TIDMING
RNS Number : 6022O
Ingenta PLC
02 June 2020
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 2019.
Highlights
-- 6 new customer sales of the Commercial product suite with one
off fees of GBP1.4m and recurring fees of GBP0.2m.
-- Vista as a service launched with a significant sale made in
the year and further opportunities being progressed in 2020.
-- Revenues of GBP10.9m (2018: GBP12.0m) reflecting increased
emphasis on higher quality contracts.
-- Company profile substantially de-risked with an ongoing
annual cost base of approximately GBP9.5m.
-- Over 70% of the reported revenues highly visible and recurring in nature.
-- Operating cash inflows of GBP3.6m in the year (2018:
GBP2.4m), including accelerated renewal receipts of GBP0.5m and
before expenditure on research and development of GBP1.4m and
reorganisation costs of GBP0.5m.
-- Cash balances at year end of GBP2.6m (2018: GBP1.3m) with a normalised balance of GBP2.1m.
-- Adjusted EBITDA* up c. 43% to GBP1.3m (2018: GBP0.9m).
*Adjusted EBITDA - earnings before interest, tax, depreciation ,
amortisation , impairment, restructuring costs and foreign exchange
gains / losses. See note 2 for details.
Scott Winner, Chief Executive Officer, commented:
"I'm pleased with the progress made in 2019 and these results
bear testament to the operational efficiencies we have implemented.
The positive news is wide ranging and includes 6 new customer sales
of our Commercial product during the year, having gained
significant traction in our target markets.
"In addition, we have broadened our offering to new verticals,
including Conchord as an IP management solution for the music
industry, and look forward to promoting its benefits in 2020. We
have also taken steps to strengthen Vista's offering for our
customers in the wider publishing industry, and are excited to
continue to serve our loyal client base."
Chairman's statement
Overview
2019 was the first year the business has operated under its new
structure and the results to date have been encouraging. The
overriding aim of the restructuring effort was to remove product
silos and encourage a unified approach to all aspects of business
operations. The benefits of this are a more integrated service
provision to customers across all products allowing efficient use
of resources to meet or exceed customer requirements. In order to
achieve this transformation, the business incurred a further
GBP0.5m of restructuring costs in the year.
Strategically, the business has also switched its focus away
from large bespoke ERP solutions to more productised offerings
aimed at SMEs. The software solutions still retain the
configurability options necessary to satisfy changing customer
requirements, but these are offered after go-live as and when the
need arises. The success of this approach is evidenced by the
business winning 6 new SME customer deals for our Commercial
product. In total these deals are anticipated to deliver initial
implementation fees of approximately GBP1.4m with recurring
revenues of GBP0.2m. From the existing customer base, we are
pleased to report 3 go-lives during the year, 2 for our Edify
content platform and 1 for the Commercial product which will
enhance recurring revenues for 2020 and beyond.
Looking forward, Ingenta is planning to leverage existing
expertise in contracts, rights and royalties developed in the
traditional publishing sector into adjacent verticals with music
being the primary target. The concepts are very closely aligned,
and we released our ConChord product during 2019 to address the
challenges faced in this growing industry.
Another way of driving value is to increase recurring revenue
streams. To this end, we have had notable success selling Vista as
a Service to an existing customer in 2019 and we will promote this
product to our customers more widely in 2020. We also intend to
accelerate growth in recurring revenues from our Commercial and
Content product suites. Ingenta has previously sold perpetual
software licences and annual support contracts, alongside project
implementation revenues. Going forward it is our intention to
prioritise contractually recurring revenues over perpetual licence
and project revenues. This will enhance shareholder value in the
longer term at the expense of revenues in the current period. This
transition is facilitated by our strong financial foundations, and
the board is confident this strategy is the right one for Ingenta
shareholders, customers and employees.
