TIDMIMTK
RNS Number : 2143N
Imaginatik PLC
07 August 2017
Imaginatik plc
("Imaginatik", "the Company" or the "Group")
Audited Final Results for financial year ended 31 March 2017
Imaginatik plc (AIM: IMTK.L), the innovation company, announces
its audited results for the financial year ended 31 March 2017.
Financial Highlights
-- Reduced adjusted loss after tax of GBP0.55m* (FY16: adjusted net loss of GBP0.80m)
-- Recognised revenue of GBP3.9m (FY16: GBP3.9m)
-- Deferred revenue of GBP3.0m at 31 March 2017 (31 March 2016: GBP2.9m)
-- Annualised renewal base at 31 March 2017: GBP3.2m (31 March 2016: GBP2.8m)
-- Gross bookings of GBP3.6m (FY16: GBP4.7m)**
-- Successfully completed a placing and open offer in June 2016,
raising GBP1.67m gross proceeds
Operational Highlights
-- 15 new customers signed during the year (FY16: 9), 11 added in H2 as sales momentum started to build
-- Several partnership agreements signed, including strategic partnership with a US-based digital technology
services company, resulting in significantly expanded market reach
-- Bolstered senior management team with key hires, including Chief Technology Officer and General Manager, Software
-- Continued investment in business to expand technology and consultancy offerings
Post Period End:
-- Successful placing and open offer completed in July 2017, raising GBP1.45m gross to enable further investment in
the business
*Net of an exceptional fx loss of GBP0.23m
** At constant currency, US$ to GBP exchange rate of 1.2453.
Matt Cooper, Non-Executive Chairman, commented: "This has been a
year of good progress as we continue to position the business to
capitalise on the growing market opportunity available. We have
delivered results broadly in line with market expectations,
resulting in improved financial strength as we make further
progress toward breakeven. We continue to invest in the business to
add new capabilities to our consulting and technology offerings and
expand our addressable market through the development of our
partnership channel.
"We are encouraged by the development of the sales pipeline
arising as a result of the newly developed partnership channels.
Whilst we are mindful of the task ahead, we remain optimistic about
the Group's growth prospects."
For further information please contact:
Imaginatik plc Tel: 01329 243
243
Matt Cooper, Non-Executive Chairman
Ralph Welborn, CEO
Shawn Taylor, CFO
finnCap Ltd Tel: 020 7220
0500
Jonny Franklin-Adams/Giles Rolls,
corporate finance
Camille Gochez, corporate broking
Alma PR Tel: 020 8004
4218
Hilary Buchanan
Robyn Fisher
About Imaginatik
Imaginatik provides a range of Innovation solutions comprised of
consultancy, enterprise software and program management to deliver
innovation results to companies such as Exxon Mobil, Altria, Shell,
Goodyear, the Yorkshire Building Society, Caterpillar, AECOM,
Novartis and Cargill, and via its strategic partnership programme.
Few companies possess the internal capability to consistently
generate fresh ideas, identify those worth pursuing and reliably
transform them into real, value-enhancing assets. Imaginatik's
mission is to help these companies build sustainable innovation
competencies. In 2016 Forrester Research found that "Imaginatik has
the most comprehensive innovation management solution," providing
excellent industry recognition of Imaginatik's full-service
innovation offering, combining both technology and consultancy
services.
Imaginatik is a public company whose shares are traded on the
AIM market of the London Stock Exchange (LSE: IMTK.L) with offices
in Boston, MA, and Fareham, UK. For more information visit
www.imaginatik.com.
Chairman's Statement
We are pleased to report results for the year to 31 March 2017
which are broadly in line with management and market expectations,
and good underlying progress across a number of strategic fronts.
During the year we have added new customers to our blue-chip client
base, expanded our market reach, improved the financial strength of
the business by further reducing trading losses and completing a
successful equity fundraising, and maintained investment in our
proprietary innovation software and services to seek to ensure the
long-term success of the Group.
The financial results show the 4th consecutive year of reduced
trading losses, with adjusted loss after tax of GBP0.55m. The
result is net of an exceptional foreign exchange loss of GBP0.23m
arising as a result of the strong US dollar over the reporting
period (2016: adjusted net loss of GBP0.80m). This was delivered on
static revenue of GBP3.9m (2016: GBP3.9m).
A total number of 15 new customers were signed during the year
(2016: 9), 9 of which are on annual or multi-year contracts
consisting of both technology and consulting, and 6 are on
consulting engagements. Out of these new customer wins, 11 were
added in the second half of the year as sales momentum started to
build and also partially reflective of the inherent sales
volatility often characteristic of a small company. Approximately
76% of renewals by value were converted over the period. This was
due to the loss of two significant clients, one being acquired and
the other through a cost reduction programme. In the last three
years this renewal rate was higher at approximately 90% or more. We
have contracted two new clients so far in the new financial year,
in what is traditionally a slower quarter for new business and
renewals. We are currently contracting with six new clients that we
expect to close in the next few weeks.
During the period under review, we completed a successful
placing and open offer, raising GBP1.67m gross in June 2016. The
proceeds of the equity fundraising were used to fund development
investment in the business as well as strengthen the Group's
balance sheet to cover the on-going albeit diminishing trading
losses.
Our core focus is to help businesses achieve and realise the
value from a sustainable innovation programme, delivered through
our portfolio of unique solutions, which combines innovation
consultancy services and software. As more and more organisations
are waking up to the importance of harnessing business-critical
innovation, the message is becoming even clearer: businesses that
innovate survive and thrive, while those that fail to do so, risk
failure. We believe that this realisation is driving a 'coming of
age' for the innovation market and we have seen an acceleration in
the maturing of the market. This is evidenced by new buyers
entering the market with access to larger budgets for innovation
programmes.
