ABAL.L Regulatory News (ABAL)

15 Dec 2006 07:58

Imaginatik PLC15 December 2006 IMAGINATIK PLC ("IMAGINATIK" OR THE "COMPANY") FIRST DAY OF DEALINGS Imaginatik plc (AIM: IMTK), a leading provider of software and services to helpcompanies build an infrastructure for sustainable innovation, announces itsfirst day of dealings of its Ordinary Shares on AIM. The Company has raised £1.5 million net of expenses via a Placing at 7.5p pershare, to fund, inter alia, the addition of further sales executives, marketingresources and implementation staff in both the US and UK, which will enable theCompany to take advantage of the expanding market for its products. Overview of the Company • Founded in 2000 by Mr. Mark Turrell, CEO and Dr. Yvonne Lindow, VP of Operations, Imaginatik has operations in the US, UK and Germany and sells to predominantly medium to large-scale corporations. • Imaginatik and its founders have developed a software-based process to enable corporations to facilitate innovations across their operations. The Company's core product is "Idea Central", a software package that helps businesses to innovate systematically across the organisation. • Imaginatik's revenues have grown from £0.58 million in the year ended 31 March 2004 to £1.4 million in the year ended 31 March 2006. In the six months to 30 September 2006 sales have grown to £1.3 million, a 200 per cent increase on the equivalent period in the previous year. The Company's pipeline of prospects at the end of August 2006 was six times larger than it was at the end of November 2005. • The Company has established a strong client base in the US as well as a number of clients in Europe, ranging across a number of industry sectors, and is seeing significant growth in its business. Clients of Imaginatik include: Pfizer Inc., Hewlett-Packard, Weyerhaeuser Corporation, Chevron Texaco Global Lubricants and Cargill Inc. • According to a February 2005 industry report by IDC Corporation, the global innovation market is forecast to grow at a compound annual growth rate of 35 per cent over the next few years. Mr. Mark Turrell, CEO and Co-founder of Imaginatik commented: "Innovation is now acknowledged as being a key factor in achieving long-termgrowth. As market leaders in the process of innovation, some of the world'slargest companies are now turning to Imaginatik to help them build aninfrastructure for sustainable innovation which reaches across their entireorganisation. We believe our first mover advantage, strong client base oflargely blue chip organisations and award-winning well developed product line,mean we are well positioned to capitalise on the expected growth of thismarket." For further information, please contact: Imaginatik plc Tel: 020 7917 2975Mark Turrell, CEO / Shawn Taylor, CFO WH Ireland Tel: 0121 616 2101Tim Cofman / Katy Birkin ICIS Tel: 020 7651 8688Tom Moriarty / Caroline Evans-Jones Placing statistics Placing Price 7.5pNumber of Ordinary Shares being issued under the Placing 27,793,345Gross proceeds of the Placing £2.1 millionEstimated net proceeds receivable by the Company £1.5 millionNumber of existing Ordinary Shares prior to the Placing 80,000,000Number of Ordinary Shares in issue immediately following Admission 116,601,226Market capitalisation of the Company at the Placing Price £8.7 million BACKGROUND ON THE COMPANY Imaginatik focuses on the provision of innovation management processes to mediumand large-scale organisations. It offers businesses a comprehensive solution fortheir innovation and idea management requirements, consisting of leadingsoftware products and related consulting services. Imaginatik's approachdelivers tools that focus on using the employees, customers, suppliers and otherstakeholders in the enterprise to address relevant business issues, generate newsources of revenue and deliver cost reductions. The Market The global innovation market is growing quickly. According to a February 2005industry report by IDC Corporation, the market is forecast to grow at a compoundannual growth rate of 35% over the next few years. A 2005 Bain & Company surveyfound that 86% of executives said that innovation is more important than costreduction for long-term success and a survey by PriceWaterhouseCoopers in March2005 found that two-thirds of Chief Executive Offices from America's fastestgrowing private companies reported that innovation is an organisation-widepriority. Innovation impacts many types of organisations - in both the private and thepublic sector. The European Union has for a number of years funded innovationinitiatives and most EU governments now have innovation mandates. The EuropeanCommission announced on 12 October 2005 an action plan in a bid to boostinnovation in the 25-nation