TIDMING
RNS Number : 2795A
Ingenta PLC
01 June 2021
Ingenta plc
(the 'Group' or the 'Company')
Final Audited Results
Ingenta plc (AIM: ING) a leading provider of software and
services to the global publishing industry, announces its final
audited results for the year ended 31 December 2020.
Financial Key Points
-- Revenues of GBP10.2m (2019: GBP10.9m) reflecting a focus on core software offerings.
-- Annual Recurring Revenue of 86% (2019: 77%).
-- Operating cash inflows of GBP0.8m in the year (2019: GBP1.7m
inclusive of GBP0.5m of accelerated receipts).
-- Cash balances at year end of GBP2.3m (2019: GBP2.6m).
-- Adjusted EBITDA* of GBP1.2m (2019: GBP1.3m).
-- Net profit of GBP0.3m (2019: loss of GBP1.4m).
-- Proposed dividend of 1.5 pence per share, subject to
shareholder approval at the 2021 AGM (2019: 1.5 pence)
-- Earnings per share of 1.61 pence (2019: loss 7.98 pence).
Operational Key Points
-- 3 new customer sales and 5 Go-lives across the product portfolio during the year.
-- Vista as a service operational within key customers sites.
-- Company profile substantially de-risked with an ongoing
annual cost base of approximately GBP9.7m.
-- Remote working capability fully operational across all areas of the Group.
*Adjusted EBITDA - EBITDA before impairment, amortisation, gain
/ loss on disposal of fixed assets, foreign exchange gain / loss
and exceptional non-recurring costs . See note 2 for details.
Scott Winner, Chief Executive Officer, commented:
"2020 was a challenging year but I'm pleased with the resilience
the Group has shown across all our products and services. Although
sales activity has been hampered by general economic uncertainty,
Ingenta has managed to confirm several new deals which will enhance
recurring revenue over the coming years.
Within our Content platform, we secured 3 new customers, 2 of
which went live during the year thanks to our recently streamlined
implementation methodology. The Commercial product had another 3
customer go lives during 2020.
Encouragingly, our existing customers have also looked to
strengthen their relationships with Ingenta and we were delighted
to announce a significant multiyear hosting arrangement with a
global publishing partner. It is anticipated that similar offerings
will be attractive to other publishers as they look to concentrate
on core activities rather than manage complex IT infrastructure
requirements."
Certain of the information contained within this announcement is
deemed by the Company to constitute inside information as
stipulated under the UK version of the EU Market Abuse Regulation
(2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to
time.
For further information please contact:
Ingenta plc
Scott Winner / Jon Sheffield Tel: 01865 397 800
Cenkos Securities plc
Nicholas Wells / Katy Birkin Tel: 020 7397 8900
Chairman's statement
Overview
During a year of significant disruption, Ingenta's strategic
focus remained the generation of recurring revenue by selling
rapidly deployable, productised offerings with a clear upgrade path
to future enhancements. This strategy is firmly in place within our
Ingenta Content business where we won 3 new contracts in the second
half of the year with 2 of them subsequently going live before the
year end. The next stage is to replicate this strategy fully in the
Commercial product portfolio where historically, implementations
have included a significant element of bespoke development
work.
On an operational front, we also went live with 3 Commercial
customers during the year and have transitioned them to support
which further supplements recurring revenue. In addition, our
hosted services offering has also been taken up by several
customers, most notably under the guise of Vista as a Service which
allows our partners to concentrate on their core business rather
than peripheral technology.
Traction in adjacent vertical markets has been slower than
expected, partly due to uncertainty in the global economy as
potential partners delayed or cancelled purchasing decisions.
However, we remain confident that the product remains relevant for
the wider contracts, rights and royalties challenges encountered by
industries outside of our normal trade publishing partners. As
previously announced, we already have a product specifically
tailored to the music industry, however the core Commercial
software engine can be readily adapted to other target markets as
applicable.
Results
As anticipated, Group revenue decreased slightly from the prior
year as the business refocussed itself towards its core software
offering and reduced reliance on the sales consultancy services
delivered by PCG. The Group now has recurring revenues of 86% and
reported stable gross profit margins compared to the prior
year.
