REG - Ingenta PLC - Half-year Report
11/09/2023 07:00
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RNS Number : 9338L Ingenta PLC 11 September 2023
11 September 2023
Ingenta plc
("Ingenta", the "Company" or the "Group")
Interim Results
Ingenta plc (AIM: ING), a leading provider of world-class software and
services to the global publishing industry, is pleased to announce its
unaudited interim results for the six months to 30 June 2023.
Financial Key Points
· Group revenues increased by 9% to £5.74m (2022: £5.27m)
· 80% of Group revenues recurring in nature (2022: 89%) with
reduction due to growth of consultancy services
· Gross profit margin increased to 55% (2022: 53%)
· Adjusted EBITDA(*) increased by 26% to £1.58m (2022: £1.26m)
· Cash from operations of £0.38m (2022: £1.61m) impacted by
timing of annual renewal cash receipts for 2023 being received at the end of
2022
· Cash balances of £2.59m (31 December 2022: £2.38m)
· Adjusted earnings per share(**) of 9.40 pence (2022: 6.27 pence)
· Interim dividend of 1.5 pence per share (2022: 1.2 pence)
reflecting the Group's progressive dividend policy
Operational Key Points
· Three key contracts signed amounting to approximately £2m over
the next 5 years with revenue due to commence in the second half of the year
· Content revenue increased by 19% to £1.25m (2022: £1.07m)
driven by efficient and rapid customer deployments and associated recurring
revenue
· Commercial revenue increased by 9% to £4.09m (2022: £3.77m) as
a result of a strong order book for change control work
· Sales and marketing teams expanded with strategic focus on new
customer wins
(*)Earnings before Interest, Tax, Depreciation and Amortisation is calculated
before foreign exchange differences and restructuring costs. See Statement of
Comprehensive Income for reconciliation
(**) Adjusted earnings per share is calculated before foreign exchange
differences. See note 4 for reconciliation
Dividend Timetable
The Company is pleased to confirm that an interim dividend of 1.5 pence per
share will be paid on 23 October 2023. The ex-dividend date is 21 September
2023 and the associated record date for the interim dividend is 22 September
2023.
Martyn Rose, Chairman of Ingenta plc, commented:
"The Group has had a strong start to 2023 driven by our comprehensive range of
services that have been carefully developed over the preceding years. It is
pleasing to note that both of our core divisions, Commercial and Content, were
key drivers in the reported revenue increase.
Revenue growth in the period has been generated by additional software
consultancy fees for our existing customer deployments plus further
exploratory work as we scope out potential customer requirements for future
service expansion. It is extremely encouraging to see that we are building on
our reputation as a trusted partner for some very successful businesses.
Previously, we reported on improvements being made to our sales and marketing
efforts to win new business and I am delighted to say that we have achieved
some early success with three key contract wins. These deals are for our
content distribution platform and have associated revenues of £2m over the
next 5 years. The implementation revenues for these deals will commence in the
second half of the year and have secured a significant proportion of the
Group's new sales targets for 2023.
In recognition of these successes, and in line with our progressive dividend
policy, the Board proposes to pay an interim dividend of 1.5 pence per share."
Scott Winner, CEO, commenting on the contract wins:
"The Group has made significant progress in signing new business and these
wins demonstrate the focus in driving the business forward. With the new wins
we are both growing our targets of NGO's and scientific publishers, as well as
adding scholarly magazines, in addition to the media wins in IP management
that we reported earlier. These wins will leverage our quick implementations
to drive ongoing recurring revenues and long-term customer partnerships."
Certain information contained in this announcement would have been deemed
inside information as stipulated under the UK version of the EU Market Abuse
Regulation (2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to time, until
the release of this announcement.
For further information please contact:
Ingenta
plc
Tel: 01865 397 800
Scott Winner / Jon Sheffield
Cenkos Securities plc Tel:
0207 397 8900
Katy Birkin / Callum Davidson
Financial Review
As previously reported, the Group has successfully restructured its
operational base and can now leverage those efficiency gains as new business
is taken on.
Statement of Comprehensive Income
Group revenue increased by 9% to £5.74m (2022: £5.27m) driven by time-based
consultancy work enhancing customer deployments and project work scoping out
potential extensions to ongoing recurring revenue streams. Encouragingly, this
growth has come from both the Commercial and Content divisions which remain
our key focus.
As a result of the operational enhancements, any new revenue can be
efficiently serviced by the Group and this has helped increase gross profit
margins to 55% (2022: 53%). Although sales and marketing expenditure has been
stable, the activity and focus has been refined, hires made, and there will be
additional investments made in the second half of the year as the Group
targets further revenue growth.
Administrative expenses include unrealised foreign exchange gains on
revaluation of intercompany balances of £0.14m (2022: £0.50m loss). After
adjusting for this movement, expenditure is broadly consistent with the prior
period. EBITDA adjusted for unrealised foreign exchange differences on
intercompany balances increased by 26% to £1.58m (2022: £1.26m).
