Ingenta Regulatory News (ING)

3 Apr 2007 07:01

Publishing Technology PLC03 April 2007 Publishing Technology Plc (formerly Ingenta Plc) announces 2006 results Publishing Technology Plc, formerly known as Ingenta, has published its annualreport and accounts for 2006. Publishing Technology provides combined print andonline management solutions to the global publishing industry. On 27 February 2007, Ingenta acquired VISTA International Limited, formingPublishing Technology Plc, which is listed on the Alternative Investment Marketof the London Stock Exchange (ticker: PTO). These results focus solely on Ingenta's trading in the 12 months to December 31,2006, prior to the VISTA acquisition. Highlights • Executive focus on acquisition activities - announced and completed post year end • IngentaConnect and Publishers Communication Group operations performed strongly with growth in new client acquisitions and revenues • Information Commerce Division benefited from investment of £0.5m and delivered major new software product • IngentaConnect added 40 new publishers • Number of Electronic Publications via IngentaConnect.com was 10,000 (2005:9,500) • Sales in the year of £6.1m (2005: £6.6m) • Overheads before exceptional items of £5.5m (2005: £5.6m) • Gross profit £4.5m (2005:£4.9m) - margin steady at 74% (2005: 75%) • Loss of £1.0m (2005: loss £0.3m) after exceptional write-downs and reorganisation provisions of £0.2m (2005: 0.1m) Outlook The acquisition of VISTA International, which was announced on 2 February 2007,and completed on 27 February 2007, is designed to enable all three of Ingenta's business units todeliver growth in 2007, by: • Providing opportunities to increase sales through cross-selling, particularly through VISTA's ability to sell Information Commerce Division's products into it's existing market place; • Strengthening the management team of Ingenta by integration of the VISTA management team; • Creating critical mass both in terms of the range of products and services as well as the scale of the combined businesses; and • Obtaining cost savings from synergies and from reduction of duplicated functions and duplicated activities. Since the merger was announced, Publishing Technology has signed its firstweb-based deal with one of Europe's largest independent publishers of businesstitles and a VISTA client, to supply online services from Ingenta, which istestament to the value of the acquisition. Martyn Rose, chairman, Publishing Technology, said: "Ingenta's performance in 2006 gives us confidence that there will beconsiderable opportunities for the newly-formed Publishing Technology toincrease revenues across its core businesses. The potential for our renamed andsubstantially expanded company is considerable." For further information please contact: The Communication Group plc Tel: 020 7630 1411Kit Bingham M: 07880748672 Publishing Technology Plc (formerly Ingenta Plc) announces 2006 results 2 April 2007 Publishing Technology Plc, formerly known as Ingenta Plc, has published itsannual report and accounts for 2006. Ingenta Plc acquired VISTA International Limited on 27 February 2007. This ismore fully described in the circular dated 2 February 2007 sent to shareholders.At the Extraordinary General Meeting on 27 February 2007 the enlarged companychanged its name to Publishing Technology Plc (ticker: PTO) on the AIM market ofthe London Stock Exchange. Ingenta: Business Overview Ingenta provides technology and associated marketing services to publishers fromwhom it receives fees. The provision of Ingenta's software and services enablepublishers to make their content available online under a variety of businessmodels including subscription and pay per view. Ingenta also provides marketingservices to help publishers maximise distribution of their content. Ingenta charges recurring fees, in many cases under multi year agreements, foruse of its market-leading technology and services. These are in the areas ofcontent preparation, content enhancement, website creation, marketing services,online distribution and access management of subscription controlled content. The services provided by Ingenta not only enable publishers to securelydisseminate their content online but also to make incremental revenues fromtheir content. In 2006 the Group worked with over 40 new publishers in additionto over 270 with whom it has existing relationships. Ingenta's technical skills, its market leadership and its broad understanding ofthe issues faced by publishers attempting to distribute content and gain newonline revenues are key business advantages for the Group. Ingenta's three principal activities are as follows: 1) IngentaConnect (www.ingentaconnect.com) 2006 saw IngentaConnect add another 40 new publishers to its customer base.IngentaConnect provides online access to over 10,000 titles to those wishing toconduct academic or scientific research. IngentaConnect regularly achieves over20 million user sessions a month. IngentaConnect enables publishers to reach anaudience beyond their traditional subscriber bases, for instance it allows freeaccess to paid-up subscribers of a publication, with other non-subscriptionusers able to purchase individual articles on a pay per view basis. Institutions also engage Ingenta to create online student course packs throughthe Group's Heron service, which launched a new course pack management system asa further service to its educational institution clients. Ingenta also operatesa small number of premium services of direct benefit to institutions and usersof IngentaConnect, for which there is an annual charge. 