TIDMING
RNS Number : 5746U
Ingenta PLC
01 April 2019
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 2018.
Highlights
-- Business reorganisation substantially complete.
-- Cumulative cost reductions of GBP4m on an annualised basis
achieved over the last 18 months.
-- Company profile substantially de-risked with an ongoing
annual cost base of approximately GBP9.5m.
-- Revenues of GBP12.0m (2017: GBP14.7m) reflecting increased
emphasis on higher quality contracts.
-- Over 70% of the reported revenues highly visible and recurring in nature.
-- Operating cash inflows of GBP2.4m in the year (2017:
GBP2.7m), before expenditure on research and development of GBP1.9m
and reorganisation costs of GBP0.8m.
-- Cash balances at year end of GBP1.3m (2017: GBP2.1m) and
GBP2.5m at the end of January 2019.
-- Adjusted EBITDA* GBP0.8m (2017: GBP1.4m).
-- Dividend of 1.5 pence per share proposed (2017: 1.5 pence).
-- New contracts secured with a value of over GBP3.3m over 3
years, and an encouraging pipeline of further prospects.
*Adjusted EBITDA - earnings before interest, tax, depreciation,
amortisation, gains / losses on revaluation, restructuring costs
and foreign exchange gains / losses. See note 2 for details.
Scott Winner, Chief Executive Officer, commented:
"Our strategic move away from product silos towards a more
client centric structure is starting to produce real results, and
we look forward to 2019 with great enthusiasm. Our business is now
leaner and focussed on delivering first class services for all our
customers with significantly improved positioning for the next
stage of our growth".
Chairman's statement
2018 Developments
The Group announced that 2018 would signal the culmination of
its long-term business reorganisation plans and I'm pleased to
announce that the new business structure is in place for 2019. The
Group now has a unified approach to servicing its customer base
which allows it to be significantly nimbler and more responsive to
changing customer demands. The removal of the old product siloes
has already had positive results as the business looks to cross
sell its products and services and improve customer retention.
Obviously, these changes were significant, and the business
incurred some one-off costs during the transition that are reported
in the financial statements.
On an operational level, the business has secured several large
renewals within its customer base and expanded its service
offering. The Group was pleased to recently announce 3 multi-year
customer renewals within its Commercial division with a total deal
value of GBP3.3m over 3 years. The Group also announced two new
customer wins for its CMS product in 2018 and these deployments are
running smoothly to a go live in 2019. One of these customers is an
institution in Qatar and it means the CMS product is now
operational in Arabic which provides scope for further
opportunities within that territory. Within the advertising
business, our new software platform for Sainsburys has successfully
gone live and the new features and functionality are being marketed
to a wider customer base with some interesting leads being followed
up. The Commercial product has one go live scheduled for the first
quarter of 2019 and two new customer implementations underway with
more new contract wins expected to be announced shortly.
Results
As mentioned above, the audited results for the year ended 31
December 2018 have been impacted by the costs associated with the
Group's business reorganisation plans. The costs of this were
approximately GBP0.8m (2017: GBP0.3m) and have contributed to the
loss reported in the year. In addition, the Group also incurred
non-cash impairment charges to intangible assets of GBP0.9m (2017:
nil). These impairment charges included a GBP0.3m (2017: nil) write
down of the Group's shareholding in its Chinese joint venture and a
GBP0.6m (2017: nil) impairment of non-software related goodwill.
The Group deems both items to be non-core assets.
The revenue base has been restructured towards fewer, higher
quality contracts with approximately 70% of the reported revenues
highly visible and recurring in nature. From this revenue base, the
Group generated operating cash inflows of GBP2.3m in the year,
before expenditure on research and development of GBP1.8m,
acquisition costs of GBP0.25m, dividends of GBP0.25m and the
planned reorganisation costs of GBP0.8m, resulting in net cash
balances at year-end of GBP1.3 million. In January 2019 cash
balances increased to GBP2.5m and the Group expects that the new
organisational structure will help deliver improved cash
generation.
