cash flows reported previously by the group. As
a result of adopting IFRS there have been numerous changes to the presentation of the financial statements.
3. Segmental reporting
The directors consider that the group has one class of business, being the provision of innovation software and related professional
services. These services are provided to clients in different geographical areas using resources shared between those markets. Therefore
segmental information is presented in respect of the group's geographical segments relating to where customers are based. This is the
primary basis of segmental reporting. The geographical segmental reporting reflects the group's management and internal reporting structure.
Segmental results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The
location of customers is not significantly different to the location of assets.
2008 2007
� �
Segmental revenue:
United States of America 2,619,246 2,346,597
Rest of the world 539,756 145,111
3,159,002 2,491,708
Segmental result:
United States of America 241,911 (858,019)
Rest of the world (381,558) (270,957)
(139,647) (1,128,976)
4. Earnings per share
Basic loss/earnings per share (EPS) has been calculated in accordance with IAS 33 'Earnings per share'. The calculation of EPS is based
on losses of �139,647 (2007: losses of �1,128,976) and on a weighted average number of ordinary shares in existence during the year of
117,270,883 (2007: 46,456,587).
The share options in issue are considered to be anti-dilutive, and therefore diluted EPS equals basic EPS.
5. Share capital
2008 2007
� �
Authorised
500,000,000 ordinary shares of 0.0625p each 312,500 312,500
Allotted, called up and fully paid
116,601,226 ordinary shares of 0.0625p each - 72,876
125,090,957 ordinary shares of 0.0625p each 78,182 -
78,182 72,876
On 27 February 2008 8,035,885 0.0625p ordinary shares were placed with investors for net cash consideration of �485,045 after deducting
issue costs of �14,955. The issue costs have been deducted from the share premium account.
On 7 March 2008 453,846 0.0625p ordinary shares were issued to directors and staff in lieu of accrued salary and net of taxes for a
consideration of �22,125.
6. Reconciliation of operating loss to net cash outflow from operating activities
2008 2007
� �
Operating loss (130,548) (1,044,497)
Depreciation of tangible fixed assets 56,820 18,626
Amortisation of intangible fixed assets 33,992 -
Share option charge 77,015 26,500
Other share-based payments 22,125 420,449
Interest paid (9,099) (96,590)
Operating cash flows before movements in working 50,305 (675,512)
capital
(Increase)/decrease in trade and other receivables (87,493) (320,260)
Increase/(decrease) in payables (173,176) 520,158
Net movement in working capital (260,669) 199,898
Net cash from operating activities (210,364) (475,614)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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