2) Information Commerce Division (IC) Publishers have a range of complex needs to maximise the value of the contentthey create in online environments. This may include increasing awareness andreadership, capturing data about customers, revenue goals or cost targets foronline delivery. All these aims require publishers to have flexible tools tore-bundle, re-brand and market their content online and also to create brandedwebsites through which users can purchase and access this content. Ingenta provides software and services to meet these needs, the core of which isa software package called Information Commerce Services (ICS), which is offeredto publishers for use by them. Additionally the Group designs, develops,maintains and runs publication websites on behalf of publishers. 3) Publishers Communication Group (PCG) Ingenta's PCG provides a range of specialised marketing and business developmentservices to meet the needs of professional and scholarly publishers. Theseinclude services in the areas of: market intelligence for planning and marketingnew products; promotions to expand awareness; and local market representationservices. In addition PCG has recently introduced market segmentation andpublisher consulting services. PCG provides services to over 50 North American and European publishers withprogrammes delivered in over 40 countries in eight languages on their behalf. Chairman's Statement - Martyn Rose Finance and Operations Turnover in the year was £6.1m (2005: £6.6m) and the gross margin was 74% (2005:75%). The loss before tax in the year was £1.3m (2005: loss £0.6m), inclusive of £1.1m(2005: £1.2m) invested in Research and Development, all of which was expensedthrough the profit and loss account as incurred. With the benefit of a Researchand Development tax credit of £0.3m for the year (2005: £0.3m) this has resultedin a net loss for the financial year of £1.0m (2005: loss £0.3m). The Group's net cash balance at 31 December 2006 was a deficit of £0.1m (2005:surplus £0.3m). The Group's leading academic and research publications hosting platform,IngentaConnect (www.ingentaconnect.com) performed strongly and 2006 saw therelease of new services for both publisher clients and end users. In addition,Ingenta's Information Commerce Division (ICD) unit completed further softwaredeliveries. Finally the Group's Publisher Communication Group (PCG) worked withsix new publishers, again demonstrating the value of the high quality servicesoffered. Ingenta's understanding of the issues faced by publishers trying to reach globalaudiences for their content and to derive new revenues from online delivery ofcontent, remain key business advantages for the Group. Current Trading and Prospects 2006 saw the Group deliver operational improvements in its financial performancewithin two divisions - IngentaConnect and PCG, which are expected to continueinto 2007. As indicated in the announcement of the interim results the ICD grouphas for some time needed additional sales distribution to achieve its potential,and corporate activity has been explored to effect this. Shareholders will be aware that this was achieved through the announcement on 2February 2007 of the acquisition of VISTA International Limited, and therenaming of the Company as Publishing Technology Plc. This move is designed toenable all three of Ingenta's business units to deliver growth in 2007 andparticularly to enable expanded sales of the ICD offerings The circular highlighted the following strengths of the combination of Ingentaand VISTA to create Publishing Technology: • Providing opportunities to increase sales through cross-selling, particularly through VISTA's ability to sell ICD's products into it's existing market place; • Strengthening the management team of Ingenta by integration of the VISTA management team; • Creating critical mass both in terms of the range of products and services as well as the scale of the combined businesses; and • Obtaining cost savings from synergies and from reduction of duplicated functions and duplicated activities. Chief Executive's Review - Simon Dessain Chief Operating Officer (formerly ChiefExecutive) Ingenta provides services for publishers of high value content, including marketleading services in the areas of content preparation and enhancement, websitecreation, marketing services, online distribution and access management forsubscriber controlled content. Access management in particular requiressophisticated and complex technical solutions for which Ingenta is a marketleader. The use of such technology is a pre-requisite for publishers wishing toexploit new and evolving e-commerce opportunities and thus derive incrementalrevenues from their digital content. Ingenta continues to generate over 90% of its revenues from providing technologyand marketing services to publishers, with the remaining revenues coming frominstitutions and end users of the Group's services. The majority of the Group'spublisher revenues consist of recurring annual fees and long-term contractsderived