Shareholders' returns and dividends
On the 26(th) January 2018, the Board proposed a court approved
reduction of capital and invited shareholders to vote on the
resolution at a General Meeting held on 19(th) February 2018. This
resolution was successfully passed and at a Court hearing on the
27(th) March the reduction of capital was approved and became
effective that day, increasing the Company's distributable reserves
by GBP8,999K.
The Directors declared their intention to pay a dividend in 2019
of 1.5 pence per share (2018: 1.5 pence). This is subject to
shareholder approval at the forthcoming AGM.
M C Rose
Chairman
29 March 2019
Group strategic report
2018 has been a period of change as the Group implemented a new
organisational structure which sets the foundations for a more
responsive business which is better positioned for growth.
Business Strategy
The Business has moved away from a product siloed divisional
structure to a more product agnostic services architecture. The
benefit of this is a much more integrated approach to servicing our
customers whereby we can standardise service levels and utilise
resources more efficiently.
The Group's unified approach is starting to produce results and
we have already announced some significant contract renewals and
customer upgrade projects as the business looks to actively
re-engage and respond to our client's needs. The business strategy
has been to focus on our higher quality revenue streams where the
Group believes it can deliver better margins. Similarly, the sales
and marketing efforts are targeted at improved margins and I'm
extremely encouraged by the progress being made in developing our
sales pipeline and building customer awareness of our suite of
products and services. The aim going forward is to be highly
focussed in our sales prospecting work by targeting key market
areas with a proven and referenceable product set. The previous
decisions to develop a simplified GO! offering with pre-configured
out of the box functionality has been instrumental in this as we
now have some strong leads within the mid-tier market which we hope
to announce shortly.
Our development strategy is also firmly in line with the broader
business goals. Now that the product set is complete and
referenceable, we can be more strategic with our investment
decisions. Our Commercial product offering has the core
functionality to be applicable to a much wider audience and, with
modest development can be tailored to meet those requirements. We
are currently investigating these opportunities as we believe they
offer good prospects for growth.
Product review
Ingenta Commercial
Ingenta Commercial provides enterprise level publishing
management systems for both print and digital products.
All modules of the product are now fully referenceable and live
on customer sites allowing the business to step up its marketing
and sales activity. The indications from the second half of 2018
were positive, with promising opportunities being progressed in the
mid-tier market where the GO! offering is proving successful. The
core of the simplified GO! offering remains intact which means the
software can be configured and enhanced over time as the customers'
needs and requirements change.
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.
As in other parts of the software business, Ingenta's Content
Management Solutions (CMS) is offered in a GO! format as well as
the full enterprise version. The business has secured two new deals
in the year which are progressing well with go lives anticipated
for mid-2019. One of these deals involved an Arabic interface for
the software which is now fully functional and provides further
scope for the Group to expand into these new territories.
Ingentaconnect, the divisions content aggregation solution, also
announced a new Open Access solution in 2018 which puts Ingenta at
the forefront of this rapidly evolving area of debate within the
scholarly publishing industry which remains a key focus for the
Group.
Ingenta Advertising
Ingenta Advertising provides a complete browser-based multimedia
advertising, CRM and sales management platform for content
providers.
Within the advertising space, traditional newspaper and magazine
customers are adopting a cautious approach to investment decisions.
The Group remains well placed to service these customers and has an
upgraded platform solution on offer to address the changing
requirements of its customer base. In addition, the business has
developed a new portal with specific application to the retail
business and its management of advertising and promotions. The
solution went live at Sainsburys in 2018 and the Group are pressing
ahead with other potential sales in this sector.
PCG
The PCG consulting arm provides a range of services designed to
support and drive a business's sales strategy.
PCG continues to deliver impressive results to its customer base
and maintained its revenue levels in line with the prior year.
Financial Performance
Group revenues for the year have decreased by GBP2.7m to
GBP12.0m (2017: GBP14.7m) reflecting our focus on higher quality
earnings which we believe will deliver improved margins.