Earnings per share have increased substantially to 10.37 pence (2022: 3.23p)
and reflect the increased profitability of the Group, unrealised exchange
gains on intercompany balances, and also the effect of the £2.2m tender offer
to repurchase 1,796,484 Ordinary shares in the second half of 2022. After
adjusting for the effects of foreign exchange gains and losses, the adjusted
earnings per share increased by 50% to 9.40p (2022: 6.27p).
Statement of Cash Flows and Financial Position
Cash inflow from operations was £0.38m (2022: £1.61m) which was lower than
the prior period due to the acceleration of receipts which normally fall at
the beginning of the financial year being received at the end of 2022. This
had the effect of inflating the 31 December 2022 year end cash balance and
reducing cash generation in the current period. Cash generation around the
year end will remain sensitive to the timing of large receipts from annual
billings and the Group's closing cash balances were £2.59m (31 December 2022:
£2.38m).
The Statement of Financial position remains strong, with no debt other than
leases and a significant deferred tax asset of £1.38m (2022: £1.16m)
relating to the valuation of brought forward tax losses over the coming 5
years. The comparative reduction in share capital from £1,69m to £1.51m
reflects the tender offer mentioned above.
Outlook
Traditionally, the first half of the year is seasonally stronger as customers
commit to their annual budget plans. Whilst we expect progress to continue in
the second half of the year, it is often less predictable as spending plans
can be delayed until the next budgetary cycle. In addition to the 3 new sales
announced in the first half of the year, the Group won another contract in
August for its content distribution platform with initial fees of £0.45m over
the next 6 years. All these new contracts will commence implementation in the
second half of the year and go a long way to securing revenue targets for
2023. On balance, the Board remain confident in the outlook for the year and
expects that EBITDA for the year ended 31 December 2023 will be ahead of
market expectations.
Jon Sheffield
Chief Financial Officer
Unaudited Condensed Consolidated Interim Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
Note £'000 £'000 £'000
Revenue 5,743 5,271 10,451
Cost of sales (2,583) (2,497) (5,348)
Gross profit 3,160 2,774 5,103
Sales and marketing expenses (345) (367) (707)
Administrative expenses (1,275) (1,861) (3,176)
Profit from operations 1,540 546 1,220
Finance costs (10) (10) (21)
Profit before tax 1,530 536 1,199
Tax (22) (8) 260
Retained profit for the period 1,508 528 1,459
Other comprehensive expenses which will be reclassified subsequently to profit
or loss:
Exchange differences on translating foreign operations (165) 478 307
Total comprehensive profit for the period 1,343 1,006 1,766
Basic profit per share - pence 4 10.37 3.23 9.02
Diluted profit per share - pence 4 10.20 3.12 8.94
Adjusted EBITDA reconciliation:
Profit from operations 1,540 546 1,220
Depreciation 182 213 412
Foreign exchange (gain) / loss (142) 496 328
Gain on disposal of fixed assets - - (4)
EBITDA before foreign exchange gains / losses 1,580 1,255 1,956
Unaudited Condensed Consolidated Interim Statement of Financial Position
Unaudited Unaudited Audited
30 June 2023 30 June 2022 31 Dec 2022
Note £'000 £'000 £'000
Non-current assets
Goodwill 3 2,661 2,661 2,661
Other intangible assets 3 - - -
Property, plant & equipment 136 500 302
Deferred tax 1,384 1,163 1,384
4,181 4,324 4,347
Current assets
Trade and other receivables 5 2,365 1,150 1,910
Cash and cash equivalents 2,594 4,413 2,376
4,959 5,563 4,286
Total assets 9,140 9,887 8,633
Equity
Share capital 1,512 1,692 1,512
Capital redemption reserve 180 - 180
Merger reserve 11,055 11,055 11,055
Reverse acquisition reserve (5,228) (5,228) (5,228)
Translation reserve (463) (127) (298)
Share option reserve 131 107 117
Retained earnings (2,056) (1,750) (3,564)
5,131 5,749 3,774
Non-current liabilities
Deferred tax liability 37 88 37
Leases - 77 -
37 165 37
Current liabilities
Trade and other payables 6 1,814 1,856 2,138
Contract liabilities 2,158 2,117 2,684
3,972 3,973 4,822
Total equity and liabilities 9,140 9,887 8,633
Unaudited Condensed Consolidated Interim Statement of Changes in Equity
Share capital Capital redemption reserve Merger reserve Reverse acquisition reserve Translation reserve Share option reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 1,512 180 11,055 (5,228) (298) 117 (3,564) 3,774
Share based payment expense - - - - - 14 - 14
Transactions with owners - - - - - 14 - 14
Profit for the period - - - - - - 1,508 1,508
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - (165) - - (165)
Total comprehensive income / (expense) for the period - - - - (165) - 1,508 1,343
Balance at 30 June 2023 1,512 180 11,055 (5,228) (463) 131 (2,056) 5,131
Share capital Capital redemption reserve Merger reserve Reverse acquisition reserve Translation reserve Share option reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2022 1,692 - 11,055 (5,228) (605) 88 (2,278) 4,724
Share based payment expense - - - - - 19 - 19
Transactions with owners - - - - - 19 - 19
Profit for the period - - - - - - 528 528