As the market opportunity grows, our focus is on ensuring we
remain the leaders in the space through continued investment in our
capabilities and expanding our routes to market, including the
development of our channel partnership programme. A key achievement
in the year was the signing of several partnership agreements, the
most significant of which is with a leading digital technology
services company. We have already launched our first
jointly-developed innovation offering which is currently being
marketed to both partners' global customer bases. To capitalise on
these channel partner opportunities, a proportion of the July 2017
fundraising proceeds were allocated for investment in sales and
marketing for the channel partnership programme, along with further
investment in technology. On behalf of the Board, I would like to
thank our shareholders for their continued support. We will
continue to pursue a strategy of building relationships with
strategic partners to continue to expand the Group's market reach
and open up new opportunities.
I would like to thank all of our dedicated employees and
colleagues whose vision and hard work is invaluable as we drive
Imaginatik forward. As we look ahead, we have a clear, focused
strategy, a good pipeline of opportunities and a growing market
opportunity. We remain encouraged by the Group's growth
prospects.
Matt Cooper
Non-executive Chairman
4 August 2017
Strategic Report
Imaginatik is a comprehensive, full service innovation provider.
Our unique ability to provide consultancy services and also deliver
innovation programmes through our software platform remains a
powerful differentiator in the market. During the year we have
added to our capabilities through continued investment in our
consultancy and technology solutions and have expanded our
addressable market through the development of our partnership
channel programme. We have secured contractual arrangements with
several partners, opening up a new potential client base to
Imaginatik through mutual referral as well as bringing added value
to our existing customer base through access to an expanded range
of services.
Market
We firmly believe that companies that have innovation as part of
their corporate DNA are better equipped to navigate and thrive in
the business world whilst those that are less innovative find it
increasingly difficult to compete and survive, and this message is
resounding louder among our customers and prospective customers. In
recognition, organisations are allocating innovation
responsibilities to senior leaders whose responsibilities span
across their respective businesses, including more frequently to
the role of CEO, and away from silo-ed departments with limited
budgets. These new buyers are entering the market for the first
time with dedicated budget spend.
While awareness is on the rise, the majority of these new buyers
are still unclear of what they need to do and this is evidenced by
a growing number of inbound enquiries. There is no 'one size fits
all' solution to build an innovation ethos within an organisation.
It requires a significant amount of guidance to ensure the solution
is appropriate and effective for each individual case. Our
enterprise software platform, enabling customers to scale
consistent innovation practices across their organisation, combined
with a highly qualified consulting team with many years of
experience in corporate innovation management is ideally positioned
to help these customers.
In response to the growing value of this market, large,
broad-based consulting firms are starting to enter the space in a
meaningful way and we see this as further validation of the
opportunity available. Examples of this activity includes
Deloitte's purchase of Doblin, an innovation consultancy, adding it
to their services portfolio; KPMG Netherlands acquired Innovation
Factory to strengthen its innovation technology capabilities;
E&Y Belgium acquired Cognistreamer in January 2017; and IBM is
expanding its innovation focus with a series of technology-specific
innovation services. While there are new participants emerging in
the market, Imaginatik's established offering, which has been
developed and refined over years of industry practice and
experience, is recognised as the leading solution. In a report by
Forrester (The Forrester Wave(TM) : Innovation Management
Solutions, Q2 2016) Imaginatik was named as having "the most
comprehensive innovation management solution." The report also
ranked Imaginatik above all other market competitors in terms of
its current suite of offerings as well as its strategy.
Strategy
Our strategy is to capitalise on the Group's leading reputation
to grow the business organically through new customer acquisition
whilst also maintaining a focus on customer renewals and growth
within existing accounts. In line with the strategy, we remain
committed to the ongoing investment in the Group's technology
platform and service capabilities to continually improve our
offering, with a particular focus on extending its analytic insight
capabilities, including the recruitment and hiring of additional
personnel across technology, sales and consulting functions.
Operational Review
Imaginatik's full service innovation offering covers three main
sectors within the innovation industry, being Innovation Strategy
Advisory, Innovation Capability Building and Innovation Software
platforms.
a. Innovation strategy advisory
This involves advisory consulting to help senior executives
build and develop their corporate innovation programs, such
programs of work typically have a duration of one to three
months.
b. Innovation capability building
This type of consulting is more operational in nature involving
the Company providing workshops, training, facilitation and
innovation management services in support of a client's ongoing
program. These activities are frequently project based with
delivery taking place over a few months, but may also be embedded
within annual or multi-year contracts sitting alongside a
technology purchase.
c. Innovation software platform
The Company provides an enterprise innovation software platform
that enables large global organisations to scale innovation
practices across the enterprise in a repeatable way. This is
usually deployed as annual or multi-year software as a service
("SaaS") contracts.
Sales and Marketing
Marketing efforts during the year focused on leveraging more
web-based digital advertising with a shift away from more
traditional conference activity for lead generation. This has
proved beneficial over the year as this change in focus, combined
with growing market awareness, has resulted in more inbound leads
than previously experienced. Particularly important was an
investment in a new public website, which featured a refinement of
Imaginatik's message and positioning, as well as an evolution of
the Company's brand image.
The combination of redoubled digital advertising and content
dissemination, along with improvements in website user experience,
have led to consistently higher lead acquisition and conversion at
the front end of the marketing funnel. We believe demand patterns
will continue to strengthen going forward, as we further expand our
digital marketing efforts. In addition, we have introduced a new
internal resource to help target particular market verticals,
particularly those where we have existing client and sales pipeline
concentrations, in sectors such as retail banking, insurance,
manufacturing and healthcare.
