REG - Ingenta PLC - Half-year Report
18/09/2024 07:00
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RNS Number : 5839E Ingenta PLC 18 September 2024
18 September 2024
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, announces its unaudited interim
results for the six months to 30 June 2024.
Financial Key Points
· Group revenues of £5.1m (2023: £5.7m)
· 87% of Group revenues recurring in nature (2023: 79%)
· Gross profit margin 48% (2023: 55%)
· Adjusted EBITDA(*) of £0.7m (2023: £1.6m)
· Cash from operations of £0.4m (2023: £0.4m)
· Cash balances of £3.0m (31 December 2023: £2.6m)
· Adjusted earnings per share(**) of 4.43 pence (2023: 9.55 pence)
· Interim dividend of 1.5 pence per share (2023: 1.5 pence)
Operational Key Points
· Content revenue increased by 14% to £1.6m (2023: £1.4m) driven by
efficient and rapid customer deployments and associated recurring revenue
· Commercial revenue decreased by 20% to £3.4m (2023: £4.3m) as a
result of delayed project work and exit of legacy customer business
· 3 significant new contract wins in the second half of the year
with total contract value of £1.9m over 3 to 5 years
· Timing of new business wins versus expected reduction in legacy
business has resulted in lower than expected revenues in H1 and provides some
risk to the achievement of current year end expectations; year end EBITDA
outcome now expected to be £1.8m-£2.0m.
· Group expects project work to increase in the second half of the
year and has already secured significant new business and the Board remains
optimistic about the remainder of the year
(*)Earnings before Interest, Tax, Depreciation and Amortisation is calculated
before foreign exchange differences. See Statement of Comprehensive Income for
reconciliation
(**) Adjusted earnings per share is calculated before taxation and 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 4 November 2024. The ex-dividend date is 3 October 2024
and the associated record date for the interim dividend is 4 October 2024.
Martyn Rose, Chairman of Ingenta plc, commented:
Although significant new business has been won during the year, and further
contract wins are expected, the Group has experienced a slowdown in
implementation of new project revenues over the summer months. As in previous
years, the Group's implementation of new projects on recently released
software platforms is offset by a progressive multi-year reduction in revenues
from legacy services. The recent delays mean that new project work has not
fully offset these revenue reductions and therefore revenues and profits in
the first half of the year are lower than the previous year.
However, the Board is confident that implementation of work already contracted
will result in a stronger performance in both revenues and profits in the
second half of the year. Furthermore, indications from the summer months that
timeframes around new project work may extend further beyond the end of this
financial year will result in additional revenues in 2025. As a result, the
Board expects to achieve EBITDA for the year ended 31 December 2024 between a
range of £1.8m and £2.0m.
Longer term, the Board remains aware of the need to accelerate new business
acquisition in order not just to offset the reduction in revenues from legacy
platforms over the next 18-24 months but also to resume overall growth in
revenues and profits. The Group therefore continues to progress investment
plans in sales and marketing along with that in our professional services
teams, a strategy which has been vindicated by the previously announced £1.9m
of multi-year contracts won in the first half of this year.
Scott Winner, CEO, commented:
Despite the slower start to the year and delayed work from existing clients
during the summer which slowed revenues, significant new wins have been
achieved. These successes demonstrate that the Group's strategy continues to
work and that our products in core growth areas are attractive to the market.
The investments in sales and marketing expertise continues to expand our
customer base, to build a strong pipeline for targeted future wins.
Our products continue to evolve and innovate, leveraging our strong customer
relationships. Our content distribution solution is now capable of
delivering online magazine content in addition to the books and journals
which have historically been the Group's strength, thereby increasing our
addressable market. The first magazine customer was launched earlier in the
year and continues to get positive feedback as well as generating
word-of-mouth referrals upon which the team is capitalising. Our IP product
lines are expanding to incorporate aspects of artificial intelligence to
validate alignment of sales to royalties which will increase accuracy in
royalty processing.
Our sales and marketing efforts continue to reap rewards and continue to add
revenues through our software as a service offerings.
