Ingenta Regulatory News (ING)

23 September 2019

Ingenta plc

Interim Results

Ingenta plc (AIM: ING), ("Ingenta", the "Company" or the "Group") a leading provider of world-class software and services to the global publishing industry, is pleased to announce its unaudited interim results for the six months to 30 June 2019.

Financial Key Points

·; Trading in line with Board expectations and on target to deliver materially improved full year results

·; Group revenues of £5.3m (2018: £6.4m) with recurring revenue at 79% (2018: 75%)

·; Adjusted EBITDA* of £0.3m (2018: £0.5m)

·; Cash from operations up to £1.0m (2018: £0.5m)

·; Cash balances increased from £1.3m at 31 December 2018 to £1.8m at 30 June 2019

·; Net cash generation of £0.5m (2018: £0.1m outflow) after dividend payments of £0.3m (2018: £0.3m) and exceptional restructuring costs of £0.3m (2018: £0.5m)

Operational Key Points

·; Significant Commercial Order to Cash customer go live in 2019

·; Four new Commercial customer wins announced during 2019, with combined implementation revenues of £0.7m and annual fees of £0.1m

·; Commercial product offering expanded from publishing into the wider media and music industries

·; All software implementations remain on track

·; Company profile substantially de-risked with an ongoing annual cost base of approximately £9.5m

·; Combined direct, sales and administration cost base reduced by over £3m on an annualised basis

·; Good sales pipeline growth in both traditional markets and the broader media industry

*Earnings before Interest, Tax, Depreciation and Amortisation is calculated before foreign exchange differences and restructuring costs.

Martyn Rose, Chairman of Ingenta plc, commented:

"I am pleased to report on the first half results for the Group and to outline the significant operational progress that has been made since the beginning of the year. As previously announced, Ingenta has been transformed into a unified software company providing a coherent set of products and services underpinned by a responsive management structure better equipped to serve and adapt to our customers' changing needs."

"Our commercial product offering is now gaining real momentum, in particular online content delivery solutions and our ability to deal with the ever-increasing complexity of rights and royalty management. In this area, we have had success on a number of fronts. First, our suite of commercial products went live with a major international fulfilment and distribution customer, setting a benchmark for the applicability of our solutions in the modern publishing world."

"Second, we have won four new customer contracts for our commercial products this year, one of which operates in the wider media sector, which is a positive endorsement of the suitability of our solutions outside traditional publishing markets. From a financial perspective, these new customer wins will start to deliver revenue in the second half of the year."

"On an operational level, I am encouraged to see that the fundamental changes we made to the business are delivering tangible benefits. Notably, the business generated £1.0m of operating cashflows in the period, resulting in an overall cash increase of £0.5m after payment of dividends and restructuring costs."

"The Board remains confident of achieving a material improvement in the trading performance of the Group for the remainder of the year and beyond, as the benefits of the recently announced sales wins and restructuring begin to be recognised in our reported results. Further, the Board is proposing to exercise its share buyback authority, as approved at the most recent AGM."

For further information please contact:

Ingenta plc Tel: 01865 397 800

Scott Winner / Jon Sheffield

Cenkos Securities plc Tel: 0207 397 8900

Nicholas Wells / Harry Hargreaves

Financial Review

From the 1st January 2019, the Group adopted IFRS16 'Leases' and applied the full retrospective approach to transition permitted by the standard in which prior period amounts are restated as if the standard had been in effect at lease commencement. Further details are provided in note 2 of these interim results.

Statement of Comprehensive Income

Group revenue has declined to £5.3m (2018: £6.4m) compared to the same period last year which is largely the result of implementation projects coming to an end. The new projects won in 2019 will start to deliver revenue from the second half of the year. Gross profit margins have increased from 38.8% to 39.6% as the Group's restructuring efforts start to deliver results. In all, the Group's direct, sales and administrative cost base has declined by over £3m on an annualised basis and includes £0.3m (2018: £0.5m) of additional restructuring costs.

Taxation costs have increased as a result of changes in US state tax laws impacting on the 2018 and 2019 calculations. In addition, the estimated 2018 research and development tax credit receipt due in the second half of the year has been revised downwards by £0.1m to £0.3m (2018: £0.2m).

