TIDMING
RNS Number : 5864F
Ingenta PLC
29 July 2016
Ingenta plc interim results
Ingenta plc (AIM: PTO), ("Ingenta", the "Company" or the
"Group") a leading provider of world-class software and services to
the global publishing industry, today announces its unaudited
interim results for the six months to 30 June 2016.
The Board believes the business is on track to meet market
expectations for the year.
Financial Key Points
-- Group revenues GBP7.57m (2015: GBP7.59m)
-- Costs before tax GBP6.8m (2015: GBP8.5m)
-- EBITDA GBP345K (2015: loss GBP(320)K)
-- Profit before tax GBP368K (2015: loss before tax GBP(1.15)m)
-- Profit per share 2.08p (2015: loss per share (6.76)p)
-- Cash at 30 June 2016: GBP1.3m (as at 30 December 2015: GBP2.1m)
Operational Key Points
-- Restructuring in second half of 2015 reduced the cost base by GBP1.6m year on year.
-- Signed 3 new contracts in 2016 across Ingenta CMS, Ingenta
CMS GO! and Ingenta Commercial Contracts and Rights worth an
aggregate of GBP1.5m, contrasting with no new wins in 2015.
-- Business returned to profitability at both EBITDA and pre-tax levels.
-- Cash consumption significantly reduced as working capital cycle normalised
Post Balance Sheet Events
-- Agreed to acquire 5 fifteen Limited to extend the Group's product set into advertising.
o The acquisition is expected to return positive EBITDA in 2016
and 2017 and be cash generative and earnings enhancing from
2017.
o Details of the acquisition are contained in a separate market
announcement.
-- Two new Non-Executive Directors to be appointed to the Board.
David Montgomery, Chief Executive of Ingenta plc, commented:
Since I became Chief Executive Officer in September 2015 we have
moved decisively to put Ingenta on to a stronger footing. Within
weeks we removed GBP1.6m of annual costs and reorganised some key
staff and management positions within the Group while at the same
time maintaining our momentum to deliver on existing contracts and
make new sales.
I am delighted that at the half year we have returned the Group
to profitability with a GBP0.7m improvement in EBITDA and a GBP1.5m
improvement in profit before tax. We have also improved our sales
performance with three new wins, and significantly reduced our cash
outflows which now reflect the normal trading pattern across the
year.
Furthermore, we have announced today the acquisition of 5
fifteen which not only is a business I know well, but which I also
view from both a market expansion and technology standpoint as an
important strategic step.
Our priorities now focus on building our sales pipeline, fully
exploiting the potential that 5 fifteen gives us, continuing to
control our costs and building further on our profitability.
In recognition of our expanding horizons and to bring greater
depth of experience to the management of the business, I am
delighted to welcome Max Royde and Henrik Holmström to the Board as
Non-Executive Directors with effect from the beginning of
August.
This has been a challenging but exciting time during which I
believe the balance and momentum of the business has been
fundamentally shifted and the true potential of the Company to
become a growing and profitable world class software and services
provider to the content industries has begun to be demonstrated. I
look forward to the future with confidence.
For further information please contact:
Ingenta plc Tel: 01865 397 800
David Montgomery / Alan Moug
Cenkos Securities plc Tel: 0207 397 8900
Nicholas Wells / Elizabeth Bowman
Chief executive's statement
I am pleased to report our first half results for the year to 31
December 2016. The first 6 months of the financial year are marked
by stable revenue and a significantly reduced cost base leading to
a return to profitability for the Group.
Our strategy has been to restore profitability, move the
business quickly to cash generation and then use our unique
position within the media industry to acquire complimentary
businesses to strengthen the Group for the future.
I am therefore pleased to announce today the purchase of 5
fifteen Limited, a software development company which owns the
'AdDEPOT' advertising workflow software for publishers. The
addition of the 5 fifteen products to the Ingenta stable enhances
our offering to existing customers and extends the Group's reach
into the wider media market including newspapers and magazines with
a cloud based software as a service (SaaS) model.
