TIDMIMTK
RNS Number : 5305L
Imaginatik PLC
02 August 2011
2 Aug 2011
Imaginatik Plc
("Imaginatik" or the "Company")
Final Results
Imaginatik plc (AIM: IMTK.L), a leading provider of innovation
management software and consultancy, announces its unaudited
preliminary results for the year ended 31 March 2011.
Summary
-- Re-organisation of the business largely completed in the
second half of the year
-- Results for the year in line with management's
expectations:
o Revenues GBP2.85 million (FY 2010: GBP4.55 million)
o Costs (before share based payments) reduced by 12% to GBP5.1
million (FY2010: GBP5.8 million)
o Operating loss before tax GBP2.41 million (FY 2010: GBP1.43
million)
o Cash at period end of GBP0.47 million (31 March 2010: GBP1.51
million).
-- Increase in new customer momentum in second half with number
of significant contract wins including MedCo, Yara, Argo Insurance
and Lubrizol.
o Post year end contract wins with Cotton, Inc. and Cementos
Argos
-- All contracts reaching end-of-term since June 2010 have
renewed bar one, demonstrating the value customers place on the
services Imaginatik now provides.
-- Increasing number of pilot contracts now being signed,
providing strong sales pipeline for the coming year and beyond.
-- Over GBP2.6 million of revenue visibility for FY 2012 (GBP2.3
million as at 31 March 2010 for FY2011) underpinning a substantial
part of fixed overheads.
Matt Cooper, Executive Chairman of Imaginatik, commented:
"These results are a reflection of the significant
reorganisation which was required at Imaginatik. We have spent
considerable effort in the past year rebuilding the Company with
particular attention to the sales team and refocusing the business.
We believe we now have in place both a strong team and a product
offering with which to capitalise on the growing opportunities in
our market. These strengthened fundamentals combined with over 40
global customers providing revenue visibility of over GBP2.6m for
the year ahead, gives us confidence in the future of
Imaginatik."
For further information please contact:
Imaginatik plc Tel: 020 7917 2975
Matt Cooper, Executive Chairman /
Shawn Taylor, CFO
Arbuthnot Securities Limited Tel: 020 7012 2000
Tom Griffiths / Richard Johnson
Threadneedle Communications Tel: 020 7653 9850
Caroline Evans-Jones / Hilary Millar
About Imaginatik
Imaginatik provides Innovation and Idea management solutions
comprised of consultancy, enterprise software and program
management to deliver innovation results to companies such as The
World Bank, NYSE, The Chubb Group of Insurance Companies, Boeing,
Pfizer, Goodyear, Paccar, Kellogg and Cargill. Few companies
possess the internal capability to consistently generate fresh
ideas, identify those worth pursuing and reliably transform them
into real, value-enhancing assets. This is Imaginatik's area of
expertise.
Imaginatik is a public company whose shares are traded on the
AIM market of the London Stock Exchange (LSE:IMTK.L) and is a World
Economic Forum Technology Pioneer with offices in Boston, MA, and
Winchester, UK. For more information visit www.imaginatik.com.
Executive Chairman's Statement
Operational Review
As highlighted in the Interim Results announcement released in
December 2010, considerable effort has continued to be invested in
three key areas. These were the rebuilding of our sales capability,
the upgrading of our technology platform and the clarification of
our growth strategy and strategic direction.
I am pleased to report that we have made good progress in each
of these three areas. While the results for the year are
disappointing, the trends underlying the headline figures are
moving in the right direction, namely;
-- We signed 7 new customers in the second half, compared to 2
in the first (2010, 4 in the second half, 6 in the first);
-- All bar one customer reaching the end of their contracts
since the restructuring in summer 2010 have re-signed with us,
demonstrating the value they place on the services we provide;
and
-- At the year end we had more pilots underway, 6 versus 4 at
the same point last year.
