Interim Results

Imaginatik PLC
14 November 2007

14 November 2007



                                 Imaginatik Plc

                        ('Imaginatik' or the 'Company')

          Interim Results for the Six Months Ending 30 September 2007



Imaginatik plc (AIM: IMTK),a leading provider of Innovation and Collaborative
Problem-Solving software and processes, announces its Interim Results for the
six months ended 30 September 2007.



Financial Highlights

     
•    Turnover of £1.15m (2006: £1.27m)

•    Operating loss of £469,000 (2006: operating profit £155,000)

•    Increase of recurring revenue on an annualised basis to £1.4m (2006: £0.9m)
     
•    Current debtors of just over £1m (2006: £564,000), majority receivable by
     31 December 2007

•    Cash at bank and in hand of £108,000 (2006: £218,000)




Corporate Highlights
     
•    Signing of global reselling agreement with IBM

•    Addition of eight blue chip clients five of whom were converted from pilot
     programmes to full annual licence fee paying customers, including BSkyB and
     Xerox

•    Total number of annual licence customers at period end was 43 (2006: 35)

•    Total number of active customers on pilot programmes at period end was 15
     (2006: 12)

•    Product enhanced to better support blue chip enterprise customers



Chief Executive, Mark Turrell commented: 'Imaginatik is still in the early
stages of its development. It is exciting to see the benefits of our strategy
beginning to emerge. We are on course to make sound progress this year and there
are clear signs that momentum in the innovation market is increasing, which will
drive our future growth. Therefore, with the securing of further multi-year
contracts and increased investment in strategic partnerships, such as IBM, we
believe the future for the Company is promising.'



For further information please contact:

Imaginatik plc                                       Tel: [phone]
Mark Turrell, CEO / Shawn Taylor, CFO

WH Ireland                                           Tel: [phone]
Tim Cofman / Katy Birkin

ICIS                                                 Tel: [phone]
Tom Moriarty / Caroline Evans Jones


Chairman's statement



As was indicated at the time of our AGM statement on 27th July 2007 sales were
lower than were expected and the loss has weakened our balance sheet.  Whilst
the market is at an early stage of development the investment by major
corporations in collaborative infrastructures within their organisations is
confirmation that demand for our technology and methodology will grow.  Of
particular note are the conversion of many pilot customers on to long-term
contracts and the winning of some impressive new blue-chip customers.



Whilst an exciting position to be in, we also have to be aware of the risks that
can face companies in emerging markets and as such we are keeping a firm control
on costs and seeking ways in which to attack the market in the most cost
effective manner possible.  The relationship with IBM is an example of this and,
being a small company with limited sales and marketing resources, we anticipate
that partnership with companies that extend our market penetration will be a
central part of our growth strategy.



Given our market position and the potential growth of the sector I look forward
to the future with confidence. I would like to thank the management and all
those at Imaginatik for their continued commitment and hard work that has driven
the Company to date.





Chief Executive's Review



The six months ended 30th September 2007 have seen progress in the development
of Imaginatik. The strategy that the Board implemented towards the beginning of
this calendar year to focus on the closing of larger multi-year contracts with
customers, combined with securing strategic partnerships contributed to a slow
start in Q1 of this year, but it has now started to bear fruit and we
experienced far better sales in Q2. The business is currently negotiating a
number of substantial contracts, the timing of which remains uncertain and our
sales pipeline is strong. During the period, the Company has achieved major
contract wins with blue chip clients including BSkyB, Fireman's Fund (a division
of Allianz), Kellogg and Xerox. Each of these represents a six figure multi-year
contract and exemplifies the type of business which will drive the growth of
Imaginatik.



While this strategy represents a significant opportunity for the future growth
of Imaginatik, the investment in time and capital that this has required has
resulted in lower revenues than the same period last year. However, with a large
proportion of licence fees on our recurring revenue base falling to be accounted
for in the second half of the year, we are still confident of achieving a
successful outcome for the year. We are encouraged by the rise in the recurring
revenue base, which has risen 50% from last year to over £1.4m on an annualised
basis. These revenues, which comprise annual license, maintenance and hosting
fees, help underpin our overheads and provide a solid platform from which the
Company can grow.



Financial Review

Turnover for the six months ended 30th September 2007 fell 9.4% to £1.15m (2006:
£1.27m). This was largely due to the greater focus on securing larger deals and
strategic partnerships and a de-emphasis from small projects. We are confident
that this is in the best long-term interests of both the Company and its
shareholders. We have therefore seen an operating loss in this period of
£469,000, down from a profit of £155,000 in 2006. The revenue split between the
geographies was 75% USA vs. 25% Rest of World (2006: 93% USA vs. 7% Rest of
World).



Current debtors stand at just over £1m, the majority of which are expected to be
received by the end of December 2007. The Company has deferred revenue of
£500,000, most of which will be released into the P&L account in the second half
of the financial year. The increase in costs is primarily due to an increase in
staff costs - average headcount during the period was 32 (2006: 23). Cash in
hand at the end of the period was £108,000. With the expected increase in
revenues in H2, the Company is expecting to be profitable in the second half of
the year. Looking at the balance sheet, net total equity attributable to
shareholders amounted to £179,000 in comparison to £611,000 as at 31 March 2007
reflecting the reported loss for the period.



Business and New Customers

The Company is pleased to report impressive progress in its existing customer
business with an additional eight new annual license paying customers, most of
which were converted from pilot projects. All of these clients are blue chip
companies and represent significant revenue sources for Imaginatik. We have 15
existing pilot programmes ongoing at the period end, and as we have already
shown with our ability to convert these programmes into full implementations, we
are confident of closing more multi-annual deals to boost revenues further.



In terms of expanding existing customer revenue, we are also performing well
with nearly 20% of all new business coming from existing clients. This is an
excellent endorsement of our products and comes as a direct result of our
extremely high customer satisfaction levels. We have proven that once a product
of ours is in operation, the opportunities to up sell to customers become
significant. In addition, we have put in place contracts that make it easy for
our customers to buy additional licences after the first contract is signed.



During the period, many customers have reported the success of the Company's
technology, examples of which include:

-    One of the world's leading providers of IT hardware and software looking 
     for ideas from its employees as to how they can reduce its carbon 
     footprint.

-    One of the world's top 5 pharmaceutical companies managing its 
     collaboration with the Scripps Research Institute for continuous review of 
     scientific papers using our Open Innovation module.

-    One of the world's leading consumer products companies involving its 
     employees in the creation of new brand names.


Our list of contracted clients has expanded to include Allianz, Baker Hughes,
Bayer, Blue Cross Blue Shield, Capital One, Cargill, Carlson, Chevron, Coca-Cola
Company, Computer Science Corporation, Dow Chemical, Eastman Chemical, General
Electric, Goodyear, Grace Chemicals, Hallmark, Henkel, Hewlett-Packard, IBM,
IPSOS Group, Kellogg, KPMG, Kraft, Lexmark, Merck, Merrill Lynch, Nokia, Pfizer,
Royal Mail, Solvay, The Hartford, Weyerhaeuser, Whirlpool and Xerox.



Partners

In order to accelerate our global growth and extend our market reach, we are
seeking to engage with blue chip partners to act as resellers of our technology,
in combination with their consulting services. Over the next few years our goal
is to see about 20% of total revenues derived from the partner channel.



The Master Reseller Agreement we signed with IBM in August of this year is an
excellent endorsement of the quality of our offering. We have since trained and
enabled 30 IBM consultants from the UK, USA, Australia, Sweden and Germany to
sell our technology as part of a broader innovation based engagement. Following
this agreement, we closed our first deal with a tier one US Investment Bank and
believe that the potential opportunities through this partnership are
significant.



Products and Services

We continue to develop our software to ensure that we offer innovative and
relevant products to our client base. During November 2007, the Company will
release Version 8 of Idea Central, an improved version of our software that taps
into recent trends such as the social networking phenomenon and the Web 2.0 user
experience. The release includes new reporting tools and offers significantly
enhanced configurability of the core software. A proportion of the investment in
this development has been co-funded by clients, a strong demonstration of their
ongoing belief in our solutions.



We have made further investment in upgrading our server infrastructure in order
to support the growing size of our hosted customer implementations and allow for
a higher number of concurrent users.

Market/Competition

Imaginatik remains one of the only proven enterprise-level vendors of technology
solutions for Idea Management. The market continues to be relatively fragmented
and we would expect to see consolidation increase over the coming years.



Whilst the Idea Management market is still in its infancy, as companies face the
ever increasing problem of finding new ways to innovate, we are confident that
it will continue to grow significantly. We expect two of the biggest growth
industries to be in pharmaceuticals and banking; industries which are currently
seeing increased competition and regulation and which intrinsically have high
levels of knowledge and expertise locked within their employee base. We are
actively seeking opportunities in these areas.



Outlook

Following the IPO at the end of last year, Imaginatik has continued to achieve
good progress in the development of its market position. The Company is still in
the early stages of its development and it is exciting to see the benefits of
our strategy beginning to emerge. Although the Company has made an operating
loss over the period, it has made a strategic change to its business model, and
the benefits of this change are starting to emerge.



The market is continuing to have a greater appreciation of the business benefits
that can be derived from tapping into the 'collective genius' within
organisations. Therefore, with the securing of further multi-year contracts and
increased investment in strategic partnerships, such as IBM, we believe the
future for the Company is promising.







Condensed unaudited consolidated interim income statement



For the six months ended 30 September 2007

                                                                                 6 months   6 months    Year to 
                                                                               to 30 Sept to 30 Sept   31 March
                                                                                     2007       2006       2007
                                                                          Note      £'000      £'000      £'000




Revenue                                                                             1,151      1,272      2,492
Cost of sales                                                                        (68)       (70)      (183)
Gross profit                                                                        1,083      1,202      2,309

Administrative expenses                                                           (1,552)    (1,047)    (3,353)
Analysed as:
         Administrative expenses before exceptional items                         (1,552)    (1,047)    (2,741)
         Exceptional items                                           3                  -          -      (612)

Operating (loss)/profit before financing costs                                      (469)        155    (1,044)

Analysed as:
         Operating (loss)/profit before financing costs and exceptional items       (469)        155      (432)
         Exceptional items                                                              -          -      (612)
Operating (loss)/profit before financing costs                                      (469)        155    (1,044)

Financial expenses                                                                    (1)       (57)       (85)
(Loss)/profit before tax                                                            (470)         98    (1,129)

Income tax expense                                                                      -          -          -
(Loss)/profit for the period                                                        (470)         98    (1,129)

Basic and diluted earnings per share (p)                             4             (0.40)      6,144     (2.43)



All amounts are attributable to equity holders of the parent, and all arise from
continuing operations.  No amounts were recognised directly in equity, and
therefore no separate statement of recognised income and expense has been
presented.





Condensed unaudited consolidated interim balance sheet


                                                                                      30 Sept   30 Sept  31 March
                                                                                         2007      2006      2007
                                                                               Note      £000      £000      £000
Assets
       Property, plant and equipment                                                       87        20        92
       Intangible assets                                                                  117         -       208
Total non-current assets                                                                  204        20       300

       Trade and other receivables                                                      1,090       650       798
       Cash and cash equivalents                                                          108       218       862
Total current assets                                                                    1,198       868     1,660
Total assets                                                                            1,402       888     1,960

Equity
       Issued capital                                                                      73         -        73
       Share premium                                                                    1,690         -     1,690
       Retained earnings                                                              (1,584)     (372)   (1,152)
                                                                                  6
Total equity attributable to equity holders of the parent                                 179     (372)       611

Liabilities
       Interest-bearing loans and borrowings                                                -       105        39
Total non-current liabilities                                                               -       105        39

       Interest-bearing loans and borrowings                                               25       479        27
       Trade and other payables                                                         1,198       676     1,283
Total current liabilities                                                               1,223     1,155     1,310
Total liabilities                                                                       1,223     1,260     1,349
Total equity and liabilities                                                            1,402       888     1,960





Condensed unaudited consolidated interim statement of cash flows



For the six months ended 30 September 2007
                                                                              Note  6 months  6 months   Year to
                                                                                       to 30     to 30  31 March
                                                                                   Sept 2007 Sept 2006      2007
                                                                                        £000      £000      £000
Cash flows from operating activities                                                   (699)       163     (378)
           7
Net interest paid                                                                        (1)      (53)      (97)
Net cash from operating activities                                                     (700)       110     (475)

Cash flows from investing activities
Acquisition of property, plant and equipment                                            (12)      (17)     (102)
Acquisition of intangible fixed assets                                                     -         -      (55)
Net cash from investing activities                                                      (12)      (17)     (157)

Cash flows from financing activities
Net proceeds from the issue of share capital                                               -         -     1,473
Repayment of borrowings                                                                 (41)      (17)     (121)
Net cash from financing activities                                                      (41)      (17)     1,352

Net increase in cash and cash equivalents                                              (753)        76       720
Cash and cash equivalents at 1 April                                                     862       142       142
Cash and cash equivalents at 30 September                                                108       218       862




Notes to the unaudited condensed consolidated interim financial statements



1.      Background

Imaginatik plc (the 'Company') is a company domiciled in the United Kingd om.
The condensed consolidated interim financial statements of the Company for the
six months ended 30 September 2007 comprise the Company and its subsidiary
(together referred to as the 'Group').



The condensed consolidated interim financial statements were authorised for
issuance on 14 November 2007.



The interim financial statements are not statutory accounts for the purposes of
S240 of the Companies Act 1985. The Financial Information for the year ended 31
March 2007 is based on the statutory accounts for the financial year ended 31
March 2007 restated for the effects of the adoption of International Financial
Reporting Standards in issue and adopted for use in the European Union ('IFRSs
'). The statutory accounts, on which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies. The half-year figures, which
are for the 6 month period ended 30 September 2007, have not been audited.



2.      Basis of preparation

The financial statements are presented in pounds sterling, rounded to the
nearest thousand, unless stated otherwise. They are prepared on the historical
cost basis.



These condensed unaudited consolidated interim financial statements have been
prepared on the basis of IFRSs that are effective or available for early
adoption at the Group's first IFRS annual reporting date, 31 March 2008. Based
on these IFRSs, the Board of Directors have made assumptions about the
accounting policies expected to be adopted when the first IFRS annual financial
statements are prepared for the year-ended 31 March 2008.



The IFRSs that will be effective or available for voluntary early adoption in
the annual financial statements for the period ended 31 March 2008 are still
subject to change and to the issue of additional interpretation(s) and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period that are relevant to this interim financial information will
be determined only when the first IFRS financial statements are prepared at 31
March 2008.



The preparation of the condensed consolidated interim financial statements in
accordance with IFRSs resulted in no significant changes to the accounting
policies as compared with the most recent annual financial statements prepared
under previous GAAP. The accounting policies have been applied consistently to
all periods presented in these condensed consolidated interim financial
statements. They also have been applied in preparing an opening IFRS balance
sheet at 1 April 2006 for the purposes of the transition to IFRSs, as required
by IFRS 1. The transition from previous GAAP to IFRSs had no impact on the net
assets, results or cash flows reported previously by the Group.



The accounting policies have been applied consistently throughout the Group for
purposes of these condensed unaudited consolidated interim financial statements.



3.      Exceptional items

The exceptional items in the year ended 31 March 2007 comprise £611,930 of staff
costs. Certain directors and staff were issued shares upon the flotation of the
company.  Those shares have been accounted for as an equity-settled share-based
transaction in accordance with IFRS 2 'Share-based Payment'.  The exceptional
staff costs include the fair value of the shares issued together with the
related national insurance charge and other associated costs.



4.      Earnings per share



Basic earnings per share

The calculation of basic earnings per share for the six months ended 30
September 2007 was based on the loss attributable to ordinary shareholders of
£470,463 (six months ended 30 September 2006: profit of £98,318; year ended 31
March 2007: loss of £1,128,976) and a weighted average number of ordinary shares
outstanding during the six months ended 30 September 2007 of 116,601,225 (six
months ended 30 September 2006: 1,600; year ended 31 March 2007: 46,456,587),
calculated as follows:



Weighted average number of ordinary shares
                                                                Note     6 months to 6 months to          Year to
                                                                             30 Sept     30 Sept         31 March 
                                                                                2007        2006             2007
Shares in issue at the beginning of the period                     a     116,601,226       1,600            1,600
Effect of shares issued in the period                                              -           -       46,454,987
Weighted average number of ordinary shares for the period                116,601,226       1,600       46,456,587



Note a: Adjusted for the share split in October 2006.



Diluted earnings per share

There were no share options or other dilutive instruments in place in the period
ended 30 September 2006.  The options in place during the period ended 30
September 2007 and during the year ended 31 March 2007 are considered to have an
anti-dilutive effect.  Therefore basic and diluted earnings per share are the
same for each of the three periods.



5.      Segment reporting

Segment information is presented in the condensed consolidated interim financial
statements in respect of the Group's geographical segments, which are the
primary basis of segment reporting. The geographical segment reporting format
reflects the Group's management and internal reporting structure.



Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.



Geographical segments

The Group's operations comprise the following main geographical segments,
determined on the basis of the location of customers:


     United States of America
     The rest of the world


                                                                                     6 months 6 months      Year 
                                                                                        to 30    to 30     to 31 
                                                                                         Sept     Sept     March
                                                                                         2007     2006      2007
                                                                                         £000     £000      £000
Segment revenue
United States of America                                                                  861    1,178     2,346
Rest of the world                                                                         290       94       145
                                                                                        1,151    1,272     2,491

Segment result
United States of America                                                                (401)       87     (271)
Rest of the world                                                                        (69)       11     (858)
                                                                                        (470)       98   (1,129)


6.      Reserves

                                                                                     6 months 6 months      Year 
                                                                                        to 30    to 30     to 31 
                                                                                         Sept     Sept     March
                                                                                         2007     2006      2007
                                                                                         £000     £000      £000

Retained earnings
At the beginning of the period                                                        (1,152)    (470)     (470)
(Loss)/profit for the period                                                            (470)       98   (1,129)
Share-based payments                                                                       38        -       447
At the end of the period                                                              (1,584)    (372)   (1,152)

Share premium
At the beginning of the period                                                          1,690        -         -
Shares issued in the period, net of expenses                                                -        -     1,690
At the end of the period                                                                1,690        -     1,690


7.      Cash flows from operating activities


                                                                                     6 months 6 months      Year 
                                                                                        to 30    to 30     to 31 
                                                                                         Sept     Sept     March
                                                                                         2007     2006      2007
                                                                                         £000     £000      £000

Net (loss)/profit                                                                       (470)       98   (1,129)
Depreciation of tangible fixed assets                                                      18        5        19
Amortisation of intangible fixed assets                                                    91        -         -
Net interest expense                                                                        1       57        85
Share-based payment expense                                                                38        -       447
(Increase)/decrease in trade and other receivables                                      (292)    (178)     (320)
Increase/(decrease) in payables                                                          (85)      181       520
Net cash from operating activities                                                      (699)      163     (378)




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