After an initial down payment the consideration for 5 fifteen is
staggered to reflect its future performance for the remainder of
2016 and 2017. The purchase is expected to be immediately earnings
enhancing and expected to generate a positive cash flow from 2017
after a short term working capital requirement in 2016.
The purchase will be satisfied in cash, and the Directors are
please to say that we are undertaking a subscription with
institutional investors through the issue of 388,450 new ordinary
10p shares at 130p. In addition, Directors Martyn Rose and Neil
Kirton intend to subscribe GBP275,015 in total for new shares on
the same basis. The subscription is within the authority granted by
resolutions passed at our AGM in May and I am delighted that a
number of our existing shareholders have taken this opportunity to
acquire more stock.
A more detailed announcement regarding this acquisition is being
made separately today.
Ingenta business
Revenue for the first half of 2016 has improved compared to the
same period last year for Ingenta CMS (previously known as pub2web)
and Ingenta Commercial (previously known as advance), our
enterprise level replacement for the Vista product suite. The
uplift in Ingenta Commercial in particular has more than covered
the anticipated reduction in Vista revenue.
In the last 6 months, we have launched Ingenta CMS GO!, an out
of the box content management solution which uses standard
functionality to roll out a fast and efficient solution for mid-
sized publishers. We have already had some success in selling the
concept with 2 ongoing implementations and a number of other sales
opportunities in the pipeline.
We intend to roll out the concept of a GO! implementation which
has no development or bespoke elements to the Ingenta Commercial
suite in the next few months. Ingenta Commercial has four ongoing
projects currently and we expect to go live on two of these around
the end of 2016, with the others maintaining time based revenues
into 2017.
We have closed three new deals in 2016 so far aggregating around
GBP1.5m of future revenue. These include:
-- signing a new multi-year deal with the OECD to build their
next generation web presence on Ingenta CMS which will allow, not
just the OECD, but also other International Government
Organisations, to host their content with their own branding and
domain through the site;
-- an Ingenta CMS GO! for Sabinet, a South African publisher; and,
-- an Ingenta Commercial contract and rights sale to SAGE publishers.
This contrasts with no new deals in 2015.
Vista still remains almost 50% of the Group's revenue and
produces a 50% profit before tax margin and will remain core to the
Group's activities for a number of years to come.
Elsewhere there was a small reduction in the first half of 2016
against the same period in 2015 for PCG and Ingenta Connect
revenues, with Ingenta Connect expected to grow into 2017 and with
PCG expected to recover in the second half with 2016 revenue
expected to exceed 2015.
Ingenta Connect is about to launch 'Ingenta Open' an online
portal for open access data. This has so far had a good response
among customers and will fully launch in October 2016. In addition,
from the end of Q3, Ingenta Connect will charge libraries for
previously free access services under a Library Memberships scheme.
This is expected to improve the Ingenta Connect results in 2017 and
bring this division back to growth.
PCG has undergone significant change in 2016, with a re-emphasis
on the elements of the business which earn the highest margin,
concentrating on the sales representation parts of the business
model and has been PCG win new clients across US, Latin America and
India.
Financial review
First half revenue was stable from the first half of 2015, with
the expected decrease in revenue from the Vista product being
replaced by revenue from the new Ingenta Commercial product suite.
Other revenues remained relatively stable.
The cost base before interest, tax and foreign exchange has
reduced by GBP1.6m on an annualised basis.
The cost base realignment has returned the Group to profit with
a first half Profit before tax of GBP368K.
Cash Flow
Cash reduced by GBP0.8m in the 6 months to 30 June 2016 as part
of the expected cash flow. The working capital cash cycle is now
normalising after 18 months of restructuring and amortising
provisions associated with the beta implementations of Ingenta
Commercial.
Compared to the same period in 2015, working capital cash
movements are similar, the main cash variances are the differential
on the trading account and the capital raising in June 2015.
