TIDMING
RNS Number : 0246B
Ingenta PLC
18 September 2018
18 September 2018
Ingenta plc
Interim Results
Ingenta plc (AIM: ING), ("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 2018.
During the period, the Group has largely completed a substantial
restructuring exercise to improve the operational efficiency of the
business. The new structure aligns processes across all product
sets whilst delivering annual cost savings of more than GBP2m along
with improved cash generation.
Financial Key Points
-- Group revenues GBP6.4m (2017: GBP7.75m)
-- Adjusted EBITDA(*) GBP449K (2017: GBP659K)
-- Cash inflow from operations GBP459K (2017: outflow GBP466K)
-- Cash at 30 June 2018: GBP2.1m (2017: GBP1.3m)
-- China Joint Venture non-cash impairment charge of GBP320K (2017: GBPnil)
-- Exceptional restructuring costs of GBP537K (2017: GBP112K)
-- Operating loss after impairment and exceptional charges is GBP588K (2017: profit GBP321K)
-- Strong cash conversion and balances are stated after dividend
payments, acquisition and exceptional costs
Operational Key Points
-- Substantial progress made in business combination and operational efficiency plan
-- Ingenta Open launched
-- Significant Commercial go live with 3 more projected in the second half of the year
-- All software implementations remain on track
-- Advertising customer base expanded into retail market with Sainsburys implementation
-- Growth in digital capabilities and reach with new advertising partnerships
-- Good sales pipeline growth with 2 Content deals closed in Q3
(*) Earnings before Interest, Tax, Depreciation and Amortisation
is calculated before foreign exchange differences and restructuring
costs.
Martyn Rose, Chairman of Ingenta plc, commented:
"The first half of 2018 has seen a decisive and constructive
move by the Board and management to execute the final stage of
Ingenta's transformation into a unified software company providing
a coherent set of products and services under a single, simplified
structure and branding.
"The exceptional costs in the period relate to this
restructuring effort and include GBP537K of staff costs and GBP320K
of non-cash impairment charges against the Group's joint venture
investment in China. The Company has no further cash or balance
sheet exposure to China and expects a materially lower level of
staff restructuring costs of approximately GBP250K in the second
half of the year.
"During this period of change, cash conversion and underlying
EBITDA profitability remained strong. The resulting shape of the
business following the reorganisation is simpler, leaner and better
positioned for growth in both revenues and profits. Annualised
costs have been reduced by over GBP2m to an ongoing run rate of
approximately GBP11m and our simplified structure allows easier
cross-selling to clients and better career progression for our
people.
"Going forward, the business has over 200 customers across all
our product sets with recurring revenues representing approximately
75% of the total income. As we move into the second half of the
year, the new systems and processes will put the business in a
better position to service its loyal customer base and accelerate
our new business acquisition.
"The Board believes the Group's restructuring efforts have
significantly de-risked the business and will allow it to more
easily convert its revenue into profit and cash, producing a higher
quality earnings stream whereby the fixed costs of the business are
at least met by the highly visible revenues of the Group.
"The Board expects to see a further improvement in the operating
fundamentals in the second half of the year. In addition, the Board
is pleased to note that concurrent with the restructuring, our
future sales pipeline growth has been accelerating which gives us
cause for cautious optimism in this financial year and beyond."
For further information please contact:
Ingenta plc Tel: 01865 397 800
Scott Winner / Jon Sheffield
Cenkos Securities plc Tel: 0207 397 8900
Nicholas Wells / Harry Hargreaves
Ingenta business
During the first half of 2018, the Group initiated the final
stage of its long-term business combination and operational
efficiency strategy. The changes have been far reaching. We have
moved away from a divisional product siloed structure to a modern,
product and services company providing robust software and a
product agnostic professional services and support framework. With
successful customer go lives across all product lines, the Group
has now been able to merge fragmented teams to provide a wider
range of more flexible and responsive services to its customers and
offer broader opportunities to Ingenta staff.
In the 2017 financial statements, the Group outlined it has been
actively engaged in discussions to sell or dispose of its
shareholding in the Chinese Joint Venture and had reclassified it
as an asset held for sale. These discussions are ongoing, but the
Board does not believe a deal is imminent and have subsequently
reclassified the Group's holding in the Joint Venture as an
investment. Given the inherent uncertainty around valuing a Chinese
non-listed, minority shareholding combined with flat earnings and
an increasingly uncertain mechanism to repatriate funds, the Group
have decided to fully impair the investment. The Group's strategy
going forward is to concentrate on its core product set and given
the lack of control it exerts over the Joint Venture, it will not
continue to consolidate results into the Group.
As announced in March, Ingenta plc has also completed a capital
reduction of its share premium account. The parent company now has
distributable reserves of GBP8.3m after payment of the latest full
year dividend.
Financial review
Revenues in the first half are down on the prior period due to
several factors. Firstly, there was a significant GBP600K licence
sale in the prior period. Secondly, there were a number of projects
in full flight last year, earning significant implementation
revenue, that have now been completed or are at the final stages of
delivery in 2018. Thirdly, contractual negotiations on new business
have taken longer to finalise, although 2 new wins have been signed
during Q3 with further opportunities being progressed for later in
the year.
Administrative expenses during the first half have been impacted
by the decision to fully impair the GBP320K value attributed to the
Group's 49% shareholding in its Chinese Joint venture. In addition,
the Group incurred GBP537K of exceptional costs related to its
business realignment and improved operational efficiency
strategy.
The Group's adjusted EBITDA is GBP449K (2017: 659K) and
excluding last year's licence sale, like for like EBITDA gives the
Board optimism that its restructuring strategy is having the
desired effects on the efficiency of the Group's core
operations.
Cash flow
Further evidence of the Group's improved operational efficiency
can be seen in the cash performance of the business. The Group
generated GBP459K of positive cash inflows from operations (2017:
outflow GBP466K) which helped finance the final GBP248K contingent
payment on acquisition of the advertising business plus the payment
of an increased dividend of GBP254K (2017: GBP169K) and still
retain cash balances of GBP2.1m (2017: GBP1.3m) at half year.
As in the prior year, the R&D tax credit of GBP174K (2016:
GBP143K) is due for receipt in the second half of the year and did
not impact the first half cash flow.
Scott Winner
Acting Chief Executive Officer
Condensed Consolidated Interim Statement of Comprehensive
Income
Unaudited Unaudited
Six months Six months
ended ended
30 June 2018 30 June 2017
Note GBP'000 GBP'000
Group revenue 6,404 7,747
Cost of sales (3,921) (4,860)
------------- -------------
Gross profit 2,483 2,887
Sales and marketing expenses (602) (655)
Administrative expenses (2,469) (1,911)
(Loss) / profit from operations (588) 321
Share of (loss) / profit from equity
accounted investment 4 - (150)
Finance costs (6) (20)
(Loss) / profit before tax (594) 151
Tax (1) (5)
Retained (loss) / profit for the
period (595) 146
Other comprehensive expenses which
will be reclassified subsequently
to profit or loss:
Exchange differences on translating
foreign operations (25) (46)
Total comprehensive (loss) / income
for the period (620) 100
Basic (loss) / profit per share -
pence 5 (3.67) 0.59p
------------- -------------
Diluted (loss) / profit per share
- pence 5 (3.61) 0.58p
Analysis of (loss) / profit from
operations:
Profit before net finance costs,
tax, depreciation and foreign exchange
gains and losses (EBITDA) 449 659
Depreciation (432) (132)
Foreign exchange (loss) (68) (94)
Restructuring costs (537) (112)
------------- -------------
(Loss) / profit from operations (588) 321
Condensed Consolidated Interim Statement of Financial
Position
Unaudited Unaudited
30 June 2018 30 June 2017
Note GBP'000 GBP'000
Non-current assets
Goodwill 3 4,900 4,900
Other intangible assets 3 308 408
Property, plant & equipment 220 172
Investments accounted for using
the equity method 4 - 218
-------------- --------------
5,428 5,698
Current assets
Trade and other receivables 6 2,767 3,790
Research and development tax credit
receivable 174 143
Cash and cash equivalents 2,051 1,255
4,992 5,188
Total assets 10,420 10,886
-------------- --------------
Equity
Share capital 1,692 1,692
Share premium - 8,999
Merger reserve 11,055 11,055
Reverse acquisition reserve (5,228) (5,228)
Translation reserve (870) (917)
Share option reserve 51 80
Retained earnings (1,274) (10,263)
5,426 5,418
Non-current liabilities
Deferred tax liability 62 82
Finance leases 76 21
-------------- --------------
138 103
Current liabilities
Trade and other payables 7 3,037 3,538
Deferred income 1,819 1,827
-------------- --------------
4,856 5,365
Total equity and liabilities 10,420 10,886
-------------- --------------
Unaudited Condensed Consolidated Interim Statement of Changes in
Equity
Share Share Merger Reverse Translation Share Retained Total
capital premium reserve acquisition reserve option Earnings
reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2018 1,692 8,999 11,055 (5,228) (845) 51 (9,373) 6,300
Dividends paid - - - - - - (254) (254)
Share premium
reduction - (8,999) - - - 8,999 -
--------- --------- --------- ------------- ------------ --------- ---------- --------
Transactions
with owners - (8,999) - - - 8,745 (254)
--------- --------- --------- ------------- ------------ --------- ---------- --------
Loss for the
period - - - - - - (595) (595)
Other comprehensive
income:
Exchange differences
on translation
of foreign operations - - - - (25) - - (25)
--------- --------- --------- ------------- ------------ --------- ---------- --------
Total comprehensive
income / (expense)
for the period - - - - (25) - (595) (620)
--------- --------- --------- ------------- ------------ --------- ---------- --------
Balance at 30
June 2018 1,692 - 11,055 (5,228) (870) 51 (1,224) 5,426
--------- --------- --------- ------------- ------------ --------- ---------- --------
Share Share Merger Reverse Translation Share Retained Total
capital premium reserve acquisition reserve option Earnings
reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2017 1,692 8,999 11,055 (5,228) (871) - (10,240) 5,407
Dividends paid - - - - - - (169) (169)
Share based
payment expense - - - - - 80 - 80
--------- --------- --------- ------------- ------------ --------- ---------- --------
Transactions
with owners - - - - - 80 (169) (89)
--------- --------- --------- ------------- ------------ --------- ---------- --------
Profit for the
period - - - - - - 146 146
Other comprehensive
income:
Exchange differences
on translation
of foreign operations - - - - (46) - - (46)
--------- --------- --------- ------------- ------------ --------- ---------- --------
Total comprehensive
income / (expense)
for the period - - - - (46) - 146 100
--------- --------- --------- ------------- ------------ --------- ---------- --------
Balance at 30
June 2017 1,692 8,999 11,055 (5,228) (917) 80 (10,263) 5,418
--------- --------- --------- ------------- ------------ --------- ---------- --------
Condensed Consolidated Interim Statement of Cash Flows
Unaudited Unaudited
Six months Six months
ended ended
30 June 2018 30 June 2017
Note GBP'000 GBP'000
(Loss) / profit before tax (594) 151
Adjustments for:
Share of loss / (profit) from equity
accounted investment 4 - 150
Depreciation 432 132
Share based payment expense - 80
Interest expense 6 20
Unrealised foreign exchange differences (25) (46)
Decrease in trade and other receivables 1,927 1,600
Decrease in trade and other payables (1,287) (2,553)
Cash inflow / (outflow) from operations 459 (466)
Tax Paid (1) (5)
Net cash outflow from operating activities 458 (471)
Cash flows from financing activities
Dividends paid (254) (169)
Payment of finance leases (29) (61)
Interest paid (6) (20)
------------- -------------
Net cash used in financing activities (289) (250)
Cash flows from investing activities
Acquisition of subsidiaries, contingent
consideration (248) -
Purchase of property, plant and equipment (1) (52)
Net cash used in investing activities (249) (52)
Net decrease in cash and cash equivalents (80) (773)
Cash and cash equivalents at beginning
of period 2,131 2,028
Cash & cash equivalents at end of period 2,051 1,255
------------- -------------
Notes to the Unaudited Interim Report for the six months ended
30 June 2018
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 18 September
2018.
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 2017, 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 2018. 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 2017.
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 2017.
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. Goodwill and Intangibles
Full details of the Group's policies on Goodwill and Intangibles
is presented in the financial statements for the year ended 31
December 2017.
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.
In the 2017 financial statements, the Group outlined it has been
actively engaged in discussions to sell or dispose of its
shareholding in the Chinese Joint Venture and had reclassified it
as an asset held for sale. These discussions are ongoing, but the
Board does not believe a deal is imminent and have subsequently
reclassified the Group's holding in the Joint Venture as an
investment. Given the inherent uncertainty around valuing a Chinese
non-listed, minority shareholding combined with flat earnings and
an uncertain mechanism to repatriate funds, the Group have decided
to fully impair the investment. The Group's strategy going forward
is to concentrate on its core product set and given the lack of
control it exerts over the Joint Venture, it will not continue to
consolidate results into the Group.
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 2018 30 June 2017
Attributable profit (GBP'000) 100
Weighted average number of
ordinary basic shares (basic) 16,919,609 16,919,609
Weighted average number of
ordinary shares (diluted) 17,191,942 17,375,609
(Loss) / profit per share
(basic) arising from both
total and continuing operations (3.67)p 0.59p
(Loss) / profit per share
(dilutive) arising from both
total and continuing operations (3.61)p 0.58p
6. Trade and other receivables
Trade and other receivables comprise the following:
30 June 2018 30 June 2017
GBP'000 GBP'000
Trade receivables - gross 1,918 2,712
Less: provision for impairment
of trade receivables (31) (12)
------------- -------------
Trade receivables - net 1,887 2,700
Other receivables 115 117
Prepayments and accrued income 765 973
2,767 3,790
7. Trade and other payables
Trade payables comprise the following:
30 June 2018 30 June 2017
GBP'000 GBP'000
Trade payables 475 423
Social security and other
taxes 344 396
Other payables 1,299 1,083
Accruals 919 1,636
3,037 3,538
8. Contingencies and commitments
There were no contingencies and commitments at the end of this
or the comparative period.
9. Post balance sheet events
There were no material events subsequent to the end of the
interim reporting period that have not been reflected in the
interim financial statements.
10. 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KMGMLKNGGRZM
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