Interim Results
Ingenta PLC
29 September 2006
Date: Embargoed until 07.00am, Friday 29 September 2006
Contacts: Ingenta
Martyn Rose, Non-Executive Chairman
Simon Dessain, Chief Executive
Tel: 01865 3798000
Website: www.ingenta.com
Hudson Sandler
Alistair Mackinnon-Musson
Nicola Savage
Tel: 020 7796 4133
Email: ingenta@hspr.com
Ingenta plc
INTERIM RESULTS
Ingenta plc is a provider of technology and marketing services to the publishing
and information industries. Ingenta's software and services enable publishers
of professional, scholarly and research material to make their content available
online under a variety of business models including subscription and pay per
view. Ingenta also provides marketing services to help publishers maximise
distribution and revenue from their content.
Ingenta operates three businesses, namely: IngentaConnect
(www.ingentaconnect.com), PCG and the Information Commerce Division - detailed
explanation overleaf.
Ingenta charges recurring fees, in many cases under multi year agreements, for
use of its market-leading technology and services. The Group works with over
10,000 individual publications from around 280 publishers.
The key points are:
• Turnover of £3.1 million (2005: £3.3 million)
• Continued profitability for IngentaConnect and PCG
• Continued investment in ICD division
• Collaborative / acquisition expansion of ICD sought in order to generate
profits
• IngentaConnect article 'pay per view' revenue increased by 16%
• 385 new IngentaConnect titles from 13 new publishers
• PCG marketing services - new activities and increased revenues
• Group loss for the financial period of £(0.5) million (2005: loss £(0.3)
million)
• Second half performance expected to improve over the first half
Commenting Simon Dessain, Chief Executive, said:
'Ingenta operates three business. Two of them, IngentaConnect and PCG, generate
a positive contribution and are growing. The third, our ICD unit, will require
further investment, particularly in a sales force, to start generating profits.
The Board has concluded this will best be achieved by exploring collaborative
opportunities and we expect to finalise this process by the end of the current
year.'
'As in 2005, we expect our second half performance to be an improvement over the
first half.'
Ingenta plc
UNAUDITED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2006
Financial Review
The group saw a 6.0% fall in turnover during the period to £3.1 million,
compared to the first half of last year (2005: £3.3 million), due to reduced
revenues in its ICD division. However, profit margins of 74% (2005: 76%) were
stable. Overheads of £2.9 million in the first half (2005: £2.9 million) were
steady despite cost overruns in our ICD division but when combined with the
lower group turnover resulted in a loss for the period after tax of £(0.5)
million (2005: loss £(0.3) million).
The group had cash resources of £0.1 million at 30 June 2006 (31 December 2005:
£0.6 million). Facilities with the Company's bankers continued to be used as
needed.
Creditors of £4.8 million at 31 December were reduced by £1.0 million over the
first six months, with other balance sheet items generally showing no more than
expected seasonal movements.
Trading during the first half of the financial year has delivered encouraging
results from two of our three operating divisions, as described below, together
with a summary of the activities in each of the operating groups:
IngentaConnect
IngentaConnect (www.ingentaconnect.com) enables publishers of academic or
scientific research to reach an audience beyond their traditional subscriber
bases, for instance it allows free access to paid-up subscribers of a
publication, with other non-subscribers able to purchase individual articles on
a pay per view basis. The Division represents 64% of group revenues (2005: 56%)
and over 10,000 publications are now available via the IngentaConnect platform.
Usage continues to increase, with over 20 million user sessions a month being
regularly delivered. 385 titles from 13 new publishers were added during the
period.
Revenues from pay-per-view document delivery increased during the first half
showing a 16% rise over the same period in the previous year. Our Heron course
pack operation adjusted its business model as a result of changes in
arrangements related to digital article permissions in the UK, resulting in
lower revenues but with a corresponding reduction in direct costs.
Whilst the market for online delivery remains competitive, IngentaConnect
continues to demonstrate competitive strengths with consistent delivery and
technology leadership translating into ongoing delivery of profits.
IngentaConnect won a Hewlett Packard award for an innovative technology research
project, which will result in an improved way of handling publishers' content.
Publisher Communications Group (PCG)
Ingenta's Publisher Communications Group (PCG) continues to enhance its
reputation as a high quality provider of marketing, sales and research services
to academic publishers. During the period the unit worked with six new
publishers and further expanded its European presence as a result of increased
demand. PCG represents 17% of group revenue (2005: 14%).