Results
The underlying results of the Group in 2019 were strong but have
been impacted by GBP2.2m of one-off charges which contributed to
the comprehensive loss of GBP1.35m. These one-off costs include a
non-cash GBP1.7m goodwill impairment charge relating to historic
acquisitions and a GBP0.5m restructuring charge relating to the
structural reorganisation mentioned above. The impairment charge
relates to goodwill associated with the advertising and consulting
revenue streams which the business anticipates will become less
discrete and measurable as they are integrated into the commercial
and content sectors of the business. Further details are included
within note 10.
The revenue base continues to be aligned 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 GBP3.6m (2018: GBP2.4m),
before expenditure on research and development of GBP1.4m (2018:
GBP1.8m) and the planned reorganisation costs of GBP0.5m (2018:
GBP0.8m), resulting in net cash balances at year-end of GBP2.6m
(2018: GBP1.3m). The Group expects that the new organisational
structure will help deliver improved cash generation.
Shareholders' returns and dividends
During the year, the Company announced a share buyback programme
pursuant to which 66,104 Ordinary 10 pence shares were repurchased.
At year end, these shares were held in treasury meaning 16,853,505
of the Company's total issued shares had voting rights.
Prior to the COVID-19 outbreak, the Directors declared their
intention to pay a dividend in 2020 of at least 1.5 pence per share
(2018: 1.5 pence). Given the current economic uncertainties, the
Board consider it prudent to delay any dividend announcement until
later in the year when a clearer outlook is available.
M C Rose
Chairman
1 June 2020
Group strategic report
2019 is the first year the Group has operated under its 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 product agnostic services architecture. The benefit
of this is an integrated approach to servicing our customers
whereby we can standardise service levels and utilise resources
more efficiently. In conjunction with this, the Group is now
targeting SME businesses with a standard product offering and 6 new
customer sales were made during the year to this target market.
This version of the product has been rebranded as 'Express' and is
available across the Ingenta product portfolio.
The Group is also looking to leverage its existing expertise in
contracts, rights and royalty's management by expanding into
adjacent verticals. During the year, the business announced the
release of ConChord, a solution designed for the music industry,
where we believe there are further opportunities to pursue.
Product review
Ingenta Commercial
Ingenta Commercial provides enterprise and 'Express' 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. These efforts produced positive results and the
business won 6 new customer contracts in the SME market tier.
Encouragingly, the wins were diversified and included wider media
companies and customers in the UK, US and France.
The Group have identified the concepts of intellectual property
and the management associated rights and royalties as a potential
opportunity in associated vertical markets. The most closely
related vertical is music and the Group launched a new product
labelled ConChord to address this market.
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 Edify
content management solutions is offered in an Express format as
well as the full enterprise version. During the year, there were 2
new go-lives for the content product with one enabling an Arabic
interface for the software which provides further scope for the
Group to expand into a wider geographical market.
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 which has
already been taken up by J Sainsbury plc. The business anticipates
that the Group's Advertising offering will become a component of
the larger Commercial and Content Products divisions and its
revenues will be less clearly distinguished as a separate CGU. As a
result, GBP1.2m of goodwill associated with the Advertising segment
was impaired.
PCG
The PCG consulting arm provides a range of services designed to
support and drive a business's sales strategy.
PCG delivered impressive results to its customer base and
maintained its revenue levels in line with the prior year. However,
the Group expects that revenue will decline in 2020 with the loss
of a significant contract and this has led to a goodwill impairment
of GBP0.5m as detailed in note 10.
Financial Performance
Group revenues for the year were GBP10.9m (2018: GBP12.0m)
reflecting our focus on higher quality earnings from which the
restructured business can deliver improved margins.
The Group's cost of sales, sales and marketing and
administrative costs have all declined driven by the business
reorganisation to move away from a product siloed structure. The
business incurred GBP1.7m of impairment charges (2018: GBP0.9m) and
these relate to goodwill from historic business combinations.
Further details on the impairment charge are included within note
10. Going forward, the overall cost base of the Group is
approximately GBP9.5m before accounting for impairments,
depreciation and restructuring costs.