The global pandemic led to a reduction in sales and marketing
spend as the traditional trade events calendar was severely
restricted. Administrative expenses remained broadly stable but
also include GBP0.4m of non-recurring costs associated with
premises exit costs and professional fees. There were no
impairments charged in 2020 and the Group delivered a profit from
operations of GBP0.3m compared to a loss of GBP1.2m in the prior
year. The Group has brought forward tax losses of over GBP20m and
will use them to offset future tax liabilities.
The Group's balance sheet remains strong, and the business
generated GBP0.8m of cash inflows from operations to close the year
with GBP2.3m of cash reserves. To support a stronger recurring
revenue profile, substantial investments have been made in the
Group's fixed asset base to provide increased hosting capabilities
which are being utilised by our customers as they look to outsource
internal IT infrastructure.
Shareholders' returns and dividends
During the year, the Company announced a second share buyback
programme and over the course of 2020 repurchased a further 81,000
ordinary shares. At the year end, the Company had 16,919,609
ordinary shares in issue, with a total of 147,104 shares held in
treasury and 16,772,505 ordinary shares with voting rights.
The Directors declare their intention to pay a dividend in 2021
of 1.5 pence per share (2019: 1.5 pence) subject to approval at the
forthcoming AGM.
Outlook
After the economic upheaval of 2020, Ingenta is now better
placed to move forward with renewed optimism. The Group has
streamlined its operations, improved its operational resilience,
and refined its approach to capitalise on market opportunities as
they arise. The strategy to enhance recurring revenue growth has
started to deliver results driven by a focussed product set
tailored to meet the needs of our customers, whilst providing a
clear upgrade path as required.
M C Rose
Chairman
28 May 2021
Group strategic report
Business Strategy
The Group's focus is to accelerate growth of its recurring
revenue streams. To facilitate this, the Group are moving away from
selling perpetual licences and promoting a software as a service
model wherever possible. Operationally, the Group has moved to a
product agnostic services architecture so that it can offer an
integrated approach to servicing customers whereby service levels
are standardised, and resources are utilised more efficiently. In
conjunction with this, the Group is now looking to offer
standardised functionality to its product set which has led to the
'Express' software version which will be available across the
Ingenta product portfolio.
Product review
Ingenta Commercial
Ingenta Commercial provides a variety of modular publishing
management systems for both print and digital products. A core area
of expertise is within Intellectual Property and the Group is
looking to leverage its existing expertise in contracts, rights and
royalty's management by expanding into adjacent verticals.
ConChord, a solution designed for the music industry, has already
been released and we believe there are further opportunities in
other verticals where IP management is an increasing concern.
Reported revenues increased by GBP0.4m to GBP6.6m and the Group
announced 3 further go lives in the year to add to the recurring
revenue base. These deployments were for SME businesses which the
Group has identified as a good fit for its standardised products.
Unfortunately, the Covid pandemic restricted new sales activity as
customers delayed making significant investment decisions and
consequently this has also impacted on the Group's aim to diversify
into adjacent verticals.
Ingenta Content
The Ingenta Content suite of products enable publishers of any
size, discipline or technical proficiency to convert, store,
deliver and monetise digital content.
Ingenta's Edify content management solution is offered in an
"Express' format as well as the full enterprise version. During the
year, 3 new customer 'Express' sales were made, 2 of which went
live before year end, which aligns with the strategy of efficiently
adding to the Group's recurring revenues. In total, full year
revenues declined marginally to GBP2.3m because of customer
migrations.
Ingenta Advertising
Ingenta Advertising provides a complete browser-based multimedia
advertising, CRM and sales management platform for content
providers.
The business anticipates that the Group's Advertising offering
will become a component of the larger Commercial and Content
Products divisions and, in time, its revenues will be less clearly
distinguished as a separate CGU. Reported revenue remained stable
at GBP0.8m.
PCG
The PCG consulting arm provides a range of non-software services
designed to support and drive a business's sales strategy.
As outlined in the prior year, PCG revenues were expected to
decline after the termination of a significant contract. The
business has been refocused on its key customer base and the team's
skills are being increasingly used to drive sales pipeline for the
wider Group. Reported revenue for the year was GBP0.4m.
Financial Performance
Group revenues for the year were GBP10.2m (2019: GBP10.9m)
reflecting the PCG contract loss, the Group's focus towards
recurring software revenue and challenging end markets.
Encouragingly, the Ingenta Commercial business has performed well
increasing turnover by GBP0.4m.