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
Cavendish Capital Markets Limited Tel: 0207 220 0500
Katy Birkin / Callum Davidson
Financial Review
In prior years, the Group has experienced a weighting of non-recurring
revenues in the first half of the year as customers moved ahead with pre
planned project work and, as these projects wound down, they would look to
planning for the subsequent year. Increasingly as we go through 2024, the
Board's view is that this pattern has not repeated itself to the extent
anticipated in that larger projects are taking longer to scope and finalise
and customer decision making has slowed. However, the Group expect significant
levels of work to commence in the second half of the year.
Statement of Comprehensive Income
Revenue for the six months to 30 June 2024 was £5.1m compared to £5.7m in
the prior period. As detailed above and in note 3, these shortfalls were
reflected in the non-recurring consulting services revenue which declined by
£0.5m to £0.7m (2023: £1.2m). Cost of sales increased marginally to £2.7m
(2023: £2.6m) driven by investments made to our professional services teams
to streamline future consulting services work.
As outlined previously, the Group is also investing in its sales and marketing
activity by supplementing the teams with subject matter specialists to
increase new sales activity in both the commercial and content products. This
investment has helped generate the recently announced £1.9m of new business
wins which the Group will be implementing in the second half of the year.
Administrative expense increases have been driven by non-cash foreign exchange
translation differences on intra group balances. As shown in the EBITDA
reconciliation, there was a foreign exchange credit of £142K in the prior
year as opposed to a charge of £28K in the current period.
Statement of Cash Flows and Financial Position
Cash inflow from operations was £0.4m (2023: £0.4m) and with limited tax
exposure due to accumulated tax losses, the Group's cash balances increased to
£3m (2023: £2.6m).
The Group has moved away from purchasing physical equipment with a strategic
focus on cloud-based deployments. The impact of this is a streamlined holding
of property, plant and equipment on the balance sheet and reduced financing
costs related to leases and interest payments. The cash flow statement shows
only £2K of financing costs compared to £125K in the prior period.
The Group's valuation of its available tax losses over a 5 year planning
horizon increased to £1.6m (2023: £1.4m) as indicated by the deferred tax
asset on the balance sheet. This valuation is based on UK tax losses only and
there remains some limited tax exposure on the US business.
Outlook
Evidence from the summer months suggests that the time taken to secure new
business is extending, while the progressive multi-year reduction in revenues
from customers on legacy platforms is continuing. The experience to date is
that new contracts are taking longer to finalise as customers explore many
options before committing to larger projects which in turn delays revenue
recognition. However, the Group expects project work to increase in the second
half of the year and has already secured significant new business in that
respect. The Board therefore remains optimistic about the remainder of the
year.
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 2024 30 June 2023 31 Dec 2023
Note £'000 £'000 £'000
Revenue 3 5,080 5,743 10,825
Cost of sales (2,655) (2,583) (5,429)
Gross profit 2,425 3,160 5,396
Sales and marketing expenses (429) (345) (757)
Administrative expenses (1,379) (1,275) (2,590)
Profit from operations 617 1,540 2,049
Finance costs (2) (10) (17)
Profit before tax 615 1,530 2,032
Tax (26) (22) 267
Retained profit for the period 589 1,508 2,299
Other comprehensive expenses which will be reclassified subsequently to profit
or loss:
Exchange differences on translating foreign operations 28 (165) (190)
Total comprehensive profit for the period 617 1,343 2,109
Basic profit per share - pence 4 4.05 10.37 15.82
Diluted profit per share - pence 4 3.93 10.20 15.50
Adjusted profit per share - pence 4 4.43 9.55 12.77
Adjusted EBITDA reconciliation:
Profit from operations 617 1,540 2,049
Depreciation 29 182 288
Foreign exchange (gain) / loss 28 (142) (168)
Gain on disposal of fixed assets - - -
EBITDA before foreign exchange gains / losses 674 1,580 2,169
Unaudited Condensed Consolidated Interim Statement of Financial Position
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 Dec 2023
Note £'000 £'000 £'000
Non-current assets
Goodwill 2,661 2,661 2,661