As reported at the half year, the Group incurred GBP0.3m (2017:
nil) of non-cash impairment charges against its joint venture
investment in China. The Company has no further cash or balance
sheet exposure to China and further details are included in note 3.
The Group also incurred a further GBP0.6m (2017: nil) non-cash
impairment charges against its non-software related goodwill. In
terms of the reorganisation, there has also been a GBP0.8m (2017:
GBP0.3m) exceptional charge relating to staff costs and the
business reorganisation plans. In total, these costs amounted to
GBP1.7m (2017: GBP0.3m) and were a key driver in the reported
operating loss of GBP1.2m (2017: profit GBP0.9m).
A tax credit of GBP0.3m (2017: GBP0.2m) is included in the
results for the year and relates to money expected to be received
under the research and development tax credit scheme. The claim has
been calculated using the same methodology as in prior years and is
subject to HMRC approval.
Financial Position
Non-current assets include goodwill and intangibles created in
historic acquisitions. The intangibles relate to the software
technology acquired and were originally valued at GBP0.5m using a
discounted cashflow model. These are being amortised over 5 years.
The goodwill of GBP4.3m (2017: GBP4.9m) was tested for impairment
using discounted cashflows resulting in an impairment charge of
GBP0.6m (2017: nil) was incurred in relation to non-software
items.
Current assets have decreased compared to 2017 because of the
timing of cash receipts from the renewals cycle. The cash balance
was over GBP2.5m at the end of January 2019.
Total liabilities have also declined compared to 2017. The main
contributory factor here was a reduction in accruals of GBP0.3m
relating to the settlement of the earnout on acquisition of the 5
Fifteen business.
On 26 January 2018, the Group announced a court approved
reduction of capital whereby the Company cancelled its share
premium account and increased its distributable reserves by
approximately GBP9m.
Cashflow
The Group generated operating cash inflows of GBP2.3m in the
year, before expenditure on research and development of GBP1.8m,
acquisition costs of GBP0.25m, dividends of GBP0.25m and the
planned reorganisation costs of GBP0.8m, resulting in net cash
balances at year-end of GBP1.3 million. At the end of January 2019,
cash balances increased to GBP2.5m and the Group expects that the
new organisational structure will help deliver improved cash
generation. The Group received a tax credit in the year of GBP0.2m
(2017: GBP0.1m) and the estimate for 2018 is a for a further
GBP0.3m, although this is subject to HMRC approval.
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 the prior year and have been
impacted by the strategy to focus on higher quality revenue streams
which the Group believe will deliver better margins. The sales and
marketing team has also been restructured and training programmes
initiated which has seen tangible improvements in lead generation
and pipeline development. Management believe this has set the
foundations for commercial success in 2019.
Adjusted EBITDA numbers are included in the segmental
information by business unit in the Group accounts. For the Group,
these results were below budget which meant share options for the
year did not vest. Management took action during the year
implementing cost control measures so that resourcing was kept in
line with sales activity, and operational efficiencies were
identified which helped improve margins.
Year-end cash balances were GBP1.3m. This was impacted by the
restructuring efforts in the year and timing of receipts. The
renewals activity of the business is heavily linked to the calendar
year with some receipts falling into January 2019 when cash
balances rose to over GBP2.5m.
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. Such analysis has led to the
development of GO! products designed to meet a market
requirement.
The business has also started to monitor time utilisation rates
of its core functional departments. These are at an early stage of
development and will be enhanced during 2019.
Outlook
The Group can look forward to 2019 with renewed optimism as the
positive benefits from its long-term business reorganisation plan
continue to roll out. The Board believe the business is now
significantly de-risked, producing a higher quality, cash
generative earnings stream whereby the fixed costs of the business
are met by its highly visible recurring revenues. Combined with
this, the Group's efforts to strategically build its sales pipeline
are now paying off and we hope to capitalise on this momentum
through our refreshed sales targets for 2019.