Information Commerce Division (ICD)
Publishers have a range of complex needs to maximise the value of the content
they create in online environments. This may include increasing awareness and
readership, capturing data about customers, revenue goals or cost targets for
online delivery. All these aims require publishers to have flexible software
tools to re-bundle, re-brand and market their content online and also to create
branded websites through which users can purchase and access this content.
Ingenta provides software to meet these needs, the core of which is Ingenta's
Information Commerce Services (ICS), which is offered to publishers for use by
them. It also provides publication websites created, maintained and run on
behalf of publishers by Ingenta.
Revenues from the ICD unit represent 17% of group turnover (2005: 27%) reducing
in the period as a result of low sales activity. Software deliveries to the
unit's first customer, Institute of Physics Publishing and IMF, were completed
during the first half.
During the period ICD decided to abandon a project to create a new technology
platform in favour of basing our website infrastructure on the robust and proven
technologies that already support IngentaConnect. The costs of the aborted
project and additional expenses relating to the creation of a replacement were
expensed as incurred to the profit and loss account.
Ingenta's Board believes that ICD's products are now at a point where they
require an expanded sales organisation in order to gain the revenue growth that
is required from them. It also acknowledges that further investment in the
division would stretch the resources of the Group as a whole. It has therefore
concluded the best way to generate a return for shareholders on the investment
already made in the ICD unit's product development is through partnership with
another organisation with complementary skills. It is therefore exploring
collaborative or acquisition opportunities to add to the scale of this division.
This process is already under way and a conclusion is expected before the end of
the current year.
Operations and Staff
As outlined Ingenta comprises three activities and the current structure,
created in 2005, is allowing each business to develop independently as befits
their differing business models and individual stages of development.
Group staff numbers were 78 FTE (full time equivalent) at 30 June 2006, down
from 85 at 31 December 2005. The contribution of Ingenta's staff during the
period has again been magnificent. The period has seen many staff acquire
additional responsibilities and also several important promotions have been made
demonstrating the strength of our skill base. The Board would like to thank all
staff for their hard work.
Current Trading and Prospects
Continued progress from our IngentaConnect and PCG operations, which are already
EBITDA profitable and growing, is expected. As we put in place an
infrastructure, either by collaboration or acquisition, to leverage our
investment in ICD products, it should enable the Ingenta Group to achieve
profitability and growth.
A recent review of the new business forecast for the second half, together with
the benefit of lower second half costs as a result of actions already taken,
supports the Board's current business plan and forecast. This enables Ingenta to
maintain its expectation of trading improvements in the second half year as
achieved in 2005.
UNAUDITED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2006
Ingenta plc
Consolidated Profit and Loss Account
For the 6 months ended 30 June 2006
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
£'m £'m £'m
Turnover 3.1 3.3 6.6
Cost of sales (0.8) (0.8) (1.7)
Gross profit 2.3 2.5 4.9
Overheads (2.9) (2.9) (5.5)
Operating loss and loss before tax (0.6) (0.4) (0.6)
Tax 0.1 0.1 0.3
Loss for the financial period (0.5) (0.3) (0.3)
Basic and diluted loss per share (0.3)p (0.2)p (0.2)p
Statement of group total recognised gains and losses
For the 6 months ended 30 June 2006
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
£'m £'m £'m
Loss for the financial period (0.5) (0.3) (0.3)
Currency translation differences on foreign (0.0) (0.0) (0.1)
currency net investments
Total recognised losses for the period (0.5) (0.3) (0.4)
Ingenta plc
Consolidated Balance Sheet
As at 30 June 2006
As at As at As at
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
£'m £'m £'m
Fixed assets
Tangible assets 0.2 0.3 0.2
Investments 0.2 0.2 0.2
0.4 0.5 0.4
Current assets
Debtors 1.2 1.6 2.3
Cash at bank and in hand 0.1 0.3 0.6
1.3 1.9 2.9
Creditors: amounts falling due within one year (3.8) (3.6) (4.8)
Net current liabilities (2.5) (1.7) (1.9)
Total assets less current liabilities (2.1) (1.2) (1.5)
Provisions for liabilities and charges - (0.3) (0.1)
Net liabilities (2.1) (1.5) (1.6)
Capital and reserves
Called up share capital 7.5 7.5 7.5
Share premium account 21.0 21.0 21.0
Merger reserve 11.0 11.0 11.0
Reverse acquisition reserve 12.7 12.7 12.7