Under IFRS16, lease costs are now charged to the income statement as depreciation and interest costs. The prior period depreciation comparative has been restated to include £61k of depreciation and £11k of interest. Further details are included in note 2 of these interim results.

Although the adjusted EBITDA declined to £0.3m (2018: £0.5m restated), the loss from operations, which includes £0.3m (2018: £0.5m) of restructuring costs, improved to £0.2m (2018: £0.5m loss). The Group expects to be profitable in the second half of the year as the new sales wins, combined with the lower cost base, flow through into the reported results.

Statement of Financial Position

Adoption of IFRS16 'Leases' has led to the groups operating leases being reported as a right to use asset within property, plant and equipment along with a lease creditor within liabilities. These reporting standard changes have been reflected in the comparative disclosures.

Statement of Cash Flows

The Group's cash inflow from operations has increased substantially to £1m (2018: £0.5m) as the restructuring efficiencies mentioned previously continue to deliver results. At the half year, the Group's cash position increased by £0.5m (2018: £0.1m reduction) to a total of £1.8m (2018: £2m) and includes payment of the final 2018 dividend of £0.3m (2018: £0.3m).

As in the prior year, the R&D tax credit of £0.3m (2018: £0.2m) is due for receipt in the second half of the year and did not have an impact on the first half cash flow.

Scott Winner

Chief Executive Officer

Condensed Consolidated Interim Statement of Comprehensive Income

Condensed Consolidated Interim Statement of Financial Position

Unaudited Condensed Consolidated Interim Statement of Changes in Equity

Condensed Consolidated Interim Statement of Cash Flows

Notes to the Unaudited Interim Report for the six months ended 30 June 2019

1. Nature of operations and general information

Ingenta plc (the "Company") and its subsidiaries (together 'the Group') is a provider of technology and supporting services to content providers and publishers. The nature of the Group's operations and its principal activities are set out in the full annual financial statements.

The Company is incorporated in the United Kingdom under the Companies Act 2006. The Company's registration number is 00837205 and its registered office is 8100 Alec Issigonis Way, Oxford OX4 2HU. The condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 23 September 2019.

The financial information set out in this interim report does not constitute statutory accounts as defined in section 404 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2018, prepared under IFRS as adopted by the European Union, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 (2) or section 498 (3) of the Companies Act 2006.

2. Basis of preparation

These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2019. They have been prepared following the recognition and measurement principles of IFRS as adopted by the European Union. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2018.

These condensed consolidated interim financial statements have been prepared on the going concern basis under the historical cost convention and have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2018 with the exception of IFRS16 'leases' which was adopted on the 1st January 2019 and detailed further below.

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

A detailed set of accounting policies can be found in the annual accounts available on our website, www.ingenta.com or by writing to the Company Secretary at the registered office as above.

New Standards adopted as at 1 January 2019

IFRS 16 'Leases' provides a new model for lessee accounting in which all leases, other than short-term and small-ticket-item leases, will be accounted for by the recognition on the balance sheet of a right-to-use asset and a lease liability, and the subsequent amortisation of the right-to use asset over the lease term. Ingenta has adopted IFRS 16 using the full retrospective approach to transition permitted by the standard in which prior period amounts are restated as if the standard had been in effect at lease commencement. At lease inception, a right to use asset is created along with a lease liability which represents the net present value of the expected lease payments. The presentation and timing of the recognition of charges in the income statement has changed as the straight line operating lease costs reported under IAS17 have been replaced by depreciation of a right to use asset and interest charges on the lease liability. A summary of the changes is shown below:

3. Goodwill and Intangibles

Full details of the Group's policies on Goodwill and Intangibles is presented in the financial statements for the year ended 31 December 2018.

4. Profit / (loss) per share

Basic profit / (loss) per share is calculated by dividing the profit / (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For diluted profit / (loss) per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

5. Trade and other receivables

Trade and other receivables comprise the following:

6. Trade and other payables

Trade payables comprise the following:

7. Contingencies and commitments

There were no contingencies or commitments at the end of this or the comparative period.

8. Post balance sheet events

There were no material events subsequent to the end of the interim reporting period that have not been reflected in the interim financial statements.

9. Copies of the Interim Financial Statements

A copy of the interim statement is available on the Company's website, www.ingenta.com, and from the Company's registered office, 8100 Alec Issigonis Way, Oxford OX4 2HU.