The reasons for the reduction in revenues compared to the prior
year are three-fold. First, the loss of a significant number of
customers in the preceding year meant we had a lower level of
renewals available to us. We are confident that we now have a more
solid customer base, having spent time this year visiting and
working with every customer to maximise their returns from the use
of our software.
Second, we did not secure as many new customers overall as we
did in the previous year as a result of the time spent rebuilding
and reeducating the sales team. It is important to note that we did
see an increased level of new client wins in the second half of the
year, securing contracts worth over GBP500,000 in the final few
months of the year. The majority of these revenues will be
recognised in the next financial year.
The third reason was the extent of the multi-year contracts
signed in the previous financial year providing a substantial
revenue contribution in the year ended 31 March 2010, but a
markedly lower contribution in the year ended 31 March 2011. A
number of these contracts are due for renewal in the coming
financial year.
Our enterprise innovation platform and consultancy services
continue to be selected by some of the world's most successful
businesses and organisations, including the World Bank, and the
Government Services Agency of the United States Government. We
believe this is a clear validation of the quality of our offering.
Our continuing goal is to help make the best companies even better
by helping them develop a deep competency in innovation. In order
to achieve that goal, we are continuing to fill out our offering of
products and services so that we can be a complete innovation
partner to our clients. We believe we have made a great deal of
progress towards that goal in the past year.
This steadying of the customer base and the signing of several
new clients on annual contracts towards the end of the year, means
we have now entered the new financial year with a higher level of
revenue visibility than the previous year, being revenue which is
either under contract for the year, or available to us via renewal
with existing customers. We entered the new financial year with
visibility of over GBP2.6m (2010: GBP2.3m), underpinning a
substantial part of our fixed overheads.
Since the year end, we have secured two additional customers,
Cotton Incorporated, the research and promotions company for US
cotton growers, on a multi-year contract, and Cementos Argos, one
of the largest cement manufacturers in Latin America, further
adding to our client base and recurring revenues.
Financial Review
Total revenue for the year ended 31 March 2011 decreased by 37%
to GBP2.85 million (FY 2010: GBP4.55 million). During the year, 21%
of revenue was generated from up-selling our software and services
into existing customers, 29% from selling into new clients, and 50%
from recurring business (FY 2010: 20:29:51%). We added 9 new
customers during the year (FY 2010: 10).
The US continues to be our core market and the percentage of
revenues received from the region grew in the period to 96% (FY
2010: 90%) with the remaining 4% made up from the Rest of the World
(FY 2010: 10%).
We took steps during the year to reduce overheads, largely
through lower head count and reduced spend on marketing activities
deemed to be unnecessary in a period where many leads are now
generated through web activity and referrals. The overheads for the
year were inflated due to approximately GBP350,000 of one-off legal
costs incurred as a result of litigation against the former CEO.
This litigation has resulted in a successful result for the
Company, obtaining judgment in each of its actions. A significant
portion of this cost is expected to be recovered in due course
although in order to be prudent this has not been recognised in the
financial statements.
As a result, total costs have been reduced by 12% in the year
from GBP5.979 million to GBP5.257 million this year. The Company
continues to seek means to reduce costs post year-end.
Operating losses after share option costs widened to GBP2.41
million (FY 2010: GBP1.43 million) primarily as a function of the
drop in revenues as referred to above.
We continued to invest in our software platform in the year,
upgrading and adding new functionality to improve our
competitiveness. In the year we invested GBP0.57 million (FY2010:
GBP0.42 million) all of which has been prudently written off as
incurred but the software remains the Company's primary asset.
On 6 September 2010 the Company announced that it had raised
approximately GBP0.8 million (gross) through a placing of
53,333,332 new ordinary shares of 0.0625p each ("Ordinary Shares")
with existing institutional and other investors at a price of 1.5
pence per share.
The Company is in the final stages of securing further financing
for the business, and expects to make a market announcement on this
very shortly. The financing being raised is expected to be
sufficient to provide an appropriate level of working capital for
the business and to facilitate further growth, including the
addition of further sales and consulting capacity in the US.
Strategy Implementation
Innovation-as-a-Service
We have been pleased with the traction we have gained following
the launch of our 'Innovation-as-a-Service' strategy towards the
end of the first half of the year which differentiates us from the
competition and ensures that our portfolio of clients are assured
of success in their innovation programmes. There is a clear demand
in the market place for assisted innovation, with Imaginatik
providing strategy consultancy and program management alongside our
enterprise technology platform. We believe our many years'
experience in this area means we are uniquely positioned to deliver
this type of service. Clients to whom we now provide
Innovation-as-a-Service include Philip Morris, Argo Insurance,
Pfizer, Novartis, Cementos Argos and the World Bank.
Innovation Central
In the past year, we have cemented our claim to offer a
market-leading product platform.
In April 2011, after the year end, we launched Innovation
Central, an expanded version of Idea Central. Innovation Central
supports the entire lifecycle of innovation management, from
Discovery, through Ideation and Decisions, through the Results - a
claim only Imaginatik can make. Innovation Central includes many
market leading improvements, including:
-- The launch of Discovery Suite, a new offering to serve the
Discovery phase of innovation, a first in our market;
-- The first version of Portfolio Monitor, designed for the
Results phase following Innovation Central's traditional focus on
Ideation;
-- Social features at the vanguard of Ideation, including
community monitoring (Look Who's Talking); and idea and participant
profiling of innovation styles (Kudos); and related-idea
exploration (Ideas Like This); and
-- Powerful new decision and reviewing tools, including a group
prioritsation tool (Bubble Up) and a statistically rich pairwise
evaluator's tool (Head-to-Head Reviews).
These developments represent a significant step forward in our
ability to support innovation at major organisations.
We are committed to continuing product innovation and believe
that it is a vital ingredient for success in this growth
market.
Outlook
The outlook for the business is stronger now than it has been
for the last 18 months. The final quarter of the year saw the
signing of several significant contracts which gives us confidence
in our strategy and adds to our increasing levels of revenue
visibility for this coming year. We have also increased the number
of pilots signed in the second half, which we expect to see
converted into annual licence deals during the next financial
year.
Importantly, we believe our sales team now has the correct
structure, the team is largely complete and well trained and has
the tools with which to capitalise on the growing number of
opportunities in our market.
Imaginatik continues to be regarded as one of the leaders in the
high growth innovation market. This strong reputation, outstanding
customer list and strengthening fundamentals mean we view the
future with increased confidence.
Matt Cooper
Executive Chairman
2 August 2011
Consolidated statement of comprehensive income for the year
ended 31 March 2011
Unaudited Audited
Note 2011 2010
GBP GBP
Revenue 2 2,847,438 4,550,646
Cost of sales (341,533) (326,267)
------------ ------------
Gross profit 2,505,905 4,224,379
Administrative expenses (4,915,787) (5,653,189)
------------ ------------
Operating loss before financing and
taxation (2,409,882) (1,428,810)
Operating loss before share option costs (2,275,717) (1,244,933)
Share option costs (134,165) (183,877)
------------------------------------------- ----- ------------ ------------
Finance costs (4,899) (2,870)
------------ ------------
Loss on ordinary activities before
taxation (2,414,781) (1,431,680)
Income tax expense - (7,215)
------------ ------------
Loss on ordinary activities for the year (2,414,781) (1,438,895)
============ ============
Loss per share: Basic and
diluted 3 (1.26p) (0.96p)
======== ========
Consolidated statement of financial position as at 31 March
2011
Unaudited Audited
2011 2010
GBP GBP GBP GBP
ASSETS
Non-current assets
Property, plant and
equipment 100,356 151,802
Intangible assets 103,783 161,359
------------ ------------
204,139 313,161
Current assets
Trade and other
receivables 983,045 1,596,020
Cash and cash equivalents 469,022 1,506,148
------------ ------------
1,452,067 3,102,168
Total assets 1,656,206 3,415,329
---------- ----------
EQUITY AND LIABILITIES
Equity
Issued capital 134,723 99,515
Share premium 4,690,652 3,918,881
Share option reserve 654,817 520,652
Retained earnings (5,252,038) (2,837,257)
------------ ------------
Total equity attributable
to equity holders of the
parent 228,154 1,701,791
Liabilities
Non-current liabilities
Other payables 23,801 230,307
------------ ------------
23,801 230,307
Current liabilities
Interest-bearing loans
and borrowings - -
Trade and other payables 1,404,251 1,483,231
------------ ------------
1,404,251 1,483,231
Total liabilities 1,428,052 1,713,538
---------- ----------
Total equity and
liabilities 1,656,206 3,415,329
========== ==========
Consolidated cash flow statements for the year ended 31 March
2011
Unaudited Audited
2011 2010
Note GBP GBP GBP GBP
Cash outflows from
operating
activities 6 (1,819,186) (866,463)
Investing activities
Acquisition of
property, plant and
equipment (20,258) (172,048)
Acquisition of
intangible assets (4,661) (77,399)
--------- ----------
Net cash used in
investing
activities (24,919) (249,447)
Net cash flow before
financing
activities (1,844,105) (1,115,910)
Financing activities
Net proceeds from
the issue of share
capital 806,979 1,505,540
Repayment of
borrowings - (19,713)
--------- ----------
Net cash generated
from financing
activities 806,979 1,485,827
Net
(decrease)/increase
in cash and cash
equivalents (1,037,126) 369,917
Opening net cash and
cash equivalents 1,506,148 1,136,231
------------ ------------
Closing net cash and
cash equivalents 469,022 1,506,148
============ ============
Statement of changes in equity for the year ended 31 March
2011
Share
Share Share option Retained
capital premium reserve earnings Total
GBP GBP GBP GBP GBP
Balance at 1
April 2009 82,920 2,429,936 336,775 (1,398,362) 1,451,269
Loss for the
year - - (1,438,895) (1,438,895)
Share option
costs - - 183,877 - 183,877
Shares
issued 16,595 1,488,945 - - 1,505,540
--------- ---------- ------------ ------------ ------------
16,595 1,488,945 183,877 (1,438,895) 250,522
--------- ---------- ------------ ------------ ------------
Balance at
31 March
2010 99,515 3,918,881 520,652 (2,837,257) 1,701,791
--------- ---------- ------------ ------------ ------------
Loss for the
year - - - (2,414,781) (2,414,781)
Share option
costs - - 134,165 - 134.165
Shares
issued 35,208 771,771 - - 806,979
--------- ---------- ------------ ------------ ------------
35,208 771,771 134,165 (2,414,781) (1,473,637)
Balance at
31 March
2011 134,723 4,690,652 654,817 (5,252,038) 228,154
--------- ---------- ------------ ------------ ------------
Notes forming part of the financial statements for the year
ended 31 March 2011
1. Basis of preparation
The company has adopted the requirements of International
Financial Reporting Standards (IFRS) and IFRIC interpretations
endorsed by the European Union (EU) and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention and are in accordance with applicable accounting
standards.
These financial statements have been prepared in accordance with
the accounting policies set out below, which have been consistently
applied to all the years presented. These accounting policies
comply with applicable IFRS and IFRIC interpretations issued and
effective at the time of preparing these statements.
Basis of consolidation
The group financial statements for the year ended 31 March 2011
consolidate the financial statements of Imaginatik plc and its
subsidiary undertaking using the acquisition method. Subsidiaries
are entities that are directly or indirectly controlled by the
group.
The company has taken advantage of the exemption under S408 of
the Companies Act 2006 and has not presented its own statement of
comprehensive income. Of the consolidated result for the year ended
31 March 2011, a loss of GBP2,435,781 (2010: loss of GBP1,465,424)
is attributable to the company.
Going concern
The Company is in the final stages of securing further financing
for the business, and expects to make a market announcement on this
very shortly. The financing being raised is expected to be
sufficient to provide an appropriate level of working capital for
the business and to facilitate further growth, including the
addition of further sales and consulting capacity in the US. As a
result the directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the annual financial
statements.
2. 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.
2011 2010
GBP GBP
Segmental revenue:
United States of America 2,734,350 4,073,195
Rest of the World 113,088 477,451
------------ ------------
2,847,438 4,550,646
============ ============
Segmental result:
United States of America (2,317,820) (1,275,536)
Rest of the World (96,961) (163,359)
------------ ------------
(2,414,781) (1,438,895)
============ ============
Carrying amount:
United States of America
Assets 1,235,945 2,666,212
Liabilities (1,102,975) (1,336,531)
Rest of the World
Assets 420,261 749,117
Liabilities (325,077) (377,007)
------------ ------------
228,154 1,701,791
============ ============
Additions to property, plant and equipment,
and intangible assets:
United States of America 14,131 172,321
Rest of the World 10,789 77,126
------------ ------------
24,920 249,447
============ ============
Other:
Depreciation
United States of America 38,927 79,811
Rest of the World 32,777 31,746
Amortisation
United States of America 10,962 12,378
Rest of the World 51,275 57,901
Share option costs
United States of America 34,413 34,937
Rest of the World 99,752 148,940
3. Earnings per share
Basic loss per share (EPS) has been calculated in accordance
with IAS 33 'Earnings per share'. The calculation of EPS is based
on losses of GBP2,414,781 (2010: GBP1,438,895) and on a weighted
average number of ordinary shares in existence during the year of
191,084,986 (2010: 149,297,866).
The share options issued during the current and prior year are
considered to be anti-dilutive, and therefore diluted EPS equals
basic EPS.
4. Barter transactions
During the year barter transactions totalling GBP5,900 (2010:
GBP229,392) were entered into by the Group. There was no profit or
loss recorded on these transactions. At the year end there was
deferred income balance of GBPnil (2010: GBP5,900) and deferred
costs of GBPnil (2010: GBP5,900) in respect of barter
transactions.
5. Share capital
2011 2010
GBP GBP
Allotted, called up and fully
paid
159,223,876 ordinary shares
of 0.0625p each - 99,515
215,557,208 ordinary shares
of 0.0625p each 134,723 -
---------- ----------
134,723 99,515
========== ==========
On 9 September 2010:
- 53,333,332 new ordinary shares of 0.0625p each were placed
with investors for a gross cash consideration of GBP800,000. Issue
costs relating to the above placing were GBP38,021, and have been
deducted from the share premium account.
On 17 January 2011:
- 3,000,000 new ordinary shares of 0.0625p each were issued for
a gross cash consideration of
GBP45,000. There were no costs in relation to this issue.
6. Reconciliation of operating loss to net cash outflow inflow
from operating activities
2011 2010
GBP GBP
Operating loss (2,409,882) (1,428,810)
Depreciation of tangible fixed
assets 71,704 111,557
Amortisation of intangible fixed
assets 62,237 70,279
Share option charge 134,165 183,877
Corporation tax paid - (7,215)
Net interest (paid)/ received (4,899) (2,870)
Operating cash flows before movements
in working capital (2,146,675) (1,073,182)
Decrease/(Increase) in trade and
other receivables 612,975 (44,498)
(Increase)/decrease in payables (285,486) 251,217
------------ ------------
Net movement in working capital 327,489 206,719
Net cash outflows from operating
activities (1,819,186) (866,463)
============ ============
7. Report and Accounts
Copies of the Company's unaudited preliminary results
announcement are available from its offices at 6 Wessex Way, Colden
Common, Winchester SO21 1WP and on its website, www.imaginatik.com.
A copy of the Report and Accounts will be sent to all shareholders
with notice of the AGM in due course and will also be available on
the Company's website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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