No tax credit is included in 2019 (2018: GBP0.3m) as the Group
intends to use losses against future taxable profits rather than
claim cash receipts via the research and development tax credit
scheme.
Financial Position
Non-current assets include goodwill and intangibles recognised
on historic acquisitions. The intangibles relate to Advertising
software technology acquired in 2016 and were originally valued at
GBP0.5m using a discounted cashflow model. These are being
amortised over 5 years. Goodwill relating to historic acquisitions
was tested for impairment using discounted cashflows resulting in
an impairment charge of GBP1.7m (2018: GBP0.6m). Further details
are included within note 10 of the accounts. Property, plant and
equipment now includes a right of use asset in alignment with IFRS
16 'Leases'. The Group have performed a retrospective transition
and restated the comparative balances. Details of the transition
are found in note 1 and 29.
Current assets have decreased compared to 2018 mainly because
the business is not anticipating a tax credit refund (2018:
GBP0.3m). It is believed it will be more beneficial to use these
losses against future taxable income rather than cash them in at a
discount. Net cash and trade other receivables are broadly in
line.
Total liabilities have also declined compared to 2018. The main
contributory factor here is a more efficient cost base meaning year
end creditors and accruals for ongoing costs are lower.
Cashflow
The Group generated a net cash increase of GBP1.3m (2018:
GBP0.8m reduction) during the year. Operating cash inflows of
GBP3.6m (2018: GBP2.4m) were reported before expenditure on
research and development of GBP1.4m and reorganisation costs of
GBP0.5m. The cash balances were improved by accelerated collections
of approximately GBP0.5m compared to the prior year. As a result,
these increased cash collections from the year end renewals cycle
meant the Trade and other receivables were lower.
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 5 for calculation) versus budget
-- Group cashflow versus budget
-- Sales pipeline growth and conversion analysis
-- Time utilisation statistics
Any deviations or anomalies are investigated, and corrective
action taken where appropriate.
Full year revenues were below budget and 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. Sales
and marketing efforts have been targeted towards the SME market
sector and this has helped generate the 6 new customer sales wins
reported in the year.
Adjusted EBITDA numbers are lower than budgeted with details
included in the segmental information by product in the Group
accounts. These shortfalls to budget were driven by lower sales
mentioned above. Internally, the Group is moving away from a
product reporting structure to that based around activity service
streams which more closely mirror the new organisational structure
of the business.
Year-end cash balances were GBP0.2m ahead of budget at GBP2.6m.
The business reorganisation has dramatically improved cash
generation within the business which was further boosted by the
annual renewals cycle at the end of the year which continued into
2020.
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 Express products designed to meet the needs of the
SME market.
The business monitors time utilisation at a contract level to
enable accurate pricing decisions to be made ensuring profitable
service delivery. Internal development costs are also reviewed to
ensure the appropriate effort is spent supporting the products and
deliver an effective product roadmap.
Section 172(1) Statement
The Directors continually monitor the operations of the business
and take decisions to promote the success of the Group for the
benefit of all its members. As described in the Business Strategy
section of this report, the Directors have selected a business
model and operational structure designed to maximise the
effectiveness of the business for all stakeholders. The likely
consequences of any decisions are modelled to provide assurance
that they are in the long-term interest of stakeholders and, as
detailed in the Corporate Governance Report, risk management and
internal controls are a key oversight to ensure objectives are met.
The Group have also adopted the QCA Corporate Governance code which
is designed to foster strong relations with all stakeholders and
details are included on the company website. In addition to our
shareholders, the Board considers the employees, customers and
suppliers to be critical to the long-term success of the
business.
The Board is committed to maintaining active dialogue with its
shareholders to ensure that its strategy, business model and
performance are understood. The AGM is the main forum for dialogue
between retail shareholders and the Board. The notice of the AGM is
sent at least 21 days before the meeting which is held at the
Companies Head Office and all Board members routinely attend. For
each vote, the number of proxy votes received for, against and
withheld is announced at the meeting. During the meeting, the Board
members are available to answer any questions raised by
shareholders. The results of the AGM are subsequently published on
the Company's corporate website. The Chief Executive Officer and
Chief Financial Officer are primarily responsible for shareholder
liaison and can be contacted on 01865 397 800. The executive
management make presentations to institutional shareholders and
analysts each year following the release of full year and half year
results. Conversations, when requested, are also held at other
points in the year. The corporate website also includes details of
recent annual and interim results plus a listing of the Companies
RNS and RNS reach publications.
Staff are invited to regular Company wide meetings where the
Executive Team share information and updates on strategy and recent
news. At these meetings, there is also a forum where all members of
staff can ask questions. The Company also carries out a formal
staff survey so senior management and the Board can be kept abreast
of major staff concerns. Ingenta also retain an independent HR
resource to ensure all HR issues are dealt with in accordance with
best practice and all rules and regulations are adhered to.
The Group have many customers of differing size and complexity
with a variety of requirements. To best service them, the business
has rolled out a new operating model to standardise its approach to
all customers and provide a consistent level of service and
support. The business also keeps regular contact with customers via
account managers and user groups where demand exists so that our
customers can feed back any issues, share experiences and help
shape the development of our products. To ensure the business is
keeping abreast of wider industry challenges, we actively
participate in a variety of annual trade events.
The Group makes every effort to ensure our suppliers are treated
fairly and paid on time and on average they are paid within 34
days. Ingenta opposes modern slavery in all its forms and
endeavours to make sure any concerns raised are investigated. Where
offshore resourcing is used, the business meets the suppliers prior
to contract signing to satisfy itself that they are operating in a
responsible manner.
The Board and senior management expect everyone in the company
to act in a responsible and ethical manner because the reputation
of the business is key to our success. The company does not let
cost concerns override its ethics and behaviour. For example, we
only contract with offshore resourcing entities who commit to fair
working practices. The Company is committed to minimising negative
environmental impact in terms of energy usage at our offices,
digitising our content and using responsible methods to dispose of
electrical equipment. The Company and staff are also active in the
local community supporting charities and sponsoring good causes.
Feedback from all stakeholders allow the Board to monitor the
Company's culture, as well as the ethical values and behaviours
within the business.
Outlook
Ingenta can look forward to 2020 with cautious optimism. The
Group has a focussed product set tailored to meet the needs of all
sizes of customer, retaining the flexibility to grow with them and
supplement additional services as required. The business intends to
secure new Commercial customers on a recurring revenue model as in
other parts of the business. This change is enabled by our strong
financial footing and will impact short term revenue growth but
will drive contracted revenue into the future adding long term
value to the company.
As these results indicate, the operational structure is much
improved and capable of dealing with fluctuations in activity. In
that respect, we anticipate a reduction in PCG's revenues in 2020
of around GBP0.8m with associated cost savings of GBP0.4m after the
completion of a long-term contract. As a result of this, and the
intention to grow recurring revenues, we anticipate that profits
and cashflow will be lower than 2019 subject to the issues
identified in the risks and uncertainties section of this
report.
Elsewhere, in the software core of the Group's business, we see
further opportunities to leverage our expertise in intellectual
property and rights management outside of traditional publishing
sector markets and into the wider media sectors of music, film and
gaming. The business has geared up its investment to capitalise on
this and ensure software delivery quality.
Risks and uncertainties
COVID-19
The COVID-19 pandemic is considered a principal risk to the
business bringing with it many significant uncertainties over the
remainder of 2020. The Group has analysed the potential impacts and
tailored its business continuity plan in response to the
anticipated threats. All staff within the business have remote
working capabilities and for many this is a normal operating
procedure. In addition, the Group's new operating structure has
fostered teams with interchangeable skills across the product
offerings and technology stacks which, along with remote working,
provides a more flexible staffing model better equipped to deal
with illness and absence. The Group's IT infrastructure is hosted
on resilient platforms using large corporate providers ideally
suited to providing uninterrupted service.
The Group's customer base is reasonably diverse including trade
and academic publishers who are not deemed to be at high risk at
the present time. The Group also considers over 70% of its revenue
to be recurring in nature with many customers on multiyear
contracts. The Ingenta systems are central to the operations of its
customer base and not deemed to be a discretionary spend although
some project work may be impacted as customers wait to see what the
implications of COVID-19 hold for them. The key concern identified
by management is the inevitable delay in new sales as major
investment decisions are put off. However, the Group have modelled
a worst-case scenario of no new sales made in the year and predict
the business will continue to operate profitably with ample working
capital headroom. Also, a significant amount of the Group's
renewals and cash were received in the first quarter of 2020 and at
the end of February cash balances remained over GBP3m with
additional facilities in place with HSBC bank if required.
Sales risk
The major risks for future trading are converting sales of
Ingenta Edify and the Commercial product suite (Ingenta Rights,
Royalties, Product Manager and Order to Cash), 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. This is considered a
principal risk for the business.
Project risk
There are two principal project risks: risk of fixed priced
projects running over and the risk on all projects where there is
development required that we are unable to deliver to the
specification agreed.
Fixed price project risk relates to the accuracy of project
estimates and the time it will take to complete the tasks as
specified in the customer contract. Management mitigate this risk
by hiring the best staff who are able to estimate projects
accurately and by building in a contingency to fixed priced
contracts. Management also closely monitor contracts to ensure all
work performed is in accordance with the agreement and any new
requests are separately contracted for. Management 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.
This is considered a principle risk for the business.
IT risk
Internal IT services are deployed onto fault tolerant platforms
and spread over multiple locations including the Group's offices,
co-location facilities, Infrastructure as a Service (IAAS) and
Office365. Regular backups and securing of data offer multiple
restore points in the event of a critical failure outside of the
scope of the in-built resilience. E-mail is a cloud-based
deployment that staff can access from any working PC/smart phone.
Staff have access to cloud-based storage (OneDrive) in addition to
co-location deployed file servers where data cannot be stored in
e-mail. Key staff have mobile phones and access to resilient
telephony services for the purposes of contacting each other and
customers. Through Remote Working staff can access their data and
customer sites in the event that it was not possible to gain access
to our offices.
Customer facing services are monitored for both stability and
performance, wherever possible proactive maintenance is undertaken
to avoid performance problems and/or downtime. All customer
deployments are done to fault tolerant hardware either in one of
our co-location facilities or to a cloud-based service, both
offering high levels of resiliency and multiple, redundant
access.
The Group's business continuity plan is available from multiple
locations and is regularly updated to cover new services and
deployments.
FX risk
The risk associated with generating revenue and suffering costs
in a currency other than sterling is mitigated naturally within
Ingenta plc as revenues and associated costs are generally
denominated in the same currency. Overall, the Group is a net
generator of USD.
HR risk
In a company with a high proportion of people-based revenue
there is a risk of key staff leaving or being absent through
sickness. This is mitigated by having appropriate notice periods
built into employee contracts and ensuring there is adequate
coverage for all staff roles with no individual solely responsible
for significant revenue generation.
Brexit
Management continue to monitor the UK's exit from the EU and its
implications for the business. It is not anticipated the UK's exit
from the EU will affect software sales and the majority of its
revenue is within the UK and US markets. At present, the main risks
identified are currency fluctuations which have been reviewed
above.
On behalf of the Board.
G S Winner
Chief Executive Officer
1 June 2020
Group Statement of Comprehensive Income
For the year ended 31 December 2019
Restated
Year ended Year ended
31 Dec 31 Dec
19 18
note GBP'000 GBP'000
==================================================== ===== =========== ===========
Group revenue 10,920 12,001
Cost of sales (6,184) (7,258)
Gross profit 4,736 4,743
Sales and marketing expenses (819) (1,074)
Administrative expenses (3,502) (3,948)
Impairment of intangibles and investments (1,663) (896)
Loss from operations 2 (1,248) (1,175)
Finance costs (18) (29)
Loss before income tax (1,266) (1,204)
Income tax 3 (83) 407
Loss for the year attributable to equity holders
of the parent (1,349) (797)
Other comprehensive expenses which will be
reclassified subsequently to profit or loss:
Exchange differences on translation of foreign
operations (4) (31)
Total comprehensive loss for the year attributable
to equity holders of the parent (1,353) (828)
Basic loss per share (pence) 4 (7.98) (4.71)
Dilutive loss per share (pence) 4 (7.98) (4.71)
All activities are classified as continuing
Group Statement of Financial Position
As at 31 December 2019
Restated Restated
31 Dec 31 Dec 1 Jan
19 18 18
===================================== =====
note GBP'000 GBP'000 GBP'000
===================================== ===== ======== ========= =========
Non-current assets
Goodwill 2,661 4,324 4,900
Other intangible assets 158 258 358
Property, plant and equipment 473 583 627
3,292 5,165 5,885
Current assets
Trade and other receivables 3,219 4,627 4,688
Investments classified as held for
sale - - 320
Research and Development tax credit
receivable 3 - 336 180
Cash and cash equivalents 2,600 1,323 2,131
======== ========= =========
5,819 6,286 7,319
Total assets 9,111 11,451 13,204
======== ========= =========
Equity
Share capital 1,692 1,692 1,692
Share Premium - - 8,999
Merger reserve 11,055 11,055 11,055
Reverse acquisition reserve (5,228) (5,228) (5,228)
Share option reserve 23 16 51
Translation reserve (880) (876) (845)
Retained earnings (3,131) (1,477) (9,425)
Total equity 3,531 5,182 6,299
Non-current liabilities
Deferred tax liability 32 52 72
Leases 206 355 455
======== ========= =========
238 407 527
Current liabilities
Trade and other payables 2,459 2,757 3,435
Deferred income 2,883 3,105 2,943
5,342 5,862 6,378
Total liabilities 5,580 6,269 6,905
Total equity and liabilities 9,111 11,451 13,204
Group Statement of Changes in Equity
For the year ended 31 December 2019
Total
Reverse Share attributable
Share Merger acquisition Translation Retained option to owners
capital reserve reserve reserve earnings reserve of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================ ========= ========= ============= ============ ========== ========= ==============
Restated balance at
1 January 2019 1,692 11,055 (5,228) (876) (1,477) 16 5,182
========= ========= ============= ============ ========== ========= ==============
Dividends paid - - - - (254) - (254)
Shares bought back
into treasury - - - - (51) - (51)
Share options granted
in the year - - - - - 7 7
--------- --------- ------------- ------------ ---------- --------- --------------
Transactions with owners - - - - (305) 7 (298)
Loss for the year - - - - (1,349) - (1,349)
Foreign exchange
differences
on translation - - - (4) - - (4)
--------- --------- ------------- ------------ ---------- --------- --------------
Total comprehensive
expense for the year - - - (4) (1,349) - (1,353)
Balance at 31 December
2019 1,692 11,055 (5,228) (880) (3,131) 23 3,531
============================ ========= ========= ============= ============ ========== ========= ==============
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 as
previously
reported 1,692 8,999 11,055 (5,228) (845) (9,424) 51 6,300
Adjustment from
the
adoption of
IFRS16 - - - - - (1) - (1)
----------------- --------- --------- --------- ------------- ------------ ---------- --------- --------------
Restated balance
at
1 January 2018 1,692 8,999 11,055 (5,228) (845) (9,425) 51 6,299
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
(restated) - - - - - (797) - (797)
Foreign exchange
differences
on translation - - - - (31) - - (31)
--------- --------- --------- ------------- ------------ ---------- --------- --------------
Total
comprehensive
expense for the
year - - - - (31) (797) - (828)
Restated balance
at
31 December
2018 1,692 - 11,055 (5,228) (876) (1,477) 16 5,182
================= ========= ========= ========= ============= ============ ========== ========= ==============
Group Statement of Cash Flows
For the year ended 31 December 2019
Restated
Year ended Year ended
31 Dec 31 Dec
19 18
GBP'000 GBP'000
=================================================== =========== ===========
Loss before taxation (1,266) (1,204)
Adjustments for
Impairment of intangibles 1,663 896
Depreciation 372 349
Loss / (profit) on disposal of fixed assets 2 (2)
Interest expense 18 29
Unrealised foreign exchange differences (4) (31)
Decrease in trade and other receivables 1,408 61
Decrease in trade and other payables and deferred
income (499) (346)
Cash inflow / (outflow) from operations 1,694 (248)
Research and Development tax credit received 282 235
Tax paid (49) (6)
=========== ===========
Net cash inflow / (outflow) from operating
activities 1,927 (19)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (248)
Purchase of property, plant and equipment (132) (61)
Net cash used in investing activities (132) (309)
Cash flows from financing activities
Interest paid (4) (8)
Payment of lease liabilities (213) (183)
Dividend paid (254) (254)
Costs of capital restructure - (31)
Costs of buy back of shares into treasury (51) -
Net cash used in financing activities (522) (476)
Net increase / (decrease) in cash and cash
equivalents 1,273 (804)
Cash and cash equivalents at the beginning
of the year 1,323 2,131
Exchange differences on cash and cash equivalents 4 (4)
=========== ===========
Cash and cash equivalents at the end of the
year 2,600 1,323
1. Basis of preparation
The principal accounting policies of the Group are set out in
the Group's 2018 annual report and financial statements. IFRS 16
'Leases' became effective from the 1 January 2019.
IFRS 16 'Leases' replaces IAS 17 'Leases' along with three
Interpretations (IFRIC 4 'Determining whether an Arrangement
contains a Lease', SIC 15 'Operating Leases-Incentives' and SIC 27
'Evaluating the Substance of Transactions Involving the Legal Form
of a Lease').
The adoption of this new Standard has resulted in the Group
recognising a right-of-use asset and related lease liability in
connection with its leased UK Head Office.
The new Standard has been applied retrospectively in line with
IAS 8.
Full disclosure of the transition will be included in the 2019
Financial Statements.
2. Loss from operations
Loss from operations has been arrived at after charging:
Restated
Year ended Year ended
31 Dec 31 Dec
19 18
GBP'000 GBP'000
=============================================== =========== ============
Research and development costs 1,398 1,867
Net foreign exchange loss 37 33
Depreciation of property, plant and equipment
- owned assets 92 12
- leasehold property 122 122
- assets under leases 58 115
Auditor's remuneration 150 101
Restructuring costs 513 840
An analysis reconciling the loss from operations to adjusted
EBITDA is provided below.
Restated
Year ended Year ended
31 Dec 31 Dec
19 18
GBP'000 GBP'000
======================================== =========== ============
Loss from operations (1,248) (1,175)
Add back:
Depreciation and amortisation 372 349
Impairment of intangibles and
investments 1,663 896
Loss / (gain) on disposal of
fixed assets 2 (2)
Foreign exchange losses 37 33
Restructuring costs 513 840
EBITDA before gain / loss on
disposal of fixed assets, foreign
exchange gain / losses, restructuring
costs and gains / losses on
revaluation 1,339 941
3. Tax
Year ended Year ended
31 Dec 31 Dec
19 18
GBP'000 GBP'000
============================================= =========== ===========
Analysis of (charge) / credit in the year
Current tax:
Current research and development tax credit
- UK - 336
Current year State tax - US (49) (5)
Adjustment to prior year charge - UK (54) 56
Deferred tax credit 20 20
=========== ===========
Taxation (83) 407
============================================== =========== ===========
The Group has unutilised tax losses at 31 December 2019 in the
UK and the USA of GBP15.6m (2018: GBP15.0m) and $15.4m (2018:
$15.5m) 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 (2018: $8.7m) of the total unutilised losses at 31
December 2019.