through the following three principal activities: IngentaConnect (www.ingentaconnect.com) 2006 saw IngentaConnect cement further its position as a leader in its sector,with over 10,000 research and professional publication titles. During the year,the site regularly saw over 20 million monthly user sessions from around 20,000institutions spread across 160 countries and at an availability level in excessof 99.99%. In addition over 20,000 further titles are available for searchingand delivery through fax pay per view. IngentaConnect provides online access to the publications from over 265publishers for those conducting academic or scientific research worldwide.During the year the Group saw 40 new publishers contract with Ingenta. With over60 linking partners and a large number of search and discovery services pointingusers towards IngentaConnect, publishers gain access to a far wider audience fortheir content, beyond their traditional individual subscriber bases. Engineering activities for IngentaConnect delivered a rolling programme of newservices for publishers including a market leading new facility for searchers onGoogle Scholar with IngentaConnect subscriptions and also a major release inSeptember 2006 which contained certain Web 2.0 functionality. byDesign, is aservice through which publishers can add the extensive functionality ofIngentaConnect to their own websites, and 2006 saw the launch of the option forpublishers to have an entire publication website delivered on their owndedicated server allowing significant expansion in the level of customisation.Both these services allow paid-up subscribers of a publication to downloadarticles for free, or non-subscribers to purchase individual articles online ona pay per view basis. In addition, Ingenta's Heron service creates online student course packs andduring the period launched a new product Pack Tracker which providesinstitutions administrative and operational management of course pack creationacross an entire institution. Through the Heron website, institutions canrequest digitisation, copyright clearance and course pack distribution services.Article pay per view through IngentaConnect and Heron together generate royaltyrevenues of over £1m per annum for Ingenta's publishers. Ingenta also now provides a small number of chargeable premium services, whichare of direct benefit to users of IngentaConnect. There are three products inthis area, including IngentaConnect Premium, an enhanced package of userservices available for a small additional fee and IngentaConnect Complete andIngentaConnect InTouch, services designed for libraries. Revenues from theIngentaConnect operation comprise set up and annual fees, as well as revenuesharing, and they contributed 65% (2005: 58%) of Group turnover during the year. Information Commerce Division As with our IngentaConnect operation, the core of our proposition is a set offeatures enabling publishers to define which kinds of user can access whatcontent and under what licence terms. When combined with Ingenta's ability totailor and deliver branded web pages containing the client's content, orfacilities enabling the client to upload and update content within a website,these features are a key part of Ingenta's competitive advantage and are part ofa product family, generally referred to as ICS. ICS also delivers both a fastertime to market and an improved return on investment for publishers. Ingenta's ICD Group designs, builds, maintains and operates websites andprovides ICS as a standalone software product. Ingenta's revenues from ICD are generated from initial and ongoing fees from thesale of software and also from the integration into, and management of,publication websites. Revenues from the ICS unit contributed 15% (2005: 28%) ofGroup turnover for the year. Publishers Communication Group (PCG) PCG provides specialised marketing and business development services to meet theneeds of professional and scholarly publishers. During the year, PCG also launched new Sales Representation services. Theseenable a publisher in North America or Europe to benefit from the services oftier own staff in additional geographies without the burden of opening anoffice, hiring or day to day management of staff. In 2006 this activity enabledPCG to enter into agreements with the American Society of Microbiology, CSIROand CABI to provide resources in both North America and Europe. In 2006, PCG grew its revenues by 25% (2005: 21% reduction). Ingenta's revenuesin this area are largely fee based and represented 20% (2005: 14%) of Groupturnover during the year. Outlook The performance of both IngentaConnect and PCG in 2006 provides confidence theycan contribute to Publishing Technology in 2007. The strength of their productsand the encouraging financial progress in 2006 place them in a strong positionto add to forecast business growth going forward. These may include expansion ofour established services into additional publisher markets and acquisitions ofsimilar businesses to increase the Group's scale. The combination of our ICD activities into VISTA operations is already takingplace and cross selling activities underway. These activities enable us to plana return on the investments made to date in these ICD products and services. As outlined in the circular of 2 February 