The Group's cost of sales declined in line with revenue to
deliver stable gross margins. Sales and marketing spend was reduced
due to the cancellation of a significant number of trade shows in
2020. Administrative costs were broadly stable however included
GBP0.5m of non-recurring costs relating to premises and
professional fees.
No tax charge is anticipated for 2020 as the Group continues to
utilise brought forward tax losses.
Financial Position
Non-current assets include goodwill and intangibles recognised
on historic acquisitions. In 2020 Goodwill relates solely to the
core Content platform software and the intangibles to Advertising
software technology acquired in 2016. Goodwill relating to historic
acquisitions is tested for impairment each year using discounted
cashflows. No impairment was identified in 2020. Property, plant
and equipment increases are because of additional investment in
hosting infrastructure to support the growing service offering.
Current assets have decreased compared to 2019 mainly driven by
reduced debtors as the business transitions away from upfront
annual billing to a more even software as a service model with
monthly invoicing.
Total liabilities have also declined compared to 2019 in part
because of less upfront annual billing which reduces deferred
income. Further, significant creditor balances were aligned with
the terminated PCG contract and these were all paid off during the
year.
Cashflow
The Group generated a cash inflow from operations of GBP0.8m
compared to GBP1.7m in 2019. Timing of renewal receipts is a key
factor and with a transition towards software as a service, there
will be less upfront annual receipts. The unwinding of the PCG
contract mentioned above also yielded a net repayment of cash as
Ingenta acted as the sales receivable function on the contract.
Other significant cash outflows were for hosting infrastructure
purchased to support the growing hosting services offering.
Key Performance Indicators
The Board and senior management review a number of KPI's
continually throughout the year, all of which form part of the
monthly management accounts process and include:
-- Revenue versus budget and monthly reforecast
-- Adjusted EBITDA (see note 2 for calculation) versus budget
-- Group cashflow versus budget
-- Sales pipeline growth and conversion analysis
-- Time utilisation statistics
Any deviations or anomalies are investigated, and corrective
action taken where appropriate.
Full year revenues were below budget largely because of
shortfalls on new sales targets as the Covid pandemic severely
restricted activity. However, new sales activity in Ingenta Content
products increased towards the end of the year.
Adjusted EBITDA was also lower than budget driven by the same
new sales shortfalls mentioned above.
Year-end cash balances were only GBP0.1m below budget which
reflects the careful management of cash throughout the
pandemic.
The Group monitor sales activity with reference to monthly sales
pipeline reports. These reports detail sales opportunities by
product with metrics around expected project timelines and revenue
recognition estimates so that management can deploy resources
adequately to ensure the best chance of success in the bidding
process. When any items are removed from the pipeline due to either
a successful sale or a lost opportunity, management carry out a
detailed analysis to ensure the reasons are understood and any
actions required are taken.
The business monitors time utilisation at a contract level to
enable accurate pricing decisions to be made ensuring profitable
service delivery. Internal development costs are also reviewed to
ensure the appropriate effort is spent supporting the products and
deliver an effective product roadmap.
Section 172(1) Statement
The Directors continually monitor the operations of the business
and take decisions to promote the success of the Group for the
benefit of all its members. As described in the Business Strategy
section of this report, the Directors have selected a business
model and operational structure designed to maximise the
effectiveness of the business for all stakeholders. The likely
consequences of any decisions are modelled to provide assurance
that they are in the long-term interest of stakeholders and as
detailed in the Corporate Governance Report in the 2020 Annual
Report, risk management and internal controls are a key oversight
to ensure objectives are met. The Group have also adopted the QCA
Corporate Governance code which is designed to foster strong
relations with all stakeholders and details are included on the
Group's website. In addition to our shareholders, the Board
considers the employees, customers and suppliers to be critical to
the long-term success of the business.
Shareholder engagement
The Board is committed to maintaining active dialogue with its
shareholders to ensure that its strategy, business model and
performance are understood. The AGM is the main forum for dialogue
between retail shareholders and the Board. The notice of the AGM is
sent at least 21 days before the meeting which is held at the
Group's Head Office and all Board members routinely attend. For
each vote, the number of proxy votes received for, against and
withheld is announced at the meeting. During the meeting, the Board
members are available to answer any questions raised by
shareholders. The results of the AGM are subsequently published via
a Regulatory Information Service on the Company's corporate
website. The Chief Executive Officer and Chief Financial Officer
are primarily responsible for shareholder liaison and can be
contacted on 01865 397 800. The executive management make
presentations to institutional shareholders and analysts each year
following the release of full year and half year results.