Other intangible assets - - -
Property, plant & equipment 65 136 93
Deferred tax 1,622 1,384 1,622
4,348 4,181 4,376
Current assets
Trade and other receivables 5 2,183 2,365 2,185
Cash and cash equivalents 3,006 2,594 2,676
5,189 4,959 4,861
Total assets 9,537 9,140 9,237
Equity
Share capital 1,512 1,512 1,512
Capital redemption reserve 180 180 180
Merger reserve 11,055 11,055 11,055
Reverse acquisition reserve (5,228) (5,228) (5,228)
Translation reserve (460) (463) (488)
Share option reserve 154 131 140
Retained earnings (921) (2,056) (1,510)
6,292 5,131 5,661
Non-current liabilities
Deferred tax liability - 37 -
- 37 -
Current liabilities
Trade and other payables 6 1,252 1,375 1,218
Provisions 150 439 307
Contract liabilities 1,843 2,158 2,051
3,245 3,972 3,576
Total equity and liabilities 9,537 9,140 9,237
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 2024 1,512 180 11,055 (5,228) (488) 140 (1,510) 5,661
Share based payment expense - - - - - 14 - 14
Transactions with owners - - - - - 14 - 14
Profit for the period - - - - - - 589 589
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - 28 - - 28
Total comprehensive income / (expense) for the period - - - - 28 - 589 617
Balance at 30 June 2024 1,512 180 11,055 (5,228) (460) 154 (921) 6,292
Unaudited Condensed Consolidated Interim Statement of Cash Flows
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Profit before tax 615 1,530 2,032
Adjustments for:
Depreciation and amortisation 29 182 288
Share based payment expense 14 14 23
Interest expense 2 10 17
Decrease / (increase) in trade and other receivables 3 (454) (276)
(Decrease) in trade and other payables (147) (1,201) (1,112)
(Decrease) / increase in provisions (157) 300 168
Cash inflow from operations 359 381 1,140
Tax Paid (26) (22) (7)
Net cash inflow from operating activities 333 359 1,133
Cash flows from financing activities
Dividend paid - - (545)
Payment of leases - (115) (192)
Interest paid (2) (10) (17)
Net cash used in financing activities (2) (125) (754)
Cash flows from investing activities
Purchase of property, plant and equipment (1) (16) (80)
Net cash used in investing activities (1) (16) (80)
Net increase / (decrease) in cash and cash equivalents 330 218 299
Cash and cash equivalents at beginning of period 2,676 2,376 2,376
Exchange differences on cash and cash equivalents - - 1
Cash & cash equivalents at end of period 3,006 2,594 2,676
Notes to the Unaudited Interim Report for the six months ended 30 June 2024
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 18 September 2024.
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 2023.
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 2023.
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. Revenue
An analysis of the Group's revenue by activity is shown below:
Six months ended Six months ended
30 June 2024 30 June 2023
£'000 £'000
Licences - 24
Consulting services 674 1,174
Non-recurring revenue 674 1,198
Hosted services 1,816 1,742
Managed services 1,319 1,522
Support and upgrade 1,085 1,096
PCG 186 185
Recurring revenue 4,406 4,545
5,080 5,743
An analysis of the Group's revenue by product type is shown below:
Six months ended Six months ended
30 June 2024 30 June 2023
£'000 £'000
Content products 1,646 1,439
Commercial products 3,434 4,304
5,080 5,743
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 2024 30 June 2023
Attributable profit (£'000) 589 1,508
Foreign exchange loss / (gain) (£'000) 29 (142)
Taxation (£'000) 26 22
Adjusted attributable profit (£'000) 643 1,388
Weighted average number of ordinary basic shares (basic) 14,535,195 14,535,195
Weighted average number of ordinary shares (diluted) 14,990,264 14,784,197
Profit per share (basic) arising from both total and continuing operations 4.05p 10.37p
Profit per share (dilutive) arising from both total and continuing operations 3.93p 10.20p
Adjusted profit per share (basic) arising from both total and continuing 4.43p 9.55p
operations
5. Trade and other receivables
Trade and other receivables comprise the following:
30 June 2024 30 June 2023
£'000 £'000
Trade receivables - gross 1,768 1,920
Less: provision for impairment of trade receivables (53) (48)
Trade receivables - net 1,715 1,872
Other receivables 4 4
Prepayments and unbilled receivables 464 489
2,183 2,365
6. Trade and other payables
Trade payables comprise the following:
30 June 2024 30 June 2023
£'000 £'000
Trade payables 312 274
Social security and other taxes 329 245
Other payables 239 332
Accruals 372 524
1,252 1,375
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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