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

Six months ended

Unaudited

Six months ended

Audited

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

30 June 2024

Unaudited

30 June 2023

Audited

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

Six months ended

Unaudited

Six months ended

Audited

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 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 operations


4.43p


9.55p

 

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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