Conversations, when requested, are also held at other points in the
year. The corporate website also includes details of recent annual
and interim results and all of the Group's RNS and RNS Reach
announcements.
Employee engagement
Staff are invited to Company wide meetings where the Executive
Team share information and updates on strategy and recent news. At
these meetings, there is also a forum where all members of staff
can ask questions. Ingenta also retain an independent HR resource
to ensure all HR issues are dealt with in accordance with best
practice and all rules and regulations are adhered to.
Customer engagement
The Group has many customers of differing sizes and complexity
with a variety of requirements. To best service them, the business
has rolled out a new operating model to standardise its approach to
all customers and provide a consistent level of service and
support. The business also keeps regular contact with customers via
account managers and user groups where demand exists so that our
customers can feed back any issues, share experiences and help
shape the development of our products. To ensure the business is
keeping abreast of wider industry challenges, we actively
participate in a variety of annual trade events.
Supplier engagement
The Group makes every effort to ensure our suppliers are treated
fairly and paid on time and on average they are paid within 29
days. Ingenta opposes modern slavery in all its forms and
endeavours to make sure any concerns raised are investigated. Where
offshore resourcing is used, the business meets the suppliers prior
to contract signing to satisfy itself that they are operating in a
responsible manner.
Company culture
The Board and senior management expect everyone in the company
to act in a responsible and ethical manner because the reputation
of the business is key to our success. The Group does not let cost
concerns override its ethics and behaviour. For example, we only
contract with offshore resourcing entities who commit to fair
working practices. The Company is committed to minimising negative
environmental impact in terms of energy usage at our offices,
digitising our content and using responsible methods to dispose of
electrical equipment. The Company and staff are also active in the
local community supporting charities and sponsoring good causes.
Feedback from all stakeholders allow the Board to monitor the
Company's culture, as well as the ethical values and behaviours
within the business.
Going concern
The core fundamentals of the Group remain strong with cash
reserves of over GBP2m and no debt beyond leasing arrangements. In
addition, further cost saving opportunities have been identified as
the Group look to reduce their physical premises cost and
associated overheads as leases naturally expire over the coming
years. Management have assured themselves that cash is sufficient
for the needs of the business based on the cash flow forecast.
The COVID-19 outbreak continues to add some uncertainty to
financial forecasting and modelling. However, at an operating
profit level, the Group's results for the first quarter of 2021
have been in line with budget. New sales activity remains subdued
with the timing of any uplift difficult to predict. The Group
continues to embrace established remote working practices without
any significant impact to services. Any ongoing implementations and
professional services can also be delivered remotely by Ingenta
personnel. The internal business infrastructure is contracted with
large multinational corporations and remains resilient. The Group
has modelled various downside scenarios and consider it appropriate
to use the going concern basis to compile these financial
statements. Further details on going concern are included in the
accounting policies section of the financial statements.
Outlook
The Group's core Commercial and Content software solutions
provide a mission critical service enabling publishers to run their
business and manage their IP assets. Recent data suggests that the
publishing market has performed well during the pandemic and is
forecast to continue growing. In response, the Group is actively
looking to broaden service provision to customers to enable them to
concentrate on core activities and capitalise on growth
opportunities as they arise. The Group sees further opportunities
in adjacent markets where concepts of IP and its inherent
complexity are increasingly prevalent. In many cases, existing
solutions often struggle to keep pace with industry changes and
Ingenta believes the Group's core royalty software engine can be
readily integrated to provide a robust and flexible upgrade. These
factors, combined with an ongoing drive to improve efficiency, give
the Board an optimistic outlook for 2021 and beyond.
Risks and uncertainties
COVID-19
The COVID-19 pandemic continues to be considered a principal
risk to the business bringing with it many significant
uncertainties although to date they have been successfully
mitigated. The Group has analysed the potential impacts and
tailored its business continuity plan in response to the
anticipated threats. All staff within the business have remote
working capabilities and for many this is a normal operating
procedure. In addition, the Group's new operating structure has
fostered teams with interchangeable skills across the product
offerings and technology stacks which, along with remote working,
provides a more flexible staffing model better equipped to deal
with illness and absence. The Group's IT infrastructure is hosted
on resilient platforms using large corporate providers ideally
suited to providing uninterrupted service.
The Group's customer base is reasonably diverse including trade
and academic publishers who are not deemed to be at high risk at
the present time. The Group also considers over 80% of its revenue
to be recurring in nature with many customers on multiyear
contracts. The Ingenta systems are central to the operations of its
customer base and not deemed to be a discretionary spend although
some project work may be impacted as customers wait to see what the
implications of COVID-19 hold for them. The key concern identified
by management is the inevitable delay in new sales as major
investment decisions are put off. However, the Group has modelled
various potential future scenarios including delayed cash receipts
and restrictions in new sales activity and predict the business
will continue to operate profitably with sufficient working capital
headroom. Also, a significant amount of the Group's renewals and
cash are received in the first quarter of each year and at 31 March
2021 cash balances remained over GBP2m.
Sales risk
The major risks for future trading are converting sales of
Ingenta Edify and the Commercial product suite (Ingenta Rights,
Royalties, Product Manager and Order to Cash). Most of the business
costs are fixed in the medium-term, being people and premises
costs, and therefore there is a risk to Group profitability when
budgeted revenue is not delivered as cost reductions will lag
behind revenue reductions. Management undertakes detailed monthly
revenue forecasting and assesses risk on an ongoing basis. Customer
procurement processes remain difficult to predict, and any delays
during contract negotiation will impact on the timing of project
commencement and the level of revenue that can be recognised in the
year. This is considered a principal risk for the business.
Project risk
There are two principal project risks: risk of fixed priced
projects running over and the risk on all projects where there is
development required that we are unable to deliver to the
specification agreed.
Fixed price project risk relates to the accuracy of project
estimates and the time it will take to complete the tasks as
specified in the customer contract. Management mitigate this risk
by hiring the best staff who are able to estimate projects
accurately and by building in a contingency to fixed priced
contracts. Management also closely monitor contracts to ensure all
work performed is in accordance with the agreement and any new
requests are separately contracted for. Management further mitigate
the risk by taking on new projects on a time and materials basis
wherever possible.
Projects requiring bespoke development also carry the risk that
the development will not be able to be delivered in the way
envisaged at the time of contract. Management take care to fully
scope these development projects and use developers who understand
the products and the complexities of building bespoke elements.
This is considered a principal risk for the business.
IT risk
Internal IT services are deployed onto fault tolerant platforms
and spread over multiple locations including the Group's offices,
co-location facilities, Infrastructure as a Service (IAAS) and
Office365. Regular backups and securing of data offer multiple
restore points in the event of a critical failure outside of the
scope of the in-built resilience. E-mail is a cloud-based
deployment that staff can access from any working PC/smart phone.
Staff have access to cloud-based storage (OneDrive) in addition to
co-location deployed file servers where data cannot be stored in
e-mail. Key staff have mobile phones and access to resilient
telephony services for the purposes of contacting each other and
customers. Through Remote Working staff can access their data and
customer sites in the event that it was not possible to gain access
to our offices.
Customer facing services are monitored for both stability and
performance, wherever possible proactive maintenance is undertaken
to avoid performance problems and/or downtime. All customer
deployments are done to fault tolerant hardware either in one of
our co-location facilities or to a cloud-based service, both
offering high levels of resiliency and multiple, redundant
access.
The Group's business continuity plan is available from multiple
locations and is regularly updated to cover new services and
deployments.
FX risk
The risk associated with generating revenue and suffering costs
in a currency other than sterling is mitigated naturally within
Ingenta plc as revenues and associated costs are generally
denominated in the same currency. Overall, the Group is a net
generator of USD.
HR risk
In a company with a high proportion of people-based revenue
there is a risk of key staff leaving or being absent through
sickness. This is mitigated by having appropriate notice periods
built into employee contracts and ensuring there is adequate
coverage for all staff roles with no individual solely responsible
for significant revenue generation. The new product agnostic
operational structure has also accelerated knowledge sharing within
groups.
Brexit
Management continue to monitor the UK's exit from the EU and its
implications for the business. It is not anticipated the UK's exit
from the EU will affect software sales and the majority of its
revenue is within the UK and US markets. At present, the main risks
identified are currency fluctuations which have been reviewed
above.