Profit and loss account (54.3) (53.7) (53.8)
Equity shareholders' deficit (2.1) (1.5) (1.6)
Ingenta plc
Consolidated Cash Flow Statement
For the 6 months ended 30 June 2006
6 months ended 6 months ended Year ended
30 June 30 June 31 December 2005
2006 2005
(unaudited) (unaudited) (audited)
£'m £'m £'m
Net cash outflow from operating activities (0.6) (1.1) (1.0)
Returns on investments and servicing of finance
Interest and other income received 0.0 0.0 0.0
Interest paid 0.0 0.0 0.0
Interest element of finance lease rentals 0.0 0.0 0.0
__________ __________ __________
Net cash inflow from returns on investments and servicing 0.0 0.0 0.0
of finance
__________ __________ __________
Taxation 0.3 0.5 0.5
__________ __________ __________
Capital expenditure and financial investments
Purchase of tangible fixed assets (0.1) 0.0 (0.1)
__________ __________ __________
Net cash outflow from capital expenditure and (0.1) 0.0 (0.1)
financial investments
__________ __________ __________
Management of liquid resources
Increase in cash placed on short-term deposit 0.0 0.7 0.7
__________ __________ __________
Cash (outflow)/inflow before financing (0.4) 0.1 0.1
__________ __________ __________
(Decrease)/increase in cash in the year (0.4) 0.1 0.1
__________ __________ __________
Ingenta plc
Reconciliation of operating loss to net cash outflow from operating
activities
For the 6 months ended 30 June 2006
As at As at As at
30 June 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
£'m £'m £'m
Operating loss (0.6) (0.4) (0.6)
Depreciation 0.1 0.1 0.2
Decrease in debtors 1.0 0.7 0.2
Decrease in creditors (1.0) (1.3) (0.5)
Decrease in provisions (0.1) (0.2) (0.3)
__________ __________ __________
Net cash outflow from operating activities (0.6) (1.1) (1.0)
__________ __________ __________
Reconciliation of net cash flow to movement in net
(debt)/funds
(Decrease)Increase in cash in the year (0.4) 0.1 0.1
Cash (inflow)/outflow from increase/decrease in 0.0 (0.7) 0.0
debt and lease financing
Cash inflow from decrease in liquid resources 0.0 0.0 (0.7)
__________ __________ __________
Change in net debt resulting from cash flows and (0.4) (0.6) (0.6)
Movement in net funds in year
Net funds at beginning of year 0.3 0.9 0.9
__________ __________ __________
Net (debt)/funds at end of year (0.1) 0.3 0.3
__________ __________ __________
Ingenta plc
Notes to the Unaudited Interim Report
for the 6 months ended 30 June 2006
1. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory financial statements for
the year ended 31 December 2005 with the exception that FRS 20 'Share Based
Payments' has been adopted in the interim financial statements.
In accordance with FRS 20, the fair value of equity-settled share-based payments
is determined at the date of grant and is expensed on a straight-line basis over
the vesting period based on the Company's estimate of the options that will
eventually vest. The adoption of FRS 20 has resulted in a charge to the profit
and loss account of £13,220. The comparative figures have not been restated as
there is no material effect.
2. Publication of Non-Statutory Accounts
The financial information contained in this interim report is unaudited and has
not been reviewed by the auditors. It does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. Statutory accounts for the 12
months ended 31 December 2005 incorporating an unqualified audit report have
been filed with the Registrar of Companies.
3. Basis of EPS Calculation
The basic loss per share has been calculated by dividing the loss for the period
by the weighted number of ordinary shares of 186,207,420 (6 months to 30 June
2005: 186,207,420) in issue during the 6-month period ended 30 June 2006. The
company had no dilutive ordinary shares in issue in any of the periods and there
is therefore no difference between the loss per ordinary share and the diluted
loss per ordinary share. There was no change in the number of shares in issue
during the period.
4. Comparative period
The comparative figures used in this report are for the six-month period ending
30 June 2005. The results for that period have been prepared on the same basis
and under the same accounting policies as those set out in the Group's statutory
financial statements for the year ended 31 December 2005.
5. Reconciliation of movements in shareholders' deficit
Balance at 1 FRS 20 Share Loss for the Balance at 30
January 2006 option charge period June 2006
£'m £'m £'m £'m
Called up share capital 7.5 - - 7.5
Share premium account 21.0 - - 21.0
Share Option Reserve - see note 1 0.0 - - 0.0
Merger reserve 11.0 - - 11.0
Reverse acquisition reserve 12.7 - - 12.7
Profit and loss account (53.8) 0.0 (0.5) (54.3)
Total (1.6) 0.0 (0.5) (2.1)
6. Copies of Announcement
Copies of this announcement will be available on the investors section of the
company's website: http://www.ingenta.com/corporate/company/investors/finan_ann/
or from the company's offices at Unipart House, Garsington Rd, Oxford OX4 2GQ.
- ENDS -
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