Risks and uncertainties
Sales risk
The major risks for future trading are converting sales of
Ingenta CMS and the Commercial product suite (Ingenta Rights,
Royalties, Product Manager and Order to Cash), and generating
revenue within PCG. 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 undertake detailed monthly revenue forecasting and
assess risk on an ongoing basis. 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.
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 projects 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 also 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.
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. This 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.
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.
G S Winner
Chief Executive Officer
29 March 2019
Group Statement of Comprehensive Income
For the year ended 31 December 2018
Year ended Year ended
31 Dec 31 Dec
18 17
note GBP'000 GBP'000
================================================= ===== =========== ===========
Group revenue 12,001 14,695
Cost of sales (7,258) (9,071)
Gross profit 4,743 5,624
Sales and marketing expenses (1,074) (1,253)
Administrative expenses (4,894) (3,441)
(Loss) / profit from operations 2 (1,225) 930
Share of loss from equity accounted investments 3 - (99)
Finance costs (8) (31)
(Loss) / profit before income tax (1,233) 800
Income tax 4 407 185
(Loss) / profit for the year attributable to
equity holders of the parent (826) 985
Other comprehensive expenses which will be
reclassified subsequently to profit or loss:
Exchange differences on translation of foreign
operations (31) 77
Total comprehensive (loss) / income for the
year attributable to equity holders of the
parent (857) 1,062
Basic (loss) / earnings per share (pence) 5 (4.88) 5.82
Dilutive (loss) / earnings per share (pence) 5 (4.88) 5.78
All activities are classified as continuing
Group Statement of Financial Position
As at 31 December 2018
31 Dec 31 Dec 31 Dec
18 17 16
====================================== =====
note GBP'000 GBP'000 GBP'000
====================================== ===== ======== ======== =========
Non-current assets
Goodwill and other intangible assets 4,324 4,900 4,900
Other intangible assets 258 358 458
Property, plant and equipment 218 140 203
Investments accounted for using the
equity method 3 - - 368
======== ======== =========
4,800 5,398 5,929
Current assets
Trade and other receivables 4,627 4,688 5,385
Investments classified as held for
sale 3 - 320 -
Research and Development tax credit
receivable 4 336 180 150
Cash and cash equivalents 1,323 2,131 2,027
======== ======== =========
6,286 7,319 7,562
Total assets 11,086 12,717 13,491
======== ======== =========
Equity
Share capital 1,692 1,692 1,692
Share Premium - 8,999 8,999
Merger reserve 11,055 11,055 11,055
Reverse acquisition reserve (5,228) (5,228) (5,228)
Share option reserve 16 51 -
Translation reserve (876) (845) (871)
Retained earnings (1,505) (9,424) (10,240)
Investment in own shares - - -
======== ======== =========
Total equity 5,154 6,300 5,407
Non-current liabilities
Borrowings - - -
Deferred tax liability 52 72 92
Finance leases 52 8 35
======== ======== =========
104 80 127
Current liabilities
Trade and other payables 2,723 3,394 4,349
Deferred income 3,105 2,943 3,608
Borrowings - - -
5,828 6,337 7,957
Total liabilities 5,932 6,417 8,084
Total equity and liabilities 11,086 12,717 13,491
Group Statement of Changes in Equity
For the year ended 31 December 2018
Total
Reverse Share attributable
Share Share Merger acquisition Translation Retained option to owners
capital Premium reserve reserve reserve earnings reserve of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================= ========= ========= ========= ============= ============ ========== ========= ==============
Balance at 1
January
2018 1,692 8,999 11,055 (5,228) (845) (9,424) 51 6,300
========= ========= ========= ============= ============ ========== ========= ==============
Dividends paid - - - - - (254) - (254)
Capital
reconstruction - (8,999) - - - 8,999 - -
Share options
lapsed
in the year - - - - - - (35) (35)
--------- --------- --------- ------------- ------------ ---------- --------- --------------
Transactions
with
owners - (8,999) - - - 8,745 (35) 289
Loss for the
year - - - - - (826) - (826)
Other
comprehensive
expense:
Exchange
differences
on translating
foreign
operations - - - - (31) - - (31)
--------- --------- --------- ------------- ------------ ---------- --------- --------------
Total
comprehensive
expense for the
year - - - - (31) (826) - (857)
Balance at 31
December
2018 1,692 - 11,055 (5,228) (876) (1,505) 16 5,154
================= ========= ========= ========= ============= ============ ========== ========= ==============
For the year ended 31 December 2017
Total
Reverse Share attributable
Share Share Merger acquisition Translation Retained option to owners
capital Premium reserve reserve reserve earnings reserve of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ========= ========= ========= ============= ============ ========== ========= =============
Balance at 1
January
2017 1,692 8,999 11,055 (5,228) (871) (10,240) - 5,407
========= ========= ========= ============= ============ ========== ========= =============
Employee Share
Ownership
Trust
transactions - - - - - (169) - (169)
Reclassification
of
share option
reserve - - - - (51) - 51 -
--------- --------- --------- ------------- ------------ ---------- --------- -------------
Transactions with
owners - - - - (51) (169) 51 (169)
Profit for the
year - - - - - 985 - 985
Other
comprehensive
expense:
Exchange
differences
on translating
foreign
operations - - - - 77 - - 77
--------- --------- --------- ------------- ------------ ---------- --------- -------------
Total
comprehensive
expense for the
year - - - - 77 985 - 1,062
Balance at 31
December
2017 1,692 8,999 11,055 (5,228) (845) (9,424) 51 6,300
================== ========= ========= ========= ============= ============ ========== ========= =============
Group Statement of Cash Flows
For the year ended 31 December 2018
Year ended Year ended
31 Dec 31 Dec
18 17
GBP'000 GBP'000
=================================================== =========== ===========
(Loss) / profit before taxation (1,233) 800
Adjustments for
Share of loss from joint venture - 99
Impairment of intangibles 896 -
Depreciation 227 250
Profit on disposal of fixed assets (2) -
Interest expense 8 31
Unrealised foreign exchange differences (31) 26
Decrease in trade and other receivables 61 697
Decrease in trade and other payables (195) (1,552)
Cash (outflow) / inflow from operations (269) 351
Research and Development tax credit received 235 143
Tax paid (6) (8)
=========== ===========
Net cash (outflow) / inflow from operating
activities (40) 486
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (248) -
Purchase of property, plant and equipment (61) (91)
Net cash used in investing activities (309) (91)
Cash flows from financing activities
Interest paid (8) (31)
Payment of finance lease liabilities (162) (95)
Costs of capital restructure (31) -
Dividend paid (254) (169)
Net cash used in financing activities (455) (295)
Net (decrease) / increase in cash and cash
equivalents (804) 100
Cash and cash equivalents at the beginning
of the year 2,131 2,027
Exchange differences on cash and cash equivalents (4) 4
=========== ===========
Cash and cash equivalents at the end of the
year 1,323 2,131
1. Basis of preparation
The principal accounting policies of the Group are set out in
the Group's 2017 annual report and financial statements. A number
of new or amended standards became effective from the 1 January
2018:
-- IFRS 9 'Financial Instruments'
-- IFRS 15 'Revenue from Contracts with Customers'
Full disclosure of the transition will be included in the 2018
Financial Statements, but the Company has not identified any
changes to its accounting policies that require retrospective
adjustment.
2. Profit from operations
Profit from operations has been arrived at after charging:
Year ended Year ended
31 Dec 31 Dec
18 17
GBP'000 GBP'000
=============================================== =========== ===========
Research and development costs 1,867 2,066
Net foreign exchange loss 33 122
Depreciation of property, plant and equipment
- owned assets 12 165
- assets under finance leases 115 84
Operating lease rentals:
- land and buildings 332 342
- other - -
Auditor's remuneration 101 113
Restructuring costs 840 301
An analysis reconciling the profit from operations to adjusted
EBITDA is provided below.
Year ended Year ended
31 Dec 31 Dec
18 17
GBP'000 GBP'000
===================================== =========== ===========
Profit / (loss) from operations (1,225) 930
Add back:
Depreciation 227 249
Profit on disposal of fixed (2) -
assets
Gain on revaluation of deferred
consideration - (178)
Restructuring costs 840 301
Foreign exchange losses 33 122
EBITDA before profit / loss
on disposal of fixed assets,
foreign exchange profits / losses,
restructuring costs and gains
/ losses on revaluation 769 1,424
3. Joint venture
The Group holds a 49% voting and equity interest in Beijing
Ingenta Digital Publishing Technology Ltd (BIDPT) which was
purchased during the year to 31 December 2012.
This investment is accounted for under the equity method. BIDPT
has a reporting date of 31 December. The shares are not publicly
listed on a stock exchange and hence published price quotes are not
available.
Certain financial information on BIDPT is as follows:
As at
31 Dec
17
=============
GBP'000
============= ========
Assets 1,343
Liabilities (690)
Year ended
31 Dec
17
=========================================== ===========
Revenues 1,481
Profit / (loss) (203)
Revenue attributable to the Group 726
Profit / (loss) attributable to the Group (99)
Changes in equity accounted investments
Year ended Year ended
31 Dec 31 Dec
18 17
GBP'000 GBP'000
============================================== ============ ===========
Cost of 49% investment in BIDPT - 368
Retained (loss) / profit attributable to the
Group - (99)
Other comprehensive income - 51
Transfer to investments held for sale - (320)
============= ===========
Investment book value - -
Dividends are subject to the approval of at least 51% of all
shareholders of BIDPT. The Group has received no dividends.
In the 2017 financial statements, the Group outlined it has been
actively engaged in discussions to sell or dispose of its
shareholding in the Chinese Joint Venture and had reclassified it
as an asset held for sale. These discussions are ongoing, but the
Board does not believe a deal is imminent and have subsequently
reclassified the Group's holding in the Joint Venture as an
investment. Given the inherent uncertainty around valuing a Chinese
non-listed, minority shareholding combined with flat earnings and
an uncertain mechanism to repatriate funds, the Group have decided
to fully impair the investment. The Group's strategy going forward
is to concentrate on its core product set and given the lack of
control it exerts over the Joint Venture, it will not continue to
consolidate results into the Group.
4. Tax
Year ended Year ended
31 Dec 31 Dec
18 17
GBP'000 GBP'000
============================================= =========== ===========
Analysis of credit in the year
Current tax:
Current research and development tax credit
- UK 336 180
Current year State tax - US (5) (8)
Adjustment to prior year charge - UK 56 (7)
Deferred tax credit 20 20
=========== ===========
Taxation 407 185
============================================== =========== ===========
The Group has unutilised tax losses at 31 December 2018 in the
UK and the USA of GBP15.0m (2017: GBP15.0m) and $15.5m (2017:
$15.9m) 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 $8.7m (2017: $8.7m) of the total unutilised losses at 31
December 2018.
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 ended Year ended
31 Dec 31 Dec
Reconciliation of tax expense 18 17
GBP'000 GBP'000
=================================================== =========== ===========
Profit / (loss) on ordinary activities before
tax (1,233) 800
=========== ===========
Tax at the UK corporation tax rate of 19% (2017:
19.25%) (234) 154
Expenses not deductible for tax purposes 1 2
Additional deduction for Research and Development
expenditure (285) (284)
Surrender of losses Research and Development
tax credit refund 120 69
Group relief 83 -
Utilisation of UK losses 79 (56)
Utilisation of US losses (81) (76)
Difference in timing of allowances (19) (9)
Adjustment to tax charge in respect of prior
years (56) 7
Refund of deferred tax liability (20) (19)
Effect of foreign tax rates 5 8
Unrelieved China losses carried forward - 19
Total taxation (407) (185)
==================================================== =========== ===========
United Kingdom Corporation tax is calculated at 19% (2017:
19.25%) of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
5. 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 101,333
ordinary shares will be issued (2017: 125,000) 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 2018 31 Dec 2017
GBP'000 GBP'000
============================================= ============= =============
Attributable (loss) / profit (826) 985
Weighted average number of ordinary shares
used in basic earnings per share ('000) 16,920 16,920
Shares deemed to be issued in respect of
share-based payments 101 125
------------- -------------
Weighted average number of ordinary shares
used in dilutive earnings per share ('000) 17,021 17,045
Basic (loss) / profit per share arising
from both total and continuing operations (4.88)p 5.82p
Dilutive (loss) / profit per share arising
from both total and continuing operations (4.88)p 5.78p
============================================== ============= =============
Dividends
On 25(th) June 2018 the company paid a dividend of 1.5 pence per
share to holders of ordinary shares. After the year end, the
directors declared their intention to pay a dividend of 1.5 pence
per share. No liability in this respect has been recognised in
2018.
6. Share options
The Group have an unapproved Executive Management Incentive
(EMI) share option scheme. Further details are detailed below.
Unapproved EMI scheme
This scheme is part of the remuneration package of the Group's
senior management. Options will vest if certain conditions, as
defined in the scheme, are met. It is based on group performance
compared to budget over a 3 year period and one third of the
options will vest in each of the of the 3 reporting periods if the
performance targets are met in that period. Participating employees
have to be employed at the end of each period to which the options
relate. Upon vesting, each option allows the holder to purchase
ordinary shares at the market price on date of grant.
Share options and weighted average exercise prices are as
follows:
Number Weighted
of shares average
exercise
price
per share
(GBP's)
--------------------------------- ----------- -----------
Outstanding at 31 December 2016 401,000 1.27
Granted 65,000 1.56
Lapsed (25,000) 1.30
---------------------------------- ----------- -----------
Outstanding at 31 December 2017 441,000 1.31
Granted - -
Lapsed (339,667) 1.27
Outstanding at 31 December 2018 101,333 1.33
The fair value of options granted were determined using the
Black Scholes method. The following principle assumptions were used
in the valuation:
Grant date January February August September
2016 2016 2016 2017
----------------------------------------- -------- --------- -------- ----------
Vesting period ends 31 Dec 31 Dec 31 Dec 31 Dec
16 16 16 18
31 Dec 31 Dec 31 Dec 31 Dec
17 17 17 19
31 Dec 31 Dec 31 Dec 31 Dec
18 18 18 20
Share price at grant GBP1.27 GBP1.27 GBP1.30 GBP1.56
Volatility 26% 26% 16% 16%
----------------------------------------- -------- --------- -------- ----------
Risk free investment rate 5% 5% 5% 5%
----------------------------------------- -------- --------- -------- ----------
Fair value of option - 31 December 2016
vesting period 18p 18p 9p -
Fair value of option - 31 December 2017
vesting period 26p 26p 17p -
Fair value of option - 31 December 2018
vesting period 32p 32p 23p 16p
Fair value of option - 31 December 2019
vesting period - - - 24p
Fair value of option - 31 December 2020
vesting period - - - 31p
----------------------------------------- -------- --------- -------- ----------
The underlying volatility was determined with reference to the
historical data of the Company's share price. In total GBP35K has
been credited (2017: GBP1K charged) of employee remuneration
expense has been included in the loss for the year and released to
retained earnings.
7. 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 2018 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 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.
For further information please contact:
Ingenta plc
Scott Winner / Jon Sheffield Tel: 01865 397 800
Cenkos Securities plc
Nicholas Wells / Harry Hargreaves Tel: 020 7397 8900
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LFFEFVVIIVIA
(END) Dow Jones Newswires
April 01, 2019 02:00 ET (06:00 GMT)
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