bloc. Its focus is on providing the best conditionsfor private sector innovation and research. Idea Central The Company's core software product is Idea Central; the software won the BasexAward for Excellence, a prestigious industry award, for being the leading Ideaand Innovation package in the marketplace. In addition, Idea Central wasidentified by KMWorld, an industry publication, as being "a trend settingproduct" in September 2005 and again in September 2006. The software may be applied to many business operations, across a variety ofindustries and in many cultures and countries. The market for Imaginatik'sproducts is therefore wide, with no requirement to restrict the sales andmarketing efforts to specific industries or functions. The software ismulti-lingual, configurable, can be deployed quickly and is designed to keep theneed for custom modifications to a minimum. Hosted Service Imaginatik provides hosting facilities for the software to assist clients who donot wish to install the software on their own systems. The infrastructure isprovided and managed by a third party in a separate facility. Approximately twothirds of Imaginatik's software implementations are delivered as a hostedservice. Generally, the 'Software As A Service' (SaaS) model is expected to growrapidly. According to Gartner Group, a leading technical research house, 33 percent of all corporate applications will be hosted in some form outside of acompany's internal IT systems by 2009. Many of Imaginatik's clients favour thehosted approach because of the security features offered by the serviceprovider. Results Clients have reported significant success as a result of their relationship withImaginatik. For instance, Georgia Pacific deployed the Imaginatik software in2003 and various ideas garnered from its employees successfully reduced thecosts of manufacture of one component part alone by $1.2 million per annum. Inaddition, Grace Chemical's manufacturing division has harvested over 2,500 newideas for improvements, yielding 76 new products and 67 distinct improvements.It estimates that their new ideas have increased revenues by as much as $3million per annum. Revenue Model Imaginatik's sources of revenue comprise of licence fees, maintenance fees,hosting fees and consulting services. Most clients buy the licence for an IdeaCentral environment, pay for maintenance and hosting on an ongoing annual basisand also order a package of innovation consulting services. The annual licencehas become a popular choice, ensuring a significant amount of contractedrecurring revenue for future years. Imaginatik's goal is to generate at least 65per cent of its revenue from licence, hosting and maintenance fees with theremainder arising from consulting services. Strategy Imaginatik's strategy is to expand the market for innovation management inmedium to large companies in its primary geographic markets of the US andEurope. Imaginatik intends to consolidate its industry lead in this emergingmarket and to leverage the Company's core advantages. The Directors believe thatthese are as follows: • a market leader in a fragmented market; • existing blue chip client base; • well established and award-winning technology platform; • recognised industry expertise; and • highly motivated, capable team. Imaginatik intends to continue to develop both its proprietary technology andmethods of exploiting the underlying technology, combined with broad industryand functional knowledge of innovation, to provide quick-to-implement, highvalue solutions. Imaginatik aims to build strong client relationships that have the potential toprovide long-term regular repeat business. Each client has the potential toprovide a source of recurring licence fees, hosting fees, support andmaintenance fees and services revenue. The net proceeds of the Placing are intended to be used to continue its growthand take advantage of the expanding market for its products, by hiring furtherstaff in all areas of the Company in both the UK and the US. The Directors believe that the Placing and Admission will also increase thecorporate profile of the Company, enable Imaginatik to incentivise and retainkey staff, and afford increased flexibility in financing the growth of thebusiness and any possible acquisitions in the longer-term. Directors Howard Cleveley Marshall (Non-executive Chairman, aged 63, British) Howard is a graduate mathematician and holds a Masters Degree in BusinessAdministration from London Business School. He was the Chairman and ChiefExecutive of Bullough plc from 2001 to 2003, and between 1989 and 2000, ChiefExecutive of Ash & Lacy plc. Howard has served at main board level within UKpublic companies for 17 years. Howard is a non-executive Director of Hill &Smith