Interest paid in the first half of 2016 was GBP13K (2015:
GBP331K).
As in the prior year, the R&D tax credit of GBP405K (2015:
GBP467K) was received in July and did not impact the first half
cash flow.
D R Montgomery
Chief Executive Officer
Condensed Consolidated Interim Statement of Comprehensive
Income
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Group revenue 7,573 7,587
Less: revenue from equity
accounted investment 4 398 300
------------ ------------
Group revenue excluding equity
accounted investment 7,175 7,287
Cost of sales (4,614) (5,119)
------------ ------------
Gross profit 2,561 2,168
Sales and marketing expenses (665) (835)
Administrative expenses (1,555) (2,214)
Profit / (loss) from operations 341 (881)
Share of profit from equity
accounted investment 4 40 20
Profit / (loss) from operations
including equity accounted
investment 381 (861)
Analysis of profit / (loss)
from operations
Profit / (loss) before net
finance costs, tax, depreciation
and foreign exchange gains
and losses (EBITDA) 345 (320)
Depreciation (90) (124)
Foreign exchange gain / (loss) 177 (117)
Restructuring costs (51) (300)
------------ ------------
Profit / (loss) from operations 381 (861)
Finance costs (13) (290)
------------ ------------
Profit / (loss) before tax 368 (1,151)
Tax (2) 49
Retained profit / (loss)
for the period 366 (1,102)
------------ ------------
Other comprehensive expenses
which will be reclassified
subsequently to profit or
loss:
Exchange differences on translating
foreign operations (27) (1)
Total comprehensive income
/ (expense) for the period 339 (1,103)
------------ ------------
Profit / (loss) attributable
to owners of the parent 366 (1,102)
============ ============
Total comprehensive income
/ (expense) attributable
to owners of the parent 339 (1,103)
============ ============
Basic profit / (loss) per
share - pence 5 2.08p (6.76)p
Diluted profit / (loss) per
share - pence 5 2.01p (6.76)p
Condensed Consolidated Interim Statement of Financial
Position
Unaudited Unaudited
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Non current assets
Goodwill 3,737 3,737
Property, plant & equipment 213 333
Investments accounted for
using the equity method 4 238 318
---------- ----------
4,188 4,388
Current assets
Trade and other receivables 6 3,711 3,750
Cash and cash equivalents 7 1,293 2,606
5,004 6,356
Total assets 9,192 10,744
---------- ----------
Equity
Share capital 1,632 1,632
Share Premium 8,294 8,291
Merger reserve 11,055 11,055
Reverse Acquisition reserve (5,228) (5,228)
Translation reserve (914) (905)
Investment in own shares (1) (6)
Share option reserve 19 -
Retained earnings (10,873) (10,909)
3,984 3,930
Current liabilities
Trade and other payables 8 5,208 6,814
5,208 6,814
Total liabilities 5,208 6,814
Total equity and liabilities 9,192 10,744
---------- ----------
Unaudited condensed consolidated interim statement of changes in
equity
Share Share Merger Reverse Translation Investment Share Retained Total
capital premium reserve acquisition reserve in option Earnings
reserve own reserve
shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at 1 January
2016 1,632 8,294 11,055 (5,228) (887) (1) - (11,239) 3,626
Profit for
the period - - - - - - 366 366
Share based
payment
expense - - - - - - 19 - 19
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - - (27) - - (27)
-------- -------- -------- ------------ ------------ ----------- --------- --------- --------
Total
comprehensive
income /
(expense)
for the
period - - - - (27) - 19 366 358
Balance
at 30 June
2016 1,632 8,294 11,055 (5,228) (914) (1) 19 (10,873) 3,984
Reverse Investment
Share Share Merger acquisition Translation in own Retained
capital premium reserve reserve reserve shares Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January
2015 841 - 11,055 (5,228) (904) (6) (9,807) (4,049)
Loss for the
period - - - - - - (1,102) (1,102)
Share issue 791 8,291 - - - - - 9,082
Other comprehensive
income:
Exchange differences
on translation
of foreign
operations - - - - (1) - - (1)
--------- --------- --------- ------------- ------------ ----------- ---------- --------
Total comprehensive
expense for
the period 791 8,291 - - (1) - (1,102) 7,979
Balance at
30 June 2015 1,632 8,291 11,055 (5,228) (905) (6) (10,909) 3,930
--------- --------- --------- ------------- ------------ ----------- ---------- --------
Condensed Consolidated Interim Statement of Cash Flows