To improve sales velocity through the pipeline, this year saw
the institution of streamlined go-to-market solution packages, with
simplified pricing and targeted use cases, across our service and
product lines. The simplified offerings structure, combined with
clarity of what needs each solution serves, has improved our
ability to target the right prospects and present them with the
most appropriate solutions. The resulting consolidation of
Imaginatik's sales processes and selling materials has resulted in
improved velocity and clarity at each pipeline stage.
In addition, we invested in a number of new personnel, mostly in
the US, spanning both technology development and software sales.
Looking forward, the Company intends to further bolster its sales
function in line with the market opportunity.
Partnership channel
We have expanded our partnership programme over the year which
has added a new sales channel to the Group and broadened our market
reach. We signed several channel partners, which cover a range of
agreement arrangements including advocate partners through to
referral partners and finally, to a more significant strategic
partnership channel which we signed in the year with a leading
digital technology services company. In this latter case, we have
been working with the partner since the early part of calendar 2017
to develop a joint go-to-market strategy across a set of new
offerings, including the launch of our first jointly-developed
innovation offering post period end, as well as employee
training.
Going forward, the Group will look to add further US-based sales
and consulting resources to take advantage of the sales
opportunities afforded by the developing partnerships and growing
innovation market as a whole.
Consultancy
The market's growing maturity is evidenced by more business
executives being involved in the decision making process around
innovation. Driving this involvement is the acceleration of change
taking place across industries as well as the recognition that
shifts in technology and business models create new opportunities.
It is our intention to capitalise on and service these new buyers
within the innovation space.
Examples of customer engagements successfully delivered in the
year include:
a. Innovation Strategy Advisory: A life insurance and asset
management company: helping the CEO to realise their vision through
Advisory engagement
The client had a specific strategic vision and was aware that
innovation is key to helping realise that vision. However, the
client had no clear idea as to how to proceed. Imaginatik was hired
to meet two of the client's objectives: firstly, to bridge the gap
between the CEO's vision and re-focusing the executive team around
how to meet that vision, and secondly, to design an innovation
program to develop new capabilities to deliver on the CEO's vision.
The innovation strategy we created following the Advisory
engagement is expected to lead to the client acquiring our
technology platform as the foundation of the innovation
program.
b. Innovation Capability Building: A pharmaceutical company
specialising in ophthalmology: Innovating for specific disease
categories.
The client needed to address innovation across specific disease
areas in an effort to mitigate the loss of patents. The client
engaged Imaginatik to support the ideation process. As a first
phase, we designed a virtual ideation process to enable
participation across the globe. The virtual ideas were then used as
a starting point for a small group facilitated session. The small
group developed the ideas with transformational potential and then
prioritised the ideas into concepts most likely to have a
significant impact. These prioritised concepts were then presented
to the leadership team for funding and further development.
Technology
During the year we made good progress in advancing our
technology roadmap including a new mobile app, enhanced analytics
capabilities and workflows, as well as further enhancing the user
experience. The technology team was bolstered with the appointments
of David Boghossian, General Manager, Software, and Kai Chuang who
joined the Group as our Boston based Chief Technology Officer.
David is based in Boston and has a remit to be the interface
between our technology and sales activities, as well as assisting
the sales team with their sales pursuits. David is a Harvard
graduate with over 25 years' experience in running technology
businesses. Kai has more than 20 years' experience in creating
digital technology solutions and has previously worked at Accenture
and Google.
We are seeing several emerging trends that we are focused on
taking advantage of. First, connectivity between innovation
platforms and other applications that support innovation ideation
or core business applications. For example, Facebook's Workplace is
a rapidly growing application that many organisations have. We have
been asked to provide connectivity capabilities from Workplace into
our platform to broaden the source of ideas that we can then apply
our analytic capabilities to - which we are doing. Second, many
organisations are struggling with how to make more sense of their
innovation ideas. We are strong in terms of existing analytics
tools, and we are building upon that strength through further
investment in our technology platform, with a particular emphasis
on helping organisations drive sustainable user engagement for
their innovation programs across the enterprise, deploying
artificial intelligence in our solutions to augment decision making
capabilities, and delivering more "insight capabilities" into
different sources of data that will strengthen the relevance and
usefulness of our platform.
KPIs & Financial Review
The key performance indicators on which we judge the progress of
our business are as follows:
KPI 2017 2016
----------------------------- ---------- ----------
Gross bookings(1) * GBP3.6m GBP4.7m
----------------------------- ---------- ----------
Recognised revenue GBP3.9m GBP3.9m
----------------------------- ---------- ----------
New & expansion bookings(2) GBP1.9m GBP2.5m
*
----------------------------- ---------- ----------
Renewal bookings(3) * GBP1.7 GBP2.2m
----------------------------- ---------- ----------
Number of clients renewing
their contracts 22/30 28/35
----------------------------- ---------- ----------
Number of new client
wins in the year 15 9
----------------------------- ---------- ----------
Total number of annual
contracts at year end 40 39
----------------------------- ---------- ----------
Consulting as a % of
contracted revenue 26% 28%
----------------------------- ---------- ----------
Adjusted loss after tax(4) (GBP0.55m) (GBP0.80m)
----------------------------- ---------- ----------
Cash balance GBP0.12m GBP0.02m
----------------------------- ---------- ----------
*At constant currency, exchange rate of 1.2453.