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - 478 - - 478
Total comprehensive income / (expense) for the period - - - - 478 - 528 1,006
Balance at 30 June 2022 1,692 - 11,055 (5,228) (127) 107 (1,750) 5,749
Unaudited Condensed Consolidated Interim Statement of Cash Flows
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
£'000 £'000 £'000
Profit before tax 1,530 536 1,199
Adjustments for:
Depreciation and amortisation 182 213 412
Profit on disposal of fixed assets - - (4)
Share based payment expense 14 19 29
Interest expense 10 10 21
(Increase) / Decrease in trade and other receivables (454) 660 (100)
(Decrease) / increase in trade and other payables (901) 170 894
Cash inflow from operations 381 1,608 2,451
Tax Paid (22) (8) (8)
Net cash inflow from operating activities 359 1,600 2,443
Cash flows from financing activities
Dividend paid - - (523)
Payment of leases (115) (135) (258)
Interest paid (10) (10) (21)
Costs of share repurchase - - (2,222)
Net cash used in financing activities (125) (145) (3,024)
Cash flows from investing activities
Purchase of property, plant and equipment (16) (48) (45)
Net cash used in investing activities (16) (48) (45)
Net increase / (decrease) in cash and cash equivalents 218 1,407 (626)
Cash and cash equivalents at beginning of period 2,376 3,006 3,006
Exchange differences on cash and cash equivalents - - (4)
Cash & cash equivalents at end of period 2,594 4,413 2,376
Notes to the Unaudited Interim Report for the six months ended 30 June 2023
1. Nature of operations and general information
Ingenta plc (the "Company") and its subsidiaries (together the "Group") is a
provider of technology and supporting services to content providers and
publishers. The nature of the Group's operations and its principal activities
are set out in the full annual financial statements.
The Company is incorporated in the United Kingdom under the Companies Act
2006. The Company's registration number is 00837205 and its registered office
is Suite 2, Whichford House, Oxford OX4 2JY. The condensed consolidated
interim financial statements were authorised for issue by the Board of
Directors on 11 September 2023.
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 404 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 December 2022,
prepared under IFRS as adopted by the European Union, have been filed with the
Registrar of Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under section 498 (2) or section
498 (3) of the Companies Act 2006.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements are for
the six months ended 30 June 2023. They have been prepared following the
recognition and measurement principles of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2022.
These condensed consolidated interim financial statements have been prepared
on the going concern basis under the historical cost convention and have been
prepared in accordance with the accounting policies adopted in the last annual
financial statements for the year ended 31 December 2022.
The accounting policies have been applied consistently throughout the Group
for the purposes of preparation of these consolidated interim financial
statements.
A detailed set of accounting policies can be found in the annual accounts
available on our website, www.ingenta.com (http://www.ingenta.com) or by
writing to the Company Secretary at the registered office as above.
3. Goodwill and Intangibles
Full details of the Group's policies on Goodwill and Intangibles is presented
in the financial statements for the year ended 31 December 2022.
4. Profit per share
Basic profit per share is calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
For diluted profit per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares.
Six months ended Six months ended
30 June 2023 30 June 2022
Attributable profit (£'000) 1,508 528
Less foreign exchange (gain) / loss (£'000) (142) 496
Adjusted attributable profit (£'000) 1,366 1,024
Weighted average number of ordinary basic shares (basic) 14,535,195 16,331,679
Weighted average number of ordinary shares (diluted) 14,784,197 16,933,230
Profit per share (basic) arising from both total and continuing operations 10.37p 3.23p
Profit per share (dilutive) arising from both total and continuing operations 10.20p 3.12p
Adjusted profit per share (basic) arising from both total and continuing 9.40p 6.27p
operations
5. Trade and other receivables
Trade and other receivables comprise the following:
30 June 2023 30 June 2022
£'000 £'000
Trade receivables - gross 1,920 834
Less: provision for impairment of trade receivables (48) (101)
Trade receivables - net 1,872 733
Other receivables 4 4
Prepayments and unbilled receivables 489 413
2,365 1,150
6. Trade and other payables
Trade payables comprise the following:
30 June 2023 30 June 2022
£'000 £'000
Trade payables 274 299
Social security and other taxes 245 337
Other payables 332 522
Accruals 963 698
1,814 1,856
7. Contingencies and commitments
There were no contingencies or commitments at the end of this or the
comparative period.
8. Post balance sheet events
There were no material events subsequent to the end of the interim reporting
period that have not been reflected in the interim financial statements.
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