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Profit / (loss) before tax 368 (1,151)
Adjustments for:
Share of profit from equity
accounted investment 4 (40) (20)
Depreciation 90 124
Share based payment expense 19 -
Interest expense 13 291
Unrealised foreign exchange
differences (27) (1)
Decrease in trade and other
receivables 961 1,064
Decrease in trade and other
payables (2,056) (2,081)
Cash (outflow) from operations (672) (1,774)
Tax Paid (2) (1)
Net cash (outflow) from operating
activities (674) (1,775)
Cash flows from financing
activities
Share issue - 9,082
Payment of finance leases (90) (86)
Loans received - 400
Loans repaid - (2,950)
Interest paid (13) (331)
------------ ------------
Net cash used in financing
activities (103) 6,115
Cash flows from investing
activities
Purchase of property, plant
and equipment (7) (6)
Net cash used in investing
activities (7) (6)
Net (decrease) / increase
in cash and cash equivalents (784) 4,334
Cash and cash equivalents
at beginning of period 2,077 (1,728)
Cash & cash equivalents at
end of period 7 1,293 2,606
------------ ------------
Notes to the Unaudited Interim Report for the six months ended
30 June 2016
1. Nature of operations and general information
Ingenta plc (the "Company") and its subsidiaries (together 'the
Group') is a provider of technology and supporting services to
content providers and publishers. The nature of the Group's
operations and its principal activities are set out in the full
annual financial statements.
The Company is incorporated in the United Kingdom under the
Companies Act 2006. The Company's registration number is 837205 and
its registered office is 8100 Alec Issigonis Way, Oxford OX4 2HU.
The condensed consolidated interim financial statements were
authorised for issue by the Board of Directors on 28 July,
2016.
The financial information set out in this interim report does
not constitute statutory accounts as defined in section 404 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2015, prepared under IFRS as adopted by
the European Union, have been filed with the Registrar of
Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under section 498 (2)
or section 498 (3) of the Companies Act 2006.
2. Basis of preparation
These unaudited condensed consolidated interim financial
statements are for the six months ended 30 June 2016. They have
been prepared following the recognition and measurement principles
of IFRS as adopted by the European Union. They do not include all
of the information required for full annual financial statements,
and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2015.
These condensed consolidated interim financial statements have
been prepared on the going concern basis under the historical cost
convention and have been prepared in accordance with the accounting
policies adopted in the last annual financial statements for the
year ended 31 December 2015.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
consolidated interim financial statements.
A detailed set of accounting policies can be found in the annual
accounts available on our website, www.ingenta.com or by writing to
the Company Secretary at the registered office as above.
3. Share based payment
In January 2016, 526,000 share options were granted to senior
executives under the Company's EMI (Enterprise Management
Incentive) scheme. The exercise price of the options is GBP1.27,
equal to the market price on the date of grant. The options vest in
3 equal tranches over 3 years on condition that the Group's
reported year end EBITDA level meets market expectation in each
year. The fair value at grant date is estimated using the Black
Scholes pricing model, taking into account the terms and conditions
upon which the options were granted. There is no cash settlement of
options. The fair value of options granted during the 6 months to
30 June 2016 was estimated using the following assumptions:
Expected volatility 21.9%
Risk free interest rate 0.5%
Closing share price at 30 June 2016 GBP1.225
The weighted average fair value of options granted was
GBP147K
For the 6 months ended 30 June 2016 the Group has recognised
GBP19,174 of share based payment expense in the income statement
(2015: GBP0)
4. Equity accounted investment
The Group holds a 49% voting and equity interest in Beijing
Ingenta Digital Publishing Technology Ltd (BIDPT), a joint venture
company registered in the People's Republic of China.
