Ingenta Regulatory News (ING)

29 Sep 2006 07:02

Ingenta PLC29 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 publishingand information industries. Ingenta's software and services enable publishersof professional, scholarly and research material to make their content availableonline under a variety of business models including subscription and pay perview. Ingenta also provides marketing services to help publishers maximisedistribution and revenue from their content. Ingenta operates three businesses, namely: IngentaConnect(www.ingentaconnect.com), PCG and the Information Commerce Division - detailedexplanation overleaf. Ingenta charges recurring fees, in many cases under multi year agreements, foruse of its market-leading technology and services. The Group works with over10,000 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, generatea positive contribution and are growing. The third, our ICD unit, will requirefurther 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 thefirst 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 reducedrevenues in its ICD division. However, profit margins of 74% (2005: 76%) werestable. Overheads of £2.9 million in the first half (2005: £2.9 million) weresteady despite cost overruns in our ICD division but when combined with thelower 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 asneeded. Creditors of £4.8 million at 31 December were reduced by £1.0 million over thefirst six months, with other balance sheet items generally showing no more thanexpected seasonal movements. Trading during the first half of the financial year has delivered encouragingresults from two of our three operating divisions, as described below, togetherwith a summary of the activities in each of the operating groups: IngentaConnect IngentaConnect (www.ingentaconnect.com) enables publishers of academic orscientific research to reach an audience beyond their traditional subscriberbases, for instance it allows free access to paid-up subscribers of apublication, with other non-subscribers able to purchase individual articles ona 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 beingregularly delivered. 385 titles from 13 new publishers were added during theperiod. Revenues from pay-per-view document delivery increased during the first halfshowing a 16% rise over the same period in the previous year. Our Heron coursepack operation adjusted its business model as a result of changes inarrangements related to digital article permissions in the UK, resulting inlower revenues but with a corresponding reduction in direct costs. Whilst the market for online delivery remains competitive, IngentaConnectcontinues to demonstrate competitive strengths with consistent delivery andtechnology leadership translating into ongoing delivery of profits. IngentaConnect won a Hewlett Packard award for an innovative technology researchproject, which will result in an improved way of handling publishers' content. Publisher Communications Group (PCG) Ingenta's Publisher Communications Group (PCG) continues to enhance itsreputation as a high quality provider of marketing, sales and research servicesto academic publishers. During the period the unit worked with six newpublishers and further expanded its European presence as a result of increaseddemand. 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 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 softwaretools to re-bundle, re-brand and market their content online and also to createbranded websites through which users can purchase and access this content. Ingenta provides software to meet these needs, the core of which is Ingenta'sInformation Commerce Services (ICS), which is offered to publishers for use bythem. It also provides publication websites created, maintained and run onbehalf of publishers by Ingenta. Revenues from the ICD unit represent 17% of group turnover (2005: 27%) reducingin the period as a result of low sales activity. Software deliveries to theunit's first customer, Institute of Physics Publishing and IMF, were completedduring the first half. During the period ICD decided to abandon a project to create a new technologyplatform in favour of basing our website infrastructure on the robust and proventechnologies that already support IngentaConnect. The costs of the abortedproject and additional expenses relating to the creation of a replacement wereexpensed as incurred to the profit and loss account. Ingenta's Board believes that ICD's products are now at a point where theyrequire an expanded sales organisation in order to gain the revenue growth thatis required from them. It also acknowledges that further investment in thedivision would stretch the resources of the Group as a whole. It has thereforeconcluded the best way to generate a return for shareholders on the investmentalready made in the ICD unit's product development is through partnership withanother organisation with complementary skills. It is therefore exploringcollaborative 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 ofthe 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 befitstheir differing business models and individual stages of development. Group staff numbers were 78 FTE (full time equivalent) at 30 June 2006, downfrom 85 at 31 December 2005. The contribution of Ingenta's staff during theperiod has again been magnificent. The period has seen many staff acquireadditional responsibilities and also several important promotions have been madedemonstrating the strength of our skill base. The Board would like to thank allstaff for their hard work. Current Trading and Prospects Continued progress from our IngentaConnect and PCG operations, which are alreadyEBITDA profitable and growing, is expected. As we put in place aninfrastructure, either by collaboration or acquisition, to leverage ourinvestment in ICD products, it should enable the Ingenta Group to achieveprofitability and growth. A recent review of the new business forecast for the second half, together withthe 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 tomaintain its expectation of trading improvements in the second half year asachieved in 2005. UNAUDITED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2006 Ingenta plcConsolidated Profit and Loss AccountFor 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 6.6Cost 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 lossesFor 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 investmentsTotal recognised losses for the period (0.5) (0.3) (0.4) Ingenta plcConsolidated Balance SheetAs 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 assetsTangible assets 0.2 0.3 0.2Investments 0.2 0.2 0.2 0.4 0.5 0.4 Current assetsDebtors 1.2 1.6 2.3Cash at bank and in hand 0.1 0.3 0.6 1.3 1.9 2.9Creditors: 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 reservesCalled up share capital 7.5 7.5 7.5Share premium account 21.0 21.0 21.0Merger reserve 11.0 11.0 11.0Reverse acquisition reserve 12.7 12.7 12.7Profit and loss account (54.3) (53.7) (53.8) Equity shareholders' deficit (2.1) (1.5) (1.6) Ingenta plcConsolidated Cash Flow StatementFor 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 0.0of 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 plcReconciliation of operating loss to net cash outflow from operatingactivitiesFor 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 yearNet 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 plcNotes to the Unaudited Interim Reportfor the 6 months ended 30 June 2006 1. Basis of preparation The interim financial information has been prepared on the basis of theaccounting policies set out in the Group's statutory financial statements forthe year ended 31 December 2005 with the exception that FRS 20 "Share BasedPayments" has been adopted in the interim financial statements. In accordance with FRS 20, the fair value of equity-settled share-based paymentsis determined at the date of grant and is expensed on a straight-line basis overthe vesting period based on the Company's estimate of the options that willeventually vest. The adoption of FRS 20 has resulted in a charge to the profitand loss account of £13,220. The comparative figures have not been restated asthere is no material effect. 2. Publication of Non-Statutory Accounts The financial information contained in this interim report is unaudited and hasnot been reviewed by the auditors. It does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. Statutory accounts for the 12months ended 31 December 2005 incorporating an unqualified audit report havebeen 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 periodby the weighted number of ordinary shares of 186,207,420 (6 months to 30 June2005: 186,207,420) in issue during the 6-month period ended 30 June 2006. Thecompany had no dilutive ordinary shares in issue in any of the periods and thereis therefore no difference between the loss per ordinary share and the dilutedloss per ordinary share. There was no change in the number of shares in issueduring the period. 4. Comparative period The comparative figures used in this report are for the six-month period ending30 June 2005. The results for that period have been prepared on the same basisand under the same accounting policies as those set out in the Group's statutoryfinancial 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 - - 7.5Share premium account 21.0 - - 21.0Share Option Reserve - see note 1 0.0 - - 0.0Merger reserve 11.0 - - 11.0Reverse acquisition reserve 12.7 - - 12.7Profit 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 thecompany'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 - This information is provided by RNS The company news service from the London Stock Exchange