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:
Restated
Year ended Year ended
31 Dec 31 Dec
Reconciliation of tax expense 19 18
GBP'000 GBP'000
=================================================== =========== ============
Loss on ordinary activities before tax (1,266) (1,204)
=========== ============
Tax at the UK corporation tax rate of 19% (2018:
19%) (241) (229)
Expenses not deductible for tax purposes 297 59
Additional deduction for Research and Development
expenditure - (285)
Surrender of losses Research and Development
tax credit refund - 120
Unrelieved UK losses carried forward 149 -
Utilisation of UK losses (110) 79
Utilisation of US losses (103) (81)
Difference in timing of allowances (13) (19)
Adjustment to tax charge in respect of prior
years 104 (56)
Effect of foreign tax rates - 5
Total taxation 83 (407)
==================================================== =========== ============
United Kingdom Corporation tax is calculated at 19% (2018: 19%)
of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
4. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive ordinary share options. Management estimate 685,000
ordinary shares will be issued (2018: 101,333) in respect of share
options. In the current year, this calculation would have an
antidilutive effect on earnings per share so has been ignored.
Restated
Year ended Year ended
31 Dec 2019 31 Dec 2018
GBP'000 GBP'000
============================================== ============= =============
Attributable loss (1,349) (797)
Weighted average number of ordinary shares
used in basic earnings per share ('000) 16,908 16,920
Shares deemed to be issued in respect of
share-based payments 685 101
------------- -------------
Weighted average number of ordinary shares
used in dilutive earnings per share ('000) 17,593 17,021
Basic loss per share arising from both total
and continuing operations (7.98)p (4.71)p
Dilutive loss per share arising from both
total and continuing operations (7.98)p (4.71)p
=============================================== ============= =============
Dividends
On 28(th) June 2019, the company paid a dividend of 1.5 pence
per share to holders of ordinary shares.
Prior to the COVID-19 outbreak, the Directors declared their
intention to pay a dividend in 2020 of at least 1.5 pence per share
(2018: 1.5 pence). Given the current economic uncertainties, the
Board consider it prudent to delay any dividend announcement until
later in the year when a clearer outlook is available.
5. Post balance sheet events
Prior to the COVID-19 outbreak, the Directors declared their
intention to pay a dividend in 2020 of at least 1.5 pence per share
(2018: 1.5 pence). Given the current economic uncertainties, the
Board consider it prudent to delay any dividend announcement until
later in the year when a clearer outlook is available.
Since 31 December 2019, the COVID-19 pandemic has significantly
affected the global economy. Measures taken by governments around
the world to contain the spread of the virus including travel bans,
social distancing and closure of non-essential services have had a
detrimental effect on businesses worldwide. The Group have already
experienced the cancellation of trade shows and other marketing
events which formed part of the sales strategy for 2020. This
combined with a more cautious investment outlook in the wider
economy will cause delays to customer discretionary spend activity
affecting the Group's new revenue targets in 2020. The Ingenta
customer base is relatively diverse and the publishing industry as
a whole has been resilient to date although future impacts are hard
to predict. It would be reasonable to expect that any increase in
severity of the disease may impact on customers and could
potentially cause them to struggle to pay outstanding receivable
balances or go into administration and cancel ongoing services.
The Company has determined that these events are non-adjusting
subsequent events and consequently the financial position and
results of operations for the year ended 31 December 2019 have not
been altered. Furthermore, it is not possible to reliably estimate
the duration and severity of any future consequences of COVID-19
nor the impact they may have on financial statements.
6. 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 2019 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 FLFEDRAILIII
(END) Dow Jones Newswires
June 02, 2020 02:00 ET (06:00 GMT)
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