On behalf of the Board.
G S Winner
Chief Executive Officer
28 May 2021
Group Statement of Comprehensive Income
For the year ended 31 December 2020
Year ended Year ended
31 Dec 31 Dec
20 19
note GBP'000 GBP'000
================================================ ===== =========== ===========
Group revenue 10,177 10,920
Cost of sales (5,741) (6,184)
Gross profit 4,436 4,736
Sales and marketing expenses (671) (819)
Administrative expenses (3,479) (3,502)
Impairment of intangibles and investments - (1,663)
Profit / (loss) from operations 2 286 (1,248)
Finance costs (22) (18)
Profit / (loss) before income tax 264 (1,266)
Income tax 3 7 (83)
Profit / (loss) for the year attributable to
equity holders of the parent 271 (1,349)
Other comprehensive expenses which will be
reclassified subsequently to profit or loss:
Exchange differences on translation of foreign
operations 41 (4)
Total comprehensive profit / (loss) for the
year attributable to equity holders of the
parent 312 (1,353)
Basic profit / (loss) per share (pence) 4 1.61 (7.98)
Dilutive profit / (loss) per share (pence) 4 1.55 (7.98)
All activities are classified as continuing
Group Statement of Financial Position
As at 31 December 2020
31 Dec 31 Dec 1 Jan
20 19 19
===================================== =====
note GBP'000 GBP'000 GBP'000
===================================== ===== ======== ======== ========
Non-current assets
Goodwill 2,661 2,661 4,324
Other intangible assets 58 158 258
Property, plant and equipment 1,119 473 583
3,838 3,292 5,165
Current assets
Trade and other receivables 2,226 3,219 4,627
Research and Development tax credit
receivable 3 - - 336
Cash and cash equivalents 2,323 2,600 1,323
======== ======== ========
4,549 5,819 6,286
Total assets 8,387 9,111 11,451
======== ======== ========
Equity
Share capital 1,692 1,692 1,692
Merger reserve 11,055 11,055 11,055
Reverse acquisition reserve (5,228) (5,228) (5,228)
Share option reserve 61 23 16
Translation reserve (839) (880) (876)
Retained earnings (3,175) (3,131) (1,477)
Total equity 3,566 3,531 5,182
Non-current liabilities
Deferred tax liability 12 32 52
Leases 430 206 355
======== ======== ========
442 238 407
Current liabilities
Trade and other payables 2,061 2,459 2,757
Deferred income 2,318 2,883 3,105
4,379 5,342 5,862
Total liabilities 4,821 5,580 6,269
Total equity and liabilities 8,387 9,111 11,451
Group Statement of Changes in Equity
For the year ended 31 December 2020
Total
Reverse Share attributable
Share Merger acquisition Translation Retained option to owners
capital reserve reserve reserve earnings reserve of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ========= ========= ============= ============ ========== ========= ==============
Balance at 1 January
2020 1,692 11,055 (5,228) (880) (3,131) 23 3,531
========= ========= ============= ============ ========== ========= ==============
Dividends paid - - - - (252) - (252)
Shares bought back
into treasury - - - - (63) - (63)
Share options granted
in the year - - - - - 38 38
--------- --------- ------------- ------------ ---------- --------- --------------
Transactions with owners - - - - (315) 38 (277)
Profit for the year - - - - 271 - 271
Foreign exchange
differences
on translation - - - 41 - - 41
--------- --------- ------------- ------------ ---------- --------- --------------
Total comprehensive
income for the year - - - 41 271 - 312
Balance at 31 December
2020 1,692 11,055 (5,228) (839) (3,175) 61 3,566
============================ ========= ========= ============= ============ ========== ========= ==============
For the year ended 31 December 2019
Total
Reverse Share attributable
Share Merger acquisition Translation Retained option to owners
capital reserve reserve reserve earnings reserve of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ========= ========= ============= ============ ========== ========= ==============
Balance at 1 January
2019 1,692 11,055 (5,228) (876) (1,477) 16 5,182
========= ========= ============= ============ ========== ========= ==============
Dividends paid - - - - (254) - (254)
Shares bought back
into treasury - - - - (51) - (51)
Share options granted
in the year - - - - - 7 7
--------- --------- ------------- ------------ ---------- --------- --------------
Transactions with owners - - - - (305) 7 (298)
Loss for the year - - - - (1,349) - (1,349)
Foreign exchange
differences
on translation - - - (4) - - (4)