Holdings plc, an infrastructure engineering company involved in transportand construction industries. He is also a governor of the University of CentralEngland, Heart of England Tourist Board and Chairman of Orchestra of the Swan.Mark Clifford Turrell (Chief Executive Officer, aged 36, Canadian) Mark is a co-founder of Imaginatik and the main shareholder. He has advised over300 companies on innovation management and related topics of knowledgemanagement and collaborative technologies. In 2001, he founded the ImaginatikResearch organisation which is dedicated to fundamental research in corporateinnovation. Mark is a frequent speaker on innovation and idea management and is widelyrecognised as a leading authority in the field of idea management, havingwritten numerous magazine articles and papers. He has been an expert guest onCNN, CNBC and CNET Radio. Mark is also the author of "Deployment and Beyond", anexecutive guide to implementing innovation applications. Mark has a BSc in Business from Cass School of Business. He was has lectured atPenn State University and he also lectures occasionally at several businessschools including Cass School of Business and Harvard Business School. Shawn Karl Taylor FCA (Chief Financial Officer, aged 44, British) Shawn joined Imaginatik in September 2005 and maintains responsibility forfinancial systems and processes. Shawn also has responsibility for the routinefinancial controls, management accounting, forecasting and budgeting procedures,treasury management, foreign exchange control and corporate governancecompliance. He has 8 years' experience as a public company CFO and has ledcompanies through growth phases having previously been Chief Financial Officerof HIT Entertainment Plc from 1998 to 2001 and Content Film Plc from 2001 to2004. Andrew Karl Wainwright (Chief Technical Officer, aged 39, British) Andrew manages hosting operations, client support, pre-sales technical supportand internal I.T. He is responsible for creating Imaginatik's hosted services.His background includes 12 years with IBM from 1988 to 2000, where he wasEuropean Manager for Hosted Services. Andrew has written three technical bookson managing hosted systems, and has been an IT management consultant. Andrew hasan MA in Mathematics from the University of Cambridge. Andrew joined Imaginatikin November 2001. Paul Gilmer Morland ACA (Non-executive Director, aged 46, British) Paul is the Software and Computer Services analyst at Arbuthnot Securities.Having qualified as a Chartered Accountant with PricewaterhouseCoopers in 1985,Paul spent three years at Schroder Investment Management. He then held variousaccounting roles in industry including divisional CFO at Serco Plc. In 1995 he joined NatWest Securities and was voted the number one analyst in theUK technology sector in the 1998 Extel survey. During this period he wasinvolved in a number of flotations including Autonomy and Computacenter. He wasconsistently ranked in the top three analysts in his sector until he leftDeutsche Bank (which acquired NatWest Securities in 1999) in 2000 to become theCFO of a privately owned IT services company. He returned to an analyst role inthe Software and IT Services sector in 2002 and his team at Societe Generale wasvoted number two in the 2005 pan-European Extel survey. Phillip George Nutburn (Non-executive Director, aged 57, British) Phil has worked for a number of technology businesses, including LTXCorporation, Schlumberger and GenRad where he worked internationally and in theUK. Phil was Vice President & General Manager of European Operations at AspectDevelopment Inc. (acquired by 12 Technologies in 1996), between 1992 and 2000.Since then he has worked as a consultant advising boards of early stage USCompanies seeking to do business in Europe. Phil is a Chartered Engineer who holds an Electrical and Electronics Engineeringdegree from the University of Northumberland and is a graduate of the IMD(Switzerland) Program of Executive Development. Directors' Interests The Directors' aggregate interests in Ordinary Shares following Admission willamount to 85,872,092 Ordinary Shares (including the interest in Ordinary Sharesheld by Mr Turrell's wife, Dr Yvonne Lindow) representing approximately 73.65per cent of the Enlarged Share Capital of the Company and options over a further5,000,000 Ordinary Shares under the Share Option Scheme. Substantial Shareholders Name Ordinary Shares % of the share at the date of capital on Admission AdmissionArtemis Investment Management Limited 8,000,000 6.86Octopus Investments 4,800,000 4.12Wills & Co Stockbrokers Limited 4,000,000 3.43Williams de Broe Limited 4,000,000 3.43 This information is provided by RNS The company news service from the London Stock Exchange