This investment is accounted for under the equity method. BIDPT
has a reporting date of 31 December. The shares are not publicly
listed on a stock exchange and hence published price quotes are not
available. Certain unaudited financial information on BIDPT is as
follows:
30 June 30 June
2016 2015
GBP'000 GBP'000
Assets 1,522 1,602
Liabilities 958 993
Six months Six months
ended ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Revenues 812 600
Profit 81 40
Profit attributable
to the Group 40 20
Changes in equity accounted investment
Six months Six months
ended ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Investment Book Value
as at 1 January 198 298
Profit attributable
to the Group 40 20
Investment Book Value
as at 30 June 238 318
Dividends are subject to the approval of at least 51% of all
shareholders of BIDPT. The Group has received no dividends.
5. Profit / (loss) per share
Basic profit / (loss) per share is calculated by dividing the
profit / (loss) attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period.
For diluted profit / (loss) per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential ordinary shares.
Six months Six months
ended ended
30 June 30 June
2016 2015
Attributable profit
/ (loss) (GBP'000) 339 (1,103)
Weighted average number
of ordinary basic shares
(basic) 16,319,609 16,319,609
Weighted average number
of ordinary shares
(diluted) 16,845,609 16,319,609
Profit / (loss) per
share (basic) arising
from both total and
continuing operations 2.08p (6.76)p
Profit / (loss) per
share (dilutive) arising
from both total and
continuing operations 2.01p (6.76)p
6. Trade and other receivables
Trade and other receivables comprise the following:
30 June 30 June
2016 2015
GBP'000 GBP'000
Trade receivables -
gross 2,322 2,225
Less: provision for
impairment of trade
receivables (21) (5)
-------- --------
Trade receivables -
net 2,301 2,220
Other receivables 124 176
Prepayments and accrued
income 881 904
Research and development
tax credit 405 450
-------- --------
3,711 3,750
7. Cash and cash equivalents
30 June 30 June
2016 2015
GBP'000 GBP'000
Cash and cash equivalents 6,528 8,116
Bank overdraft (5,235) (5,510)
-------- --------
Cash and cash equivalents
including overdraft 1,293 (2,606)
8. Trade and other payables
Trade payables comprise the following:
30 June 30 June
2016 2015
GBP'000 GBP'000
Trade payables 589 946
Social security and
other taxes 293 343
Other payables 1,265 1,532
Accruals 796 1,092
Deferred income 2,265 2,901
5,208 6,814
9. Contingencies and commitments
There were no contingencies and commitments at the end of this
or the comparative period.
10. Post balance sheet events
On 29 July 2016, the Company agreed to acquire 5 fifteen
Limited, a leading supplier of digital advertising solutions to the
magazine and newspaper industry for a consideration of up to
GBP990K.
At the same time the Company announced a direct subscription
with certain institutional investors and Directors of the Company.
The subscription will raise up to GBP780K through the issue of
600,000 new ordinary shares of 10 pence each at a subscription
price of 130 pence per share.
Details of the acquisition and the subscription are contained in
a separate market announcement.
There were no other material events subsequent to the end of the
interim reporting period that have not been reflected in the
interim financial statements.
11. Copies of the Interim Financial Statements
A copy of the interim statement is available on the Company's
website, www.ingenta.com, and from the Company's registered office,
8100 Alec Issigonis Way, Oxford OX4 2HU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDRUXDBGLI
(END) Dow Jones Newswires
July 29, 2016 02:00 ET (06:00 GMT)
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