(1) Gross value of contracted sales in the period
(2) Gross value of contracted sales in the period with new
clients and expansion within existing clients
(3) Gross value of contracted sales in the period for clients
renewing their contract
(4) Adjusted for impact of GBP0.23m of fx loss in the period
At GBP3.6m this year our gross bookings were down on the prior
year, in part that was the result of the way in which our
multi-year renewals fell, with more of the larger customers
renewing last year than this, and in part the result of lower new
and expansion bookings achieved in the year.
The lower level of renewals secured in FY17 was disappointing
and in contrast to the higher levels seen in prior years. The
Company lost nine clients in the period (2016: 7) with two of the
losses amounting to almost half the loss. We were however pleased
with the 15 new client wins achieved in the period (2016: 9), with
9 now on annual or multi-year contracts and the balance a mixture
of consulting engagements, the most significant on which was a
three month strategy engagement with a leading Canadian financial
institution. This initial engagement is expected to lead to a
subsequent annual technology sale post period end.
During the year, 28% of bookings were generated from expansion
sales of our software and consulting services into existing
customers, 25% from selling into new clients, and 47% from renewals
business (FY16: 31%:22%:47%).
Our new clients acquired in the period include an impressive
array of large global businesses, that cover a variety of sectors
including financial services, pharmaceutical, manufacturing and
technology. By the period end we had 40 clients (FY16: 39) on
annual or multi-year contracts. Of this base we have 30 clients
with contracts set for renewal in FY18, worth approximately
GBP2.4m.
The Company's cash balances are a key KPI which were monitored
on a regular basis during the period under review.
Financial Review
Total recognised revenue for the year ended 31 March 2017
remained flat at GBP3.90m (FY16: GBP3.89m) with consulting revenues
comprising 26% of the total recognised revenue (FY16: 28%) and 74%
derived from technology revenues (FY16: 72%). Whilst consulting is
often the first point of contact for new clients the technology
offering remains core to our client engagements and we see the
Company as a technology business with various consulting offerings
wrapped around. We do not expect this ratio to change materially in
the future.
In terms of geographic split the US market remains our core
sales market with 71% of recognised revenues arising from the
region (FY16: 76%) with the remaining 29% derived from the Rest of
the World (FY16: 24%).
Administrative expenses for the period were GBP4.54m, broadly
similar to the prior year at GBP4.57m. Head count across the
business remained at 35 at period end, the same as the prior year
reflecting a re-configuration of the staff base over the year as
well as a determined effort to contain the cost base. Other
operating income represents income arising as a result of
sub-leasing office space in Boston.
The Company secured a further R&D tax credit from HMRC of
GBP0.22m (FY16: GBP0.17m), reflected in the taxation line in the
consolidated statement of comprehensive income.
Losses on ordinary activities after tax were GBP0.78m in the
year ended 31 March 2017, a reduction of 18% on the prior year
(FY16: GBP0.95m). This net result for the period includes a foreign
exchange loss of GBP0.23m (2016: GBP0.15m) arising as a result of
the retranslation of certain US$ based balance sheet assets and
liabilities. Adjusting for this fx loss, the net result for the
period was GBP0.55m (FY16: GBP0.80m).
During the period we have invested in both our technology
platform and consulting offerings, adding the new products and new
capabilities to improve our competitiveness and widen our
addressable market. In the year we capitalised GBP0.57m of costs
(FY16: GBP0.26m).
Cash outflows from operating activities was GBP0.86m (FY16:
GBP0.46m) these outflows were met through the proceeds of an
institutional fund raising undertaken in the period.
In June 2016 the Company undertook placings of new ordinary
shares with both new and existing shareholders, raising aggregate
gross proceeds of GBP1.67m.
Subsequent to the period end, the Company raised a further
GBP1.45m gross via a placing and open offer to shareholders
including management and employees. A proportion of the net
proceeds will be invested in sales and marketing for the Company's
partnership channels. The Company has been developing its
partnership channels providing the technology platform and
consultancy services to both the partner and to the partner's
customer base as part of a jointly developed innovation offering.
For this the Company receives subscription revenues and consulting
fees and will also be entitled to receive success-based fees based
on the total contract value of the joint offering. The Company will
also use the proceeds to invest in both new and existing
technology. The focus on existing technology will be to: improve
reporting; mobile enablement; and user experience. Spend on new
product development will be primarily focussed on further enhancing
the analytical tools. The balance of the net proceeds will provide
additional working capital to help better manage the seasonality of
renewals and volatility often seen in the sales pipeline and
protect strategic options as the market evolves.
The Directors have reviewed the Group's budgets and forecasts
for the coming 12 months, which have been prepared with appropriate
regard to the current macroeconomic environment and the conditions
in the principal markets served by the Group. The Directors have
taken into consideration the Group's net funds, the level of
anticipated renewals by reviewing on a customer by customer basis,
forecast new and up sell revenues based on sales in the pipeline
and anticipated costs. There is inherent uncertainty in the level
of anticipated renewals and up sell revenues and assumptions are
based on reasonable expectations taking into account historic
experience and current knowledge. The forecasts include investments
and additional costs commensurate with expected levels of growth
and options available to the Directors include the ability to flex
these investments and costs should predicted revenues be lower than
forecast.
As a result, at the time of approving the financial statements,
the Directors consider that the Group has sufficient financial
resources to continue in operational existence for the foreseeable
future and, therefore, that it is appropriate to adopt the going
concern basis in preparing these financial statements. As with all
business forecasts, the Directors' statement cannot guarantee that
the going concern basis will remain appropriate given the inherent
uncertainty about future events.
Summary and Outlook
This has been a year of good progress as we continue to position
the business to capitalise on the growing market opportunity
available. We have delivered results broadly in line with market
expectations, resulting in improved financial strength as we make
further progress toward breakeven. We continue to invest in the
business to add new capabilities to our consulting and technology
offerings and expand our addressable market through the development
of our partnership channel.
We are encouraged by the development of the sales pipeline
arising as a result of the newly developed partnership channels.
Whilst we are mindful of the task ahead, we remain optimistic about
the Group's growth prospects.
Ralph Welborn
Chief Executive Officer
Shawn Taylor
Chief Operating and Financial Officer
4 August 2017
Consolidated Statement of Comprehensive Income for the Year
Ended 31 March 2017
2017 2016
Note GBP 000 GBP 000
Revenue 3 3,920 3,893
Cost of sales (194) (232)
-------- --------
Gross profit 3,726 3,661
Administrative expenses (4,540) (4,570)
Foreign exchange (gains) /
losses (230) (150)
Other operating income 4 63 14
-------- --------
Operating loss 5 (981) (1,045)
Finance costs 7 (13) (65)
-------- --------
Loss before tax (994) (1,110)
Income tax receipt 8 215 165
-------- --------
Loss on ordinary activities
for the year and total comprehensive
income (779) (945)
======== ========
Loss per share - Basic and
diluted 9 0.57p 1.15p
======== ========
The above results were derived from continuing operations.
The Group has no recognised income or expenses other than the
results for the year as set out above.
All of the above losses for the year are attributable to equity
holders of the parent.
Consolidated Statement of Financial Position as at 31 March
2017
2017 2016
Note GBP 000 GBP 000
Assets
Non-current assets
Property, plant and equipment 25 19
Intangible assets 933 493
Trade and other receivables 97 273
-------- --------
1,055 785
-------- --------
Current assets
Trade and other receivables 1,789 1,403
Cash and cash equivalents 117 23
-------- --------
1,906 1,426
-------- --------
Total assets 2,961 2,211
======== ========
Equity and liabilities
Equity
Share capital 10 4,041 3,374
Share premium 7,765 6,883
Other reserves 1,198 1,143
Retained losses (13,596) (12,817)
-------- --------
Equity attributable to owners
of the company (592) (1,417)
-------- --------
Non-current liabilities
Deferred income 737 736
Current liabilities
Trade and other payables 2,816 2,892
-------- --------
Total liabilities 3,553 3,628
-------- --------
Total equity and liabilities 2,961 2,211
======== ========
Consolidated Statement of Cash Flows for the Year Ended 31 March
2017
2017 2016
Note GBP 000 GBP 000
Cash flows from operating activities
Loss for the year (779) (945)
Adjustments to cash flows
from non-cash items
Depreciation and amortisation 5 151 180
Share based payment transactions 55 67
Income tax credit 8 (215) (165)
Finance costs 13 65
-------- --------
(775) (798)
Working capital adjustments
(Increase)/decrease in trade
and other receivables (209) 320
Decrease in trade and other
payables (76) (82)
-------- --------
Cash generated from operations (1,060) (560)
Finance costs (13) (65)
Income taxes received 8 215 165
-------- --------
Net cash flow from operating
activities (858) (460)
-------- --------
Cash flows from investing
activities
Acquisitions of property plant
and equipment (22) (1)
Acquisition of intangible
assets (575) (264)
-------- --------
Net cash flows from investing
activities (597) (265)
Cash flows from financing
activities
Proceeds from issue of ordinary
shares, net of issue costs 1,549 623
-------- --------
Net increase/(decrease) in
cash and cash equivalents 94 (102)
Cash and cash equivalents
at 1 April 23 125
-------- --------
Cash and cash equivalents
at 31 March 117 23
======== ========
Consolidated Statement of Changes in Equity for the Year Ended
31 March 2017
Share Share Other Retained
capital premium reserves earnings Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2015 3,154 6,480 1,076 (11,872) (1,162)
-------- -------- --------- --------- --------
Employee share-based
payment options - - 67 - 67
Issue of share capital 220 403 - - 623
-------- -------- --------- --------- --------
Transactions with owners 220 403 67 - 690
Loss for the year and
total comprehensive
income - - - (945) (945)
-------- -------- --------- --------- --------
At 31 March 2016 3,374 6,883 1,143 (12,817) (1,417)
======== ======== ========= ========= ========
Share Share Other Retained
capital premium reserves earnings Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2016 3,374 6,883 1,143 (12,817) (1,417)
-------- -------- --------- --------- --------
Employee share-based
payment options - - 55 - 55
Issue of share capital 667 882 - - 1,549
-------- -------- --------- --------- --------
Transactions with owners 667 882 55 - 1,604
Loss for the year and
total comprehensive
income - - - (779) (779)
-------- -------- --------- --------- --------
At 31 March 2017 4,041 7,765 1,198 (13,596) (592)
======== ======== ========= ========= ========
Notes to the Financial Statements for the Year Ended 31 March
2017
1. General information
The Group headed by Imaginatik PLC is one of the leading
providers of collaborative innovation software and related
professional services to large and medium-sized enterprises.
The Company is a public company limited by share capital
incorporated and domiciled in England and Wales.
The address of its registered office is:
27/28 Eastcastle Street
London
W1W 8DH
The Company's ordinary shares are traded on the AIM market,
London Stock Exchange.
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, except for the treatment of share options, and are
in accordance with applicable accounting standards.
The financial information set out in this preliminary results
announcement does not constitute the Group's statutory financial
statements for the year ended 31 March 2017 or 2016 but is derived
from those financial statements. Statutory financial statements for
2016 have been delivered to the Registrar of Companies. Those for
2017 will be delivered following the Company's forthcoming Annual
General Meeting. The auditors have reported on those accounts:
their reports on those financial statements were unqualified and
did not contain statements under section 498 of the Companies Act
2006.
The financial statements, and this preliminary statement, of the
Group for the year ended 31 March 2017 were authorised for issue by
the Board of Directors on 4 August 2017 and the balance sheet was
signed on behalf of the board by 4 August 2017.
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.
2. Accounting policies
Going concern
The Group posted a loss of GBP779,000 (2016: GBP945,000) for the
period, has current net liabilities of GBP910,000 (2016:
GBP1,466,000) and retained losses of GBP13,596,000 (2016:
GBP12,817,000). The Group has net funds at 31 March 2017 of
GBP117,000 (2016: GBP23,000).
The Group met its financing requirements through the placing of
new shares and completed a placing of new ordinary shares with
institutional and other investors in June 2017 raising a total of
GBP1,450,000 before expenses.
The Directors have reviewed the Group's budgets and forecasts
for the coming 12 months, which have been prepared with appropriate
regard to the current macroeconomic environment and the conditions
in the principal markets served by the Group. The Directors have
taken into consideration the Group's net funds, the level of
anticipated renewals by reviewing on a customer by customer basis,
forecast new and up sell revenues based on sales in the pipeline
and anticipated costs. There is inherent uncertainty in the level
of anticipated renewals and up sell revenues and assumptions are
based on reasonable expectations taking into account historic
experience and current knowledge. The forecasts include investments
and additional costs commensurate with expected levels of growth
and options available to the Directors include the ability to flex
these investments and costs should predicted revenues be lower than
forecast.
As a result, at the time of approving the financial statements,
the Directors consider that the Group has sufficient financial
resources to continue in operational existence for the foreseeable
future and, therefore, that it is appropriate to adopt the going
concern basis in preparing these financial statements. As with all
business forecasts, the Directors' statement cannot guarantee that
the going concern basis will remain appropriate given the inherent
uncertainty about future events.
Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 31 March 2017.
Subsidiaries are entities over which the Group has the control.
Control comprises an investor having power over the investee and is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power.
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 2017 a loss of GBP805,000 (2016: loss of GBP974,000) is
attributable to the Company.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable net of sales related taxes. Income for the
Group is derived from two sources: Technology and Consultancy.
These sources are service-based rather than through the sale of
goods. Following the principles of IAS 18 Revenue, the policies for
income recognition in respect of each of the different sources of
income are such that income is recognised by reference to the stage
of completion of the transaction at the end of the reporting
period. In applying the income recognition policies below where
there is a requirement for a contract to be signed, income is
recognised in accordance with the policy when the contract has been
signed or persuasive evidence that an arrangement exists.
a) Consulting:
Income derived from our consulting offering subject to contracts
is recognised in the month in which the consulting takes place.
Income from longer term consulting arrangements shall be recognised
evenly over the term of the contract.
b) Technology:
The provision of our suite of technology products includes
provision of software licences, hosting and maintenance in relation
to the product over the contract term. Income arising from the
provision of these bundled services are recognised evenly over the
term of the contract, once an agreement has been signed or
persuasive evidence of an arrangement exists.
Leases
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. Costs in respect of operating leases are charged on a
straight line basis over the term of the lease in arriving at the
operating loss before taxation.
Defined contribution pension obligation
Contributions to the Group's defined contributions pension
scheme are charged to profit or loss in the period in which they
become payable.
Property, plant and equipment
All property, plant and equipment is stated at cost less
subsequent depreciation and impairment. The costs of the property,
plant and equipment is their purchase price plus any incidental
costs of acquisition. Depreciation commences at the point the asset
is brought into use.
If there is any indication that an asset's value is less than
its carrying amount an impairment review is carried out. Where
impairment is identified an asset's value is reduced to reflect
this.
The residual values and useful economic lives of fixed assets
are reviewed by management on an annual basis and revised to the
extent required.
Depreciation
Depreciation is provided to write off the cost, less estimated
residual values, of all property, plant and equipment equally over
their expected useful lives. It is calculated at the following
rates:
Depreciation method
Asset class and rate
Leasehold improvements Over the life of
the lease
Fixtures and fittings 33% per annum
Equipment 33% per annum
Intangible assets
Software licences
The costs of significant groups of software licences are
capitalised and then amortised over the useful economic lives of
the software concerned. Amortisation is charged to administrative
expenses. The cost of intangible assets is their purchase price
plus any incidental costs of acquisition. Amortisation begins from
the time the asset is brought into use.
Research and development
The cost of research is charged to the statement of
comprehensive income in the period in which it is incurred.
Development expenditure is capitalised only if the Company can
demonstrate the following conditions:
- The technical feasibility of completing the intangible asset
so that it will be available for use or sale.
- Its intention to complete the intangible asset and use or sell it.
- Its ability to use or sell the intangible asset.
- How the intangible asset will generate probably future economic benefits.
- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset
- Its ability to measure reliably the expenditure attributable
to the intangible asset during its development.
Development costs not meeting the criteria for capitalisation
are expensed in the period in which they are incurred. The cost of
an internally generated intangible asset comprises all directly
attributable costs, including labour costs, necessary to create,
produce, and prepare the asset to be capable of operating in the
manner intended by management. Until completion of the development
project, the assets are subject to impairment testing only.
Amortisation commences when the asset is brought into use, and is
shown within 'Administrative Expenses' on the consolidated
statement of comprehensive income.
Amortisation
Amortisation is provided on intangible assets so as to write off
the cost, less any estimated residual value, over their expected
useful economic life as follows:
Amortisation method
Asset class and rate
Software 20% to 33% per annum
Development costs 20% per annum
Impairment
At the end of each accounting period the Group assesses the
recoverable amounts of intangible assets. Where there is an
indication of impairment an impairment loss is recognised for the
amount by which the assets carrying value exceed its recoverable
amount. Impairment losses are recognised in the profit and
loss.
Tax
The tax expense for the period comprises current tax. Tax is
recognised in profit or loss, except that a change attributable to
an item of income or expense recognised as other comprehensive
income is also recognised directly in other comprehensive
income.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit and is accounted for using the statement of financial
position liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill
or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
statement of financial position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised based on tax rates that have been enacted or substantively
enacted at the statement of financial position date. Deferred tax
and current tax are charged or credited to profit or loss, except
when it relates to items charged or credited in other comprehensive
income or directly to equity, in which case the deferred tax is
also recognised in other comprehensive income or equity
respectively.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and other
short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk
of change in value.
Share based payments
Where equity-settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to profit
or loss over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments
expected to vest at each statement of financial position date so
that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of the
options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative. Where an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any cost not
yet recognised in the income statement for the award is expensed
immediately. Any compensation paid up to the fair value of the
award at the cancellation or settlement date is deducted from
equity, with any excess over fair value being treated as an expense
in the income statement. The Group has no cash settled share based
payments.
Foreign currency transactions and balances
The presentational currency of the Group and functional currency
of the trading entities is Sterling. Transactions entered into by
group entities in a currency other than the currency of the primary
economic environment in which they operate (their "functional
currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the statement of financial
position date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
Employee benefits
The Company accounts for employee benefits in accordance with
IAS 19. Under IAS 19 there is a requirement to recognise the
monetary value of employee benefits accruing to employees but not
yet settled, typically holiday pay. There is a requirement to
account for the value of the liability for employee benefits to be
paid in the future for services provided up to the reporting
date.
Financial assets
Classification
Financial assets currently comprise trade and other receivables,
cash and cash equivalents.
Recognition and measurement
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Included within loans and receivables are trade and other
receivables. Trade and other receivables are recognised at fair
value less transaction costs. Subsequently they are carried at
amortised cost.
Cash and cash equivalents
Cash and other short-term deposits in the Statement of Financial
Position comprise cash at banks and in hand and short-term deposits
with an original maturity of three months or less and where there
is an insignificant risk of changes in value. In the consolidated
cash flow statement, cash and cash equivalents consist of cash and
cash equivalents as defined above.
Financial liabilities
Classification
Financial liabilities currently comprise trade and other
payables.
Recognition and measurement
Trade and other payables
Trade and other payables are initially recognised at fair value
less transaction costs and thereafter carried at amortised
cost.
Share capital
Equity comprises the following:
"Issued capital" represents the nominal value of equity
shares.
"Share premium" represents the excess over nominal value of the
fair value of consideration received for equity shares net of
expenses of the share issue.
"Share option reserve" represents equity-settled share-based
employee remuneration until such share options are exercised.
"Retained losses" represents retained losses.
Changes in accounting policy
New standards, interpretations and amendments not yet
effective
Standards and interpretations Effective
for annual
periods beginning
on or after
IFRS 2 Share based payment 1 January
2018
IFRS 9 Financial Instruments 1 January
2018
IFRS 15 Revenues 1 January
2018
IFRS 16 Leases 1 January
2017
The directors have not yet considered the full impact of the
above standards on the financial statements of the Company. The
directors anticipate that as a minimum the changes will have a
significant impact on the disclosures provided in the financial
statements.
Critical judgements and significant accounting estimates
In determining and applying accounting policies, judgement is
often required in respect of items where the choice of specific
policy, accounting estimate or assumption to be followed could
materially affect the reported results or net asset position of the
Group should it later be determined that a different choice would
be more appropriate. The most significant areas where judgements
and estimates have been applied are as follows:
Judgements
The value of the awards under the modified and new share option
scheme was measured, in accordance with IFRS 2, by reference to
their fair value at the date on which they were granted. Judgement
was required in determining the most appropriate valuation
model.
At the end of each accounting period the Group assesses the
recoverable amounts of intangible assets. Where there is an
indication of impairment an impairment loss is recognised for the
amount by which the assets carrying value exceed its recoverable
amount. Impairment losses are recognised in the profit and
loss.
The cost of an internally generated intangible asset comprises
all directly attributable costs necessary to create, produce, and
prepare the asset to be capable of operating in the manner intended
by management. Until completion of the development project, the
assets are subject to impairment testing only. Amortisation
commences upon completion of the asset, and is shown within
'Administrative Expenses' on the consolidated statement of
comprehensive income.
At the end of each accounting period, the Group assesses it's
ability to continue for a period of at least 12 months from the
date the financial statements are approved, by reviewing budgets
and forecasts for future trading years.
Estimates
Significant assumptions were necessary in arriving at the inputs
into the valuation model for modified and new share option
scheme.
3. Segmental reporting
Management currently identifies the Group's two revenue streams
as its operating segments. These operating segments are monitored
by the Group's chief operating decision maker. For these operating
segments only revenues are reported to the Group's chief operating
decision maker as results, other costs and assets and liabilities
cannot be reliably allocated to the operating segments.
2017 2016
GBP'000 GBP'000
Segmental revenue:
Technology 2,911 2,778
Consultancy 1,009 1,115
------- -------
3,920 3,893
======= =======
All other information presented to the Chief Operating Decision
Maker is the same as is reported in these financial statements.