--------- --------- ------------- ------------ ---------- --------- --------------
Total comprehensive
expense for the year - - - (4) (1,349) - (1,353)
Balance at 31 December
2019 1,692 11,055 (5,228) (880) (3,131) 23 3,531
============================ ========= ========= ============= ============ ========== ========= ==============
Group Statement of Cash Flows
For the year ended 31 December 2020
Year ended Year ended
31 Dec 31 Dec
20 19
GBP'000 GBP'000
=================================================== =========== ===========
Profit / (loss) before taxation 264 (1,266)
Adjustments for
Impairment of intangibles - 1,663
Depreciation 439 372
(Profit) / loss on disposal of fixed assets (2) 2
Interest expense 22 18
Unrealised foreign exchange differences 41 (4)
Decrease in trade and other receivables 993 1,408
Decrease in trade and other payables and deferred
income (953) (499)
Cash inflow from operations 804 1,694
Research and Development tax credit received - 282
Tax paid (13) (49)
=========== ===========
Net cash inflow from operating activities 791 1,927
Cash flows from investing activities
Purchase of property, plant and equipment (200) (132)
Net cash used in investing activities (200) (132)
Cash flows from financing activities
Interest paid (5) (4)
Payment of lease liabilities (550) (213)
Dividend paid (252) (254)
Costs of buy back of shares into treasury (63) (51)
Net cash used in financing activities (870) (522)
Net (decrease) / increase in cash and cash
equivalents (279) 1,273
Cash and cash equivalents at the beginning
of the year 2,600 1,323
Exchange differences on cash and cash equivalents 2 4
=========== ===========
Cash and cash equivalents at the end of the
year 2,323 2,600
1. Basis of preparation
The nancial information of the Group set out above does not
constitute statutory accounts for the purposes of Section 435 of
the Companies Act 2006. The nancial information for the year ended
31 December 2020 has been extracted from the Group's audited
nancial statements which were approved by the Board of directors on
28 May 2021 and delivered to the Registrar of Companies for England
and Wales following the Company's 2020 Annual General Meeting.
The nancial information for the year ended 31 December 2020 has
been extracted from the Group's nancial statements for that period.
The report of the auditor on the 2020 nancial statements was
unquali ed, did not include any references to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and did not contain a statement under Section 498(2)
or Section 498(3) of the Companies Act 2006.
Whilst the nancial information included in this preliminary
announcement has been prepared in accordance with International
Accounting Standards ("IASs") in conformity with the requirements
of the Companies Act 2006, the International Financial Reporting
Interpretations Committee ("IFRIC"), interpretations issued by the
International Accounting Standards Boards ("IASB") that are
effective or issued and adopted as at the time of preparing these
financial statements, and in accordance with the provisions of the
Companies Act 2006 that are relevant to companies that report under
IFRSs, this announcement does not itself contain su cient
information to comply with those IFRSs. This nancial information
has been prepared in accordance with the accounting policies set
out in the 2020 Report and Accounts and updated for new standards
adopted in the current year.
Items included in the nancial information of each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency).
The consolidated nancial information is presented in UK sterling
(GBP), which is the Group's presentational currency.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
The principal activity of Ingenta plc and its subsidiaries is
the sale of software and ancillary services.
2. Profit from operations
Profit from operations has been arrived at after charging:
Year
Year ended ended
31 Dec 31 Dec
20 19
GBP'000 GBP'000
=============================================== =========== =========
Research and development costs 1,409 1,398
Net foreign exchange loss 40 37
Depreciation of property, plant and equipment
- owned assets 110 92
- leasehold property 122 122
- assets under leases 107 58
Amortisation 100 100
Auditor's remuneration
- audit fees 71 65
- taxation services 12 85
Exceptional non-recurring costs 447 513
An analysis reconciling the profit from operations to adjusted
EBITDA is provided below.