2007, the Board is confident thatthere will be considerable opportunities for the newly formed PublishingTechnology Group to increase revenues across its core business streams. It is also expected that Publishing Technology will considerably improve itsGroup financial performance in the current financial year from alreadyidentified cost synergies. We plan that the savings will come from a reductionof the central or Group functions including human resources, finance, IT supportand product development and, to a lesser extent, from synergies and savings inthe service delivery teams. Financial Review for the year ended 31 December 2006 Operating results Turnover for the year ended 31 December 2006 was £6.1m (2005: £6.6m). Gross profit for the period was £4.5m (2005: £4.9m) and the gross margin was 74%(2005: 75%). Total operating costs in the year were £5.7m (2005: £5.6m). This resulted in aloss before tax of £1.3m (2005 loss: £0.6m). With the benefit of a tax creditof £0.3m (2005: £0.3m) the loss for the financial period was £1.0m (2005: loss£0.3m). Taxation A tax credit of £0.3m (2005: £0.3m) was included in the results for 2006relating to amounts received and receivable under the Research and Developmenttax credit scheme. The claim has been prepared on the same basis as in prioryears but is subject to HM Revenue and Customs approval. The Group has unutilised tax losses at 31 December 2006 in the UK and the USA of£11.9m (2005: £11.5m) and $14.6m (2005: $14.5m) respectively. Shareholders' returns and dividends The Directors do not recommend the payment of a dividend (2005: £nil). Balance sheet and cash Shareholders' deficit totalled £2.5m at the year end (2005: deficit £1.6m). Cash outflow from operating activities was reduced over the year to £0.5m (2005:outflow £1.0m). At the year end, net bank overdraft was £0.1m (2005: £0.3m net cash). Cashabsorbed by operations or for capital expenditure during the year amounted to£0.7m (2005: £1.1m). A tax credit of £0.3m (2005: £0.5m) in respect of Researchand Development expenditure was received in the year. Treasury The Group's policy with regard to cash balances is to monitor short and mediumterm interest rates and to place cash on deposit for periods that optimiseinterest earned while maintaining sufficient funds to meet day-to-dayrequirements. The Group operates in a business which has marked seasonality in cash flows.This is expected to continue and has been taken into account in assessing theworking capital requirements. International Financial Reporting Standards The London Stock Exchange has announced that AIM listed Groups will have topublish financial information under International Financial Reporting Standards("IFRS") for accounting periods commencing on or after 1 January 2007. Ingentaexpects to report under IFRS for the financial year ending 31 December 2007,including the interim results for the half year to 30 June 2007. The process of evaluating the impact of the changes that will result, both interms of the effect on the Group's results and its financial position, isunderway. Consolidated Profit and Loss Accountfor the year ended 31 December 2006 Notes 2006 2005 £'000 £'000 Turnover 6,067 6,598Cost of sales (1,601) (1,657) Gross profit 4,466 4,941 Administrative expenses (5,743) (5,557) Operating loss (1,277) (616) Interest receivable and similar income - 5Interest payable and similar charges (27) (4) Loss on ordinary activities before taxation (1,304) (615)Tax on loss on ordinary activities 2 283 304 Loss for the financial period (1,021) (311) Loss per share - basic and diluted 3 (0.5)p (0.2)p All activities are classified as continuing. Consolidated Statement of Total Recognised Gains and Lossesfor the year ended 31 December 2006 2006 2005 £'000 £'000 Loss for the financial year (1,021) (311)Currency translation differences on foreign currency net investments 104 (128) Total recognised losses for the year (917) (439) Consolidated Balance Sheet 31 December 31 December 2006 2005 Notes £'000 £'000 £'000 £'000Fixed assetsTangible assets 209 210Investments 103 221 312 431Current assetsStock and work in progress 7 7Debtors 1,839 2,321Cash at bank and in hand 542 567 2,388 2,895Creditors - amounts falling duewithin one yearDeferred income (1,559) (1,904)Other creditors (3,501) (2,915) (5,060) (4,819) Net current liabilities (2,672) (1,924) Total assets less current liabilities (2,360) (1,493)Creditors - amounts falling dueafter more than one year (1) (4)Provisions for liabilities and charges (160) (124) Net liabilities (2,521) (1,621) Capital and reservesCalled up share capital 7,510 7,510Share premium account 20,955 20,955Merger reserve 11,056 11,056Reverse acquisition reserve 12,679 12,679Share options reserve 17 -Profit and loss account deficit (54,738) (53,821) Shareholders' deficit 6 (2,521) (1,621) Consolidated Cash Flow Statementfor the year ended 31 December 2006 Notes 2006 2005 £'000 £'000 Net cash outflow from operating activities 4 (539) (998) Returns on investments and servicing of financeInterest received - 5Interest paid on bank overdraft (26) (4)Interest paid on finance leases (1) - Net cash (outflow)/inflow from returns on investments and servicing of finance (27) 1 Taxation 288 489 Capital expenditure and financial investmentPurchase of tangible fixed assets (115) (54) Net