The Group's revenues from external customers and its non-current
assets are divided into the following geographical areas:
2017 2016
GBP'000 GBP'000
Segmental revenue:
United States of America 2,784 2,977
Rest of the World 1,136 916
------- -------
3,920 3,893
======= =======
Segmental non-current assets:
United States of America 92 219
Rest of the World 943 566
------- -------
1,035 785
======= =======
Revenues from external customers have been identified on the
basis of the customer's geographical location. Non-current assets
are allocated based on their physical location.
The Group has one customer (2016: nil customers) who accounted
for revenues of more than 10% of Group revenues, accounting for
11.5% of turnover. These revenues arose in the Technology
segment.
4. Other operating income
The analysis of the group's other operating income for the year
is as follows:
2017 2016
GBP 000 GBP 000
Sub lease rental income 63 14
======== ========
5. Operating loss
Arrived at after charging/(crediting)
2017 2016
GBP 000 GBP 000
Depreciation expense 16 17
Amortisation expense 135 163
Research and development cost 322 330
Foreign exchange losses 230 150
Operating lease expense - property 153 76
======== ========
6. Auditor's remuneration
2017 2016
Note GBP 000 GBP 000
Fees payable to the Company's
auditor for the audit of the
Company's annual accounts 24 22
Fees payable to the Company's auditor and its
associates for other services:
Audit of the accounts of subsidiaries 1 1
Tax advisory services 3 3
-------- --------
28 26
======== ========
7. Finance income and costs
2017 2016
GBP 000 GBP 000
Finance costs
Other finance costs 13 65
-------- --------
Total finance costs 13 65
======== ========
8. Income tax
Tax credited in the income statement
2017 2016
GBP 000 GBP 000
Current taxation
UK corporation tax (215) (165)
======== ========
The tax on (loss)/profit before tax for the year is less than
(2016 - less than) the standard rate of corporation tax in the UK
of 20% (2016 - 20%).
The differences are reconciled below:
2017 2016
GBP 000 GBP 000
Loss before tax (994) (1,110)
======== ========
Corporation tax at standard rate (189) (183)
Effect of revenues exempt from
taxation (6) (39)
Effect of expense not deductible
in determining taxable profit
(tax loss) 12 15
Increase (decrease) from effect
of tax incentives (2) 1
Increase (decrease) in UK and
foreign current tax from unrecognised
tax loss or credit 185 206
Increase (decrease) in UK and
foreign current tax from adjustment
for prior periods (215) (165)
-------- --------
Total tax credit (215) (165)
======== ========
Factors that may affect future tax charges
Based on current capital investment plans, the Group expects to
be able to continue to claim capital allowances in excess of
depreciation in future periods at a slightly lower level than in
the current period.
At 31 March 2017 the Group has estimated tax losses of
GBP10,311,685 (2016: GBP9,981,625) carried forward and available
indefinitely for offset against future profits. No deferred tax
asset has been recognised in respect of these losses as there is
insufficient evidence that future profits will be sufficient for
recovery of the losses.
9. Earnings per share
The calculation of basic loss per share (EPS) is based on the
loss attributable to equity holders of the parent for the year of
GBP776,000 (2016: loss of GBP945,000) and a weighted average of
136,474,544 (2016: 81,948,369) ordinary shares in issue.
The share options issued during the current and prior year are
anti-dilutive due to losses, and therefore diluted EPS equals basic
EPS.
10. Share capital and reserves
2017 2016
No. 000 GBP 000 No. 000 GBP 000
Ordinary shares
of GBP0.01 (2016
- GBP0.01) each 151,829 1,518 85,112 851
Deferred shares
of GBP0.04 (2016
- GBP0.04) each 63,084 2,523 63,084 2,523
------- ------- ------- -------
214,913 4,041 148,196 3,374
======= ======= ======= =======
New shares allotted
During the year 66,717,012 ordinary shares having
an aggregate nominal value of GBP667,170 were
allotted for an aggregate consideration of GBP1,667,925.
Issue costs relating to the above placings were
GBP119,000 and have been deducted from the share
premium account.
Share premium account
This reserve records the consideration premium for shares issued
at a value that exceeds their nominal value, less any costs
incurred relating directly to the issue of these shares.
Other reserve account
This account acts as the share option reserve and records the
charges to profit with respect to unexercised share options.
Rights, preferences and restrictions
Ordinary have the following rights, preferences
and restrictions:
The Ordinary shares carry rights to participate
in dividends and distributions declared by the
Company and each share carries the right to one
vote at any general meeting. There are no rights
of redemption attaching to the Ordinary shares.
Deferred have the following rights, preferences
and restrictions:
The deferred shares carry no rights to receive
any dividend or distribution and carry no rights
to vote at any general meeting. On a return of
capital the Deferred share holders are entitled
to receive the amount paid up on them after the
Ordinary share holders have received GBP100,000,000
in respect of each share held by them. The Company
may purchase all or any of the Deferred shares
at an appropriate consideration of GBP1.
Alloted, called up and fully paid shares
2017 2016
No. 000 GBP 000 No. 000 GBP 000
At 1 April 148,195,874 3,374 63,084,290 3,154
Issued in the year 66,717,012 667 22,027,294 220
Share sub-division - - 63,084,290 -
----------- ------- ----------- -------
At 31 March 214,912,886 4,041 148,195,874 3,374
=========== ======= =========== =======
11. Report and Accounts
Copies of the Company's full statutory financial statements will
be available from the Company's place of business at Carnac
Cottage, Cams Hall Estate, Fareham, PO16 8UU and on its
website,www.imaginatik.com. A copy of the report and accounts will
be sent to all shareholders with the notice of the AGM in due
course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGGRNDNGNZM
(END) Dow Jones Newswires
August 07, 2017 02:00 ET (06:00 GMT)
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