Year
Year ended ended
31 Dec 31 Dec
20 19
GBP'000 GBP'000
========================================= =========== =========
Profit / (loss) from operations 286 (1,248)
Add back:
Depreciation and amortisation 439 372
Impairment of intangibles and
investments - 1,663
(Gain) / loss on disposal of
fixed assets (2) 2
Foreign exchange losses 40 37
Exceptional non-recurring costs 447 513
EBITDA before impairment, amortisation,
gain / loss on disposal of fixed
assets, foreign exchange gain
/ loss and exceptional non-recurring
costs 1,210 1,339
Exceptional non-recurring costs include restructuring costs,
premises exit costs, non-recurring professional fees and debt write
offs.
3. Tax
Year ended Year ended
31 Dec 31 Dec
20 19
GBP'000 GBP'000
============================================= =========== ===========
Analysis of (charge) / credit in the year
Current tax:
Current research and development tax credit - -
- UK
Current year State tax - US (10) (49)
Adjustment to prior year charge - UK (3) (54)
Deferred tax credit 20 20
=========== ===========
Taxation 7 (83)
============================================== =========== ===========
The Group has unutilised tax losses at 31 December 2020 in the
UK and the USA of GBP15.6m (2019: GBP15.6m) and $14.2m (2019:
$15.4m) respectively. These losses are still to be agreed with the
tax authorities in the UK and USA. The Board intends to make use of
all losses wherever possible.
The US tax losses are restricted to $491K per annum because of
change of control legislation. Losses carried forward from the
change of control in April 2008 are restricted and must be used
within 20 years. The Board believes the Group will be able to make
use of $7.7m (2019: $8.7m) of the total unutilised losses at 31
December 2020.
No deferred tax has been recognised in accordance with advice
from US tax accountants on the basis that the US losses are
restricted and there is uncertainty on the value of losses which
will be able to be used.
No deferred tax assets have been recognised in relation to any
other Group tax losses due to uncertainty over their
recoverability.
The differences are explained below:
Year
Year ended ended
31 Dec 31 Dec
Reconciliation of tax expense 20 19
GBP'000 GBP'000
================================================== =========== =========
Profit / (loss) on ordinary activities before
tax 264 (1,266)
=========== =========
Tax at the UK corporation tax rate of 19% (2019:
19%) 50 (241)
Expenses not deductible for tax purposes 14 297
Unrelieved UK losses carried forward 245 149
Utilisation of UK losses (102) (110)
Utilisation of US losses (77) (103)
Difference in timing of allowances (129) (13)
Adjustment to tax charge in respect of prior
years (8) 104
Total taxation (7) 83
=================================================== =========== =========
United Kingdom Corporation tax is calculated at 19% (2019: 19%)
of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
4. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive ordinary share options. Management estimate 681,000
ordinary shares will be issued (2019: 685,000) in respect of share
options. In the current year, this calculation would have an
antidilutive effect on earnings per share so has been ignored.
Year ended Year ended
31 Dec 2020 31 Dec 2019
GBP'000 GBP'000
============================================= ============= ==============
Attributable profit / (loss) 271 (1,349)
Weighted average number of ordinary shares
used in basic earnings per share ('000) 16,834 16,908
Shares deemed to be issued in respect of
share-based payments 681 685
------------- --------------
Weighted average number of ordinary shares
used in dilutive earnings per share ('000) 17,515 17,593
Basic profit / (loss) per share arising
from both total and continuing operations 1.61p (7.98)p
Dilutive profit / (loss) per share arising
from both total and continuing operations 1.55p (7.98)p
============================================== ============= ==============
Dividends
On 2 November 2020, the Company paid a dividend of 1.5 pence per
share to holders of ordinary shares.
The Directors declared their intention to pay a dividend in 2021
of 1.5 pence per share (2020: 1.5 pence).
5. Publication of non-statutory accounts
The financial information set out in this announcement does not
constitute statutory accounts as defined in the Companies Act
2006.
The Group Statement of Comprehensive Income, Group Statement of
Financial Position, Group Statement of Changes in Equity, Group
Statement of Cash Flows and associated notes have been extracted
from the Group's 2020 statutory financial statements upon which the
auditor's opinion is unqualified and which do not include any
statement under section 498 of the Companies Act 2006.
Those financial statements will be delivered to the Registrar of
Companies following the release of this announcement.
This announcement and the annual report and accounts, including
the Notice of Annual General Meeting, are available on the
Company's website www.ingenta.com. A copy of the report and
accounts will be sent to shareholders who have elected to receive a
printed copy with details of the annual general meeting in due
course.
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END
FR FLFEDEEITFIL
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