cash outflow from capital expenditure and financial investment (115) (54) AcquisitionsDeferred consideration (9) (7) Net cash outflow from acquisitions (9) (7)Management of liquid resourcesSale of short term deposits - 680 Net cash inflow from management of liquid resources - 680 Cash (outflow)/inflow before financing (402) 111 FinancingRepayment of principal under finance leases (3) (1) Cash outflow from financing (3) (1) (Decrease)/increase in cash in the period 5 (405) 110 Notes to the Preliminary Announcementfor the year ended 31 December 2006 1 Basis of preparation The principle accounting policies of the Group are set out in the accounts forthe year ended 31 December 2006. The policies have remained unchanged from theprevious year, apart from the adoption of FRS 20 'Share-Based Payments'. Inaccordance with FRS 20, the fair value of equity-settled Share-Based Payments isdetermined at the date of grant and is recognised on a straight line basis overthe vesting period based on the number of options that will eventually vest.The adoption of FRS 20 has resulted in a charge to the profit and loss accountof £17,000. The comparative figure and reserves have not been restated as theeffect is immaterial. 2 Tax on loss on ordinary activities 2006 2005 £'000 £'000UK corporation tax on the results for the year at 30% (2005: 30%) - -Current period research and development tax receivable 245 250Adjustment in respect of prior year research and development tax credit 38 54 Total current tax 283 304 The Group has unutilised tax losses in the UK and the USA of £11.9m (2005:£11.5m) and $14.6m (2005: $14.5m) respectively available to set-off againstfuture trading profits in those regions. These have yet to be agreed with thetax authorities. The differences between the tax charge and the standard rate of corporation taxare explained below: 2006 2005 £'000 £'000 Loss on ordinary activities before tax (1,304) (615)Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2004: 30%) (391) (185)Effects of:Permanent differences 32 3Deferred tax movement not recognised 52 (178)Tax losses surrendered for research and development 307 360Research and development tax credit 245 250Adjustment in respect of prior year research and development tax credit 38 54 Total current tax 283 304 3 Loss per share The basic loss per share has been calculated by dividing the loss for thefinancial period by the weighted average number of ordinary shares of186,207,420 (2005: 186,207,420 ) in issue during the period. The Company had nodilutive ordinary shares in either period which would serve to increase the lossper ordinary share and there is therefore no difference between the loss perordinary share and the diluted loss per ordinary share. 4 Net cash outflow from operating activities Reconciliation of operating loss to net cash outflow from operating activities: 2006 2005 £'000 £'000 Operating loss (1,277) (616)Depreciation charge 89 252Loss on disposal of fixed asset 21 -Impairment of fixed asset investments 97 -Share based payment charge 17 -Decrease in debtors 477 160Increase/(decrease) in creditors 2 (455)Increase/(decrease) in provisions and other reserves 35 (339) Net cash outflow from continuing operations (539) (998) 5 Reconciliation of net cash flow to movement in net (debt)/funds 2006 2005 £'000 £'000 (Decrease)/increase in cash in the year (405) 110Cash used to decrease liquid resources - (680)Finance lease repayments 3 1 Change in net debt resulting from cash flows (402) (569)New finance leases - (6) Movement in net debt in the year (402) (575)Net funds at beginning of the year 308 883 Net (debt)/funds at end of the year (94) 308 6 Reconciliation of movements in shareholders' deficit 2006 2005 £'000 £'000 Loss for the year (1,021) (311)Net exchange adjustments 104 (128)Share based payment 17 - Net decrease in shareholders' funds (900) (439)Opening shareholders' deficit (1,621) (1,182) Closing shareholders' deficit (2,521) (1,621) 7 Post balance sheet events On 27 February 2007 Publishing Technology Plc acquired the entire issued sharecapital of VISTA International Limited, a specialist supplier of softwaresolutions to the publishing sector. The consideration comprised 260,000,000 1pnew Publishing Technology ordinary shares at a subscription price of 1p each and£2m convertible loan notes in exchange for 100% of the issued share capital andoutstanding loan notes in VISTA International Limited. On the same date as the acquisition of VISTA International Limited the Groupraised £0.8m net of expenses through the issue of 150,000,000 1p new ordinaryshares at a price of 1p each. Further details are provided in the circular dated 2 February 2007 sent toshareholders which is available from the Registered Office on request. 8 Publication of non-statutory accounts The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The consolidated profit and loss account, the consolidated statement of totalrecognised gains and losses, the consolidated balance sheet as at 31 December2006, the consolidated cash flow statement and associated notes for the yearthen ended have been extracted from the Group's 2006 statutory financialstatements upon which the auditor's opinion is unqualified. Those financialstatements have not yet been delivered to the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange