TIDMIMTK
RNS Number : 3620H
Imaginatik PLC
17 August 2016
Imaginatik plc
("Imaginatik" or "the Company")
Final Results
Imaginatik plc (AIM: IMTK.L), the innovation company, is pleased
to announce its audited results for the year ended 31 March
2016.
Financial Highlights
-- Recognised revenue increased by 16% GBP3.89m (FY15: GBP3.34m)
-- Deferred revenue steady at GBP2.90m (FY15: GBP2.90m)
-- Annualised renewal base of GBP2.8m at year end (FY15: GBP3.2m)
-- Gross bookings increased by 19% to GBP4.0m (FY15: GBP3.37m)*
-- Loss after tax decreased by 35% GBP0.95m (FY15: GBP1.46m)
-- Completion post year end of GBP1.67m (gross) equity placing and Open Offer
* At constant currency, exchange rate of 1.4318 US$:GBP
Operational Highlights
-- Named by Forrester Research as a leader in Innovation Management Solutions
-- Secured 9 new clients in the year, across a range of sectors
while maintaining over 90% renewal rates
-- Continued expansion of Imaginatik's consultancy and
technology offerings, including launch of algorithm-based
analytics
Current trading
-- 3 new customers secured in the first quarter of the year, all
for operational consulting engagements
Matt Cooper, Non-Executive Chairman of Imaginatik,
commented:
"We are pleased with the growth achieved in the year and the
underlying progress within the business. The success of our
evolution from a software company with a narrow technology focus,
to a recognised industry leader with a full-service innovation
offering is beginning to be reflected in the financial results.
"The funds raised in June have given us the capacity to invest
in the business and capitalise on the growth in the innovation
market. Our outstanding reference customers in Europe and the US,
industry leading offering and strengthening financial position
provide us with a solid platform on which to build and we are
confident we will make further progress in the year ahead."
For further information, please contact:
Imaginatik plc Tel: 01329
243 243
Matt Cooper, Non-Executive
Chairman
Ralph Welborn, CEO
Shawn Taylor, CFO
finnCap Ltd Tel: 020
7220 0500
Jonny Franklin-Adams/Giles
Rolls, corporate finance
Camille Gochez, corporate
broking
Alma PR Tel: 020
8004 4218
Hilary Buchanan
Caroline Forde
About Imaginatik
Imaginatik provides a range of innovation solutions comprised of
consultancy, enterprise software and program management to deliver
innovation results to companies such as The World Bank, The Chubb
Group of Insurance Companies, Exxon Mobil, Altria, Shell, Mayo
Clinic, Goodyear, the Yorkshire Building Society, Caterpillar and
Cargill. Few companies possess the internal capability to
consistently generate fresh ideas, identify those worth pursuing
and reliably transform them into real, value-enhancing assets.
Imaginatik's mission is to help these companies build sustainable
innovation competencies.
Imaginatik is a public company whose shares are traded on the
AIM market of the London Stock Exchange (LSE: IMTK.L) with offices
in Boston, MA, and Fareham, UK.
For more information visit www.imaginatik.com.
Chairman's statement
I am pleased to be able to report on a year of good progress at
Imaginatik. Over the past four years we made significant
improvements to the business. Imaginatik has evolved from a
software company with a narrow technology focus, limited client
relationships and a high client churn rate to a recognised industry
leader with a full-service innovation offering and deep consulting
expertise, able to secure larger deals with more senior executives
at some of the world's leading businesses.
The success of this strategic shift is beginning to be reflected
in the financial results, which show revenue growth of 16% to
GBP3.89m (FY15: GBP3.34m). This increase, combined with the
containment of costs, reduced the losses after tax for the year by
35% to GBP0.95m (FY15: GBP1.46m). We highlighted to shareholders at
the start of the year that a large number of contract renewals
would fall due in the year. I am pleased to report that the
majority of these renewed, with our customer churn level measured
by the value available to renew remaining low at 10% (FY15: 8%), a
significant reduction from the churn witnessed a few years ago. We
added 9 new customers in the period (FY15: 21) of which 3 were
annual contracts with the remainder being technology and consulting
engagements. All of these new contracts provide a good base of
potential revenue for future years. The new customers contain some
of the world's best known brands, including a global leader in
athletic footwear, and span sectors such as financial services,
professional services, global food services and facilities
management.
Importantly, we continue to see growth in the number of
customers contracting with us for both our software platform and
consultancy expertise. Consulting accounted for 28% of contracted
revenue in the year, growing from 26% in 2015. We believe it is the
combination of these two elements which will ensure longstanding
client relationships as we help our customers create and harness
their innovation expertise.
We believe the innovation market is now moving into a more
mature phase. Innovation budgets are increasing and innovation is
securing a more prominent position on the boardroom agenda. The
recently announced fundraising has provided us with the capacity to
invest in the business and take advantage of this growth in our
marketplace. The funds will be deployed across sales, marketing,
consulting and technology, with some retained for working
capital.
I would like to take this opportunity to thank our employees in
the UK and US for their passion for the business and our
shareholders and customers for their support. While we have come a
long way in the past four years, we still have much work to do to
achieve what we believe is possible. We have a solid platform on
which to build, with outstanding reference customers both in Europe
and the US, an industry leading offering and a strengthened
financial position. We therefore look to the future with
confidence.
Matt Cooper
Non-executive Chairman
16 August 2016
Strategic Report
Over the last four years our strategy has been to reposition
Imaginatik as a global full service innovation provider, utilising
our unique and extensive consultancy and technology offerings. We
have continued to invest in all of our core competencies during the
year; consultancy, technology, sales and marketing and believe the
revenue growth delivered in the year is a result of this successful
evolution of the business.
Industry recognition
In April 2016 Imaginatik was cited by Forrester Research, an
independent research firm, as a leader in Innovation Management
solutions and we believe this provides excellent validation of
Imaginatik's long-term strategy to provide comprehensive Innovation
Management solutions to senior executives.
The report, The Forrester Wave(TM) : Innovation Management
Solutions, Q2 2016, a copy of which can be found on the Company's
website, found that "Imaginatik has the most comprehensive
innovation management solution." The report further explained that
"Imaginatik's product goes beyond crowdsourced idea collection and
idea development to support customers with a balanced corporate
innovation program." Imaginatik earned the top score for both
Current Offering (4.88 out of 5) and Strategy (4.26 out of 5). In
particular, Forrester cited Imaginatik for our "breadth of both
front-end innovation and idea management processes as well as
back-end underlying governance processes and structures." Further,
Forrester named Imaginatik as one of only two vendors which also
"scored higher for strategic vision and value creation."
Importantly, the report describes professional services as
"essential" for innovation programme success, in line with
Imaginatik's strategy. The report's marketplace analysis
highlighted the importance of professional services for Innovation
Management. As the analysts explained, this is because: "In many
situations, innovation processes need to be built from scratch,
innovation leadership structures need to be instilled, and new
skills and innovation elements need to be developed."
Market
We believe the market trends are positive, there is growing
evidence that the market for innovation technology and consulting
services is poised to move into the mainstream. Innovation
expenditure continues to grow. Between 2005 and 2014 the Bloomberg
Global Innovation 1000 Study shows that innovation R&D
investment has increased from US$400billion to US$650billion.
External innovation investments increased between 2012 and 2014
from US$2.089billion in Q1 2012 to US$4.019billion in Q2 2014,
according to CB Insights.
It is clear that innovation matters to today's companies. A
report published by Imaginatik last year, State of Global
Innovation: New Industry Report 2015 found that 95% of companies
include innovation on the management agenda, 59% now have a formal
innovation program in place, and 40% of those companies surveyed
now employ a Chief Innovation Officer (or have a person in a
similar role). In today's maturing innovation marketplace we
believe that Imaginatik is well positioned for growth.
Strategy
Imaginatik has seen a strategic shift over the past four years.
Prior to 2012 the Company was operating in what was an immature
innovation market, selling a narrow technology offering to
mid-level technology buyers with a limited consulting offering.
During this period Imaginatik experienced a high level of churn
within its client base and with little or no revenue growth
resulting in operating losses.
From 2013 we embarked on a new strategy. We set about creating a
full-service innovation offering to enable our customers to build
an effective innovation competency and in doing so increase the
strength of our customer relationships. This entailed building out
a consulting team, broadening the technology offering with new
products and recruiting new employees, including an experienced CEO
with significant innovation and consulting expertise based in the
US. We now have an extensive enterprise software platform, enabling
customers to scale consistent innovation practices across their
organisation, combined with a highly experienced consulting team
with an average of 15+ years' experience in corporate innovation
management including running innovation programmes within global
businesses.
Operational Review
Imaginatik is now uniquely positioned, with a full service
innovation offering spanning the three main sectors within the
innovation industry, being Innovation Advisory Consulting,
Innovation Capability Building and Innovation Software
platforms.
Consultancy
We are pleased to report continued progress in the Consulting
division, including successfully growing our footprint with several
existing customers and expanding the range of our consultancy
engagements to include portfolio valuation work, the creation of
long term strategy for creating deep innovation capabilities, as
well as our more traditional consulting support work with our
various technology offerings.
Examples of customer engagements successfully delivered in the
year include:
A global industrials manufacturer: An early-stage consulting
engagement to devise innovation processes
The client felt they needed to re-think their innovation
process. They had an outdated process, with no strong front end for
idea generation and no fast track execution process for
breakthrough ideas. This led the business to a series of
incremental innovations which were not driving the desired level of
growth. The client hired Imaginatik to support the development of a
new process and identify key recommendations to assist in the
further development of the company's innovation competence.
The Imaginatik team took a design thinking approach,
interviewing key company stakeholders, at all levels of the
organisation, to gain a deep understanding of the current state of
innovation. From the interviews, Imaginatik developed four key
themes to address. Various globally based individuals were brought
together for a face to face re-think of the innovation process. At
the meeting, process design principles were combined with
creativity techniques to explore where the current processes were
failing. The team was able to experiment with Imaginatik's
proprietary Head to Head review process, a module within
Imaginatik's Innovation Central platform, to prioritise existing
projects. The output to the project included a process re-design to
include front end ideation, a fast track process for breakthrough
innovations and four key recommendations were presented to the
company leadership team to assist in the further development of the
company's innovation competence.
US iconic footwear company: A new approach to capture new
sources of value
The client came to Imaginatik unsure where to focus for future
growth and how they might consider engaging their customer base
more effectively and looking for new business models.
Through a process of workshops with senior client personnel and
customer groups across North America, we were able to elicit the
key questions to focus on, define a new customer engagement model
that makes sense for the business in the changing world of consumer
retail and helped define a new innovation strategy providing a
clearer direction for where to move the company longer term.
Technology
We continue to invest in our existing technology platform with
efforts going into the development of further analytic tools to be
used in both the review and decision processes. We see this as an
area of differentiation from many of our competitors and will seek
to continue to invest in this important area. With the assistance
of various third parties working alongside our team, we have also
invested in a couple of new products that combine our consulting
expertise with our technical capabilities, including "Scale Up" -
an engagement that enables organisations to bridge the gap between
leading edge innovation and market uptake of those ideas at scale,
enabling the company to move beyond the initial insight, minimum
viable product or pilot to achieve mainstream success.
Sales and Marketing
Building on the stable foundations created in the prior year,
many core activities this year focused on consolidating and
optimising our operational base. We added two new sales people in
North America, both of whom were able to ramp up to full pipeline
productivity during the period. Implementation of Salesforce as our
company-wide CRM system has allowed us to realise substantial gains
in efficiency, productivity, and teamwork by consolidating key
sales and marketing processes. Marketing more than doubled the
volume of senior-exec level prospecting events, and dissemination
of high-end (thought leadership) oriented content in the
marketplace.
FY16 was also a time to expand into new levers for market access
and revenue growth. We invested significantly in building
relationships with key marketplace influencers. Most notably, these
efforts resulted in Imaginatik receiving top scores in the
Forrester Wave on Innovation Management Solutions. In addition, new
types of partnerships have begun to open new sales channels and
marketing levers. Most notably, during FY16 we built formalised,
public marketing partnerships with MassChallenge (a global startup
accelerator program) and Ingenin (an advisory firm to insurance
industry executives). A variety of other sales-oriented channel
partnerships have also contributed to new lead sources and
augmented deal flow.
In the coming year, we expect to add incremental headcount to
both Marketing and Sales. The expanded team will create a
significantly higher volume of marketing content and digital
advertising; focus more deeply on customer care and up-selling; and
be able to target the market more thoroughly with a larger, more
geographically distributed sales force. Partnerships will continue
to be a focus for increasing access to new buyers, and for
augmenting our ability to spread the brand message and thought
leadership more widely.
KPIs & Financial Review
The key performance indicators on which we judge the progress of
our business are as follows:
KPI 2016 2015
--------------------------------- ---------- -----------
Gross bookings * GBP4.0m GBP3.4m
--------------------------------- ---------- -----------
Recognised revenue GBP3.9m GBP3.4m
--------------------------------- ---------- -----------
New & Upsell bookings GBP2.1m GBP2.6m
*
--------------------------------- ---------- -----------
Renewal bookings * GBP1.9m GBP0.6m
--------------------------------- ---------- -----------
Number of clients renewing
their contracts 28/35 12/15
--------------------------------- ---------- -----------
Number of new client wins
in the year 9 21
--------------------------------- ---------- -----------
Total number of annual
contracts at year end 39 42
--------------------------------- ---------- -----------
Consulting as a % of contracted
revenue 28% 26%
--------------------------------- ---------- -----------
Net result (GBP0.95m) (GBP1.47m)
--------------------------------- ---------- -----------
*At constant currency, exchange rate of 1.4318.
It is evident from the KPIs how important a successful renewals
programme was to the business this year. This was a key focus of
the sales team and we are pleased with the number of renewal
contracts signed, being 28 out of a possible 35. While new client
wins were lower than the previous year, being only 9 in comparison
to 21, these deals represent a healthy addition to our client base
and will provide us with additional revenue generation
opportunities in the future. Three of the new clients were on
annual contracts with the remaining being technology with
consulting engagements.
Once again, our new clients include an impressive array of large
global businesses, across a variety of sectors including financial
services, pharmaceutical, professional services and aviation. By
the period end we had 39 clients (FY15: 42) on annual or multi-year
contracts, which although a drop is still higher than in previous
years and represents a healthy renewal base of GBP2.9m (FY15:
GBP3.1m).
The value of our contracts and our continued strong renewal
rates provides the Board confidence that, as greater proportion of
the fixed cost base is covered by the existing customer base, the
Company's contracted revenue base will be able to underpin the
fixed cost base of the business in the long term.
Financial Review
Total bookings for the year to 31 March 2016 amounted to GBP4.0m
(FY15: GBP3.4m) with a significant contribution in the year arising
from contract renewals, with a large number of multi-year contracts
being available for renewal in the period.
Customer churn, as measured by contract value, has reduced over
the last several years and is now at 10% or less. We attribute
these low churn rates to the role that our consulting services now
play in ensuring that our clients secure ongoing material benefits
from the use of the technology and services.
During the year, 31% of bookings were generated from up-selling
our software and consulting services into existing customers, 22%
from selling into new clients, and 47% from renewals business
(FY15: 39:42:19%). We added 9 new customers during the year (FY15:
21). Of the 39 clients contracted at the period end, some 21 are on
a multi-year contract (FY15: 26), with 28 available for renewal in
the next financial year.
Total recognised revenue for the year ended 31 March 2016
increased by approximately 16% to GBP3.89 million (FY15: GBP3.34
million). Recognised revenue has improved over each of the last
three years. Key to this has been an increase in the amount derived
from the consulting services that the Company offers, growth which
is largely a function of the innovation advisory work contracted.
Consulting revenue has increased approximately 127% from GBP0.44m
in FY14 to approximately GBP1.0m in FY16. This is often the first
point of contact for new clients as we seek longer term
relationships.
The US continues to be our core sales market and the percentage
of recognised revenues from the region grew in the period to 31
March 2016 to 77% (FY15: 71%) with the remaining 23% made up from
the rest of the world (FY15: 29%).
Administrative expenses for the period were broadly in line with
the prior year at GBP4.7m (FY15: GBP4.6m including GBP0.15m of FX
losses (FY15: GBP0.2m loss). Head count dropped from 39 at the end
of the prior year, to 35, reflecting the Company's focus on the
containment of costs. This resulted in a loss before tax of
GBP1.11m (FY15: GBP1.58m). We were again successful in securing an
R&D tax credit from HMRC of GBP0.17m (FY15: GBP0.12m),
reflected in the taxation line in the consolidated statement of
comprehensive income.
Losses on ordinary activities after tax were GBP0.95m in the
year ended 31 March 2016 a reduction of 35% on the prior year
(FY15: GBP1.46 million). This improved position is driven by the
higher revenues achieved with only a small increase in the total
cost base.
We have continued to invest in our technology platform and
consulting offerings in the year, upgrading and adding new
functionality and new products to improve our competitiveness. In
the year we capitalised GBP0.27m of costs (FY15: GBP0.2m), mainly
relating to internal salaries, with GBP70k of third party
development costs (FY15: all internal costs).
Cash outflows from operating activities was GBP0.45m (FY15:
GBP1.03m) these outflows were met through the institutional fund
raisings undertaken in the period and the loan from Matt Cooper,
both referred to below.
In May and June 2015 the Company undertook placings of new
ordinary shares with both new and existing shareholders, raising
aggregate net proceeds of GBP0.62m.
The Company announced on 19 January 2015, that Matt Cooper had
agreed to lend to the Company the sum of US$250,000. This loan was
repaid in full after the end of the year, following the equity
fundraise carried out in June 2016. There are no further Director
loans outstanding.
Subsequent to the period end, the Company raised GBP1.58m gross
via a placing and a further GBP0.09m via an Open Offer to
shareholders. These funds will be used to add additional sales and
consulting capabilities to capture increased volume of
opportunities, to increase the marketing spend to build the
Company's brand in the marketplace, to build new technology
capabilities to capture growing market demand, and to hire a
full-time CTO and add additional developer capacity. An increase in
working capital will allow the Company to smooth out the
seasonality in the sales pipeline.
The Directors have reviewed the group's budgets and forecasts
for the coming 12 months, which have been prepared with appropriate
regard to the current macroeconomic environment and the conditions
in the principal markets served by the group. The Directors have
taken into consideration the group's net funds, the level of
anticipated renewals by reviewing on a customer by customer basis,
forecast new and up sell revenues based on sales in the pipeline
and anticipated costs. There is inherent uncertainty in the level
of anticipated renewals and up sell revenues and assumptions are
based on reasonable expectations taking into account historic
experience and current knowledge. The forecasts include investments
and additional costs commensurate with expected levels of growth
and options available to the Directors include the ability to flex
these investments and costs should predicted revenues be lower than
forecast.
As a result, at the time of approving the financial statements,
the Directors consider that the group has sufficient financial
resources to continue in operational existence for the foreseeable
future and, therefore, that it is appropriate to adopt the going
concern basis in preparing these financial statements. As with all
business forecasts, the Directors' statement cannot guarantee that
the going concern basis will remain appropriate given the inherent
uncertainty about future events.
Summary and Outlook for 2016
We are pleased with the growth achieved in the year and the
underlying progress within the business. The success of our
evolution from a software company with a narrow technology focus,
to a recognised industry leader with a full-service innovation
offering is beginning to be reflected in the financial results.
The funds raised in June have given us the capacity to invest in
the business and capitalise on the growth in the innovation market.
Our outstanding reference customers in Europe and the US, industry
leading offering and strengthening financial position provide us
with a solid platform on which to build and we are confident we
will make further progress in the year ahead.
Approved by the Board and signed on its behalf by:
Ralph Welborn
Chief Executive Officer
Shawn Taylor
Chief Operating and Financial Officer
16 August 2016
Imaginatik plc
Consolidated Statement of Comprehensive Income for the Year
Ended 31 March 2016
2016 2015
Note GBP 000 GBP 000
Revenue 3 3,893 3,336
Cost of sales (232) (265)
-------- --------
Gross profit 3,661 3,071
Administrative expenses (4,720) (4,625)
Other operating income 4 14 -
-------- --------
Operating loss 5 (1,045) (1,554)
Finance costs 7 (65) (28)
-------- --------
Loss before tax (1,110) (1,582)
Income tax receipt 8 165 119
-------- --------
Loss on ordinary activities
for the year and total comprehensive
income (945) (1,463)
======== ========
Loss per share - Basic and
diluted 9 1.15p 2.46p
======== ========
The above results were derived from continuing operations.
The group has no recognised income or expenses other than the
results for the year as set out above.
All of the above losses for the year are attributable to equity
holders of the parent.
Imaginatik plc
Consolidated Statement of Financial Position as at 31 March
2016
2016 2015
Note GBP 000 GBP 000
Assets
Non-current assets
Property, plant and equipment 19 35
Intangible assets 493 392
Trade and other receivables 273 330
-------- --------
785 757
-------- --------
Current assets
Trade and other receivables 1,403 1,666
Cash and cash equivalents 23 125
-------- --------
1,426 1,791
-------- --------
Total assets 2,211 2,548
======== ========
Equity and liabilities
Equity
Share capital 10 3,374 3,154
Share premium 6,883 6,480
Other reserves 1,143 1,076
Retained earnings (12,817) (11,872)
-------- --------
Equity attributable to owners
of the company (1,417) (1,162)
-------- --------
Non-current liabilities
Deferred income 736 851
Current liabilities
Trade and other payables 2,892 2,859
-------- --------
Total liabilities 3,628 3,710
-------- --------
Total equity and liabilities 2,211 2,548
======== ========
Imaginatik plc
Consolidated Statement of Cash Flows for the Year Ended 31 March
2016
2016 2015
Note GBP 000 GBP 000
Cash flows from operating
activities
Loss for the year (945) (1,463)
Adjustments to cash flows
from non-cash items
Depreciation and amortisation 5 180 121
Share based payment transactions 67 109
Income tax credit 8 (165) (119)
-------- --------
(863) (1,352)
Working capital adjustments
Decrease/(increase) in trade
and other receivables 320 (53)
(Decrease)/increase in trade
and other payables (82) 259
-------- --------
Cash generated from operations (625) (1,146)
Income taxes received 8 165 119
-------- --------
Net cash flow from operating
activities (460) (1,027)
-------- --------
Cash flows from investing
activities
Acquisitions of property plant
and equipment (1) (29)
Acquisition of intangible
assets (264) (202)
-------- --------
Net cash flows from investing
activities (265) (231)
Cash flows from financing
activities
Proceeds from issue of ordinary
shares, net of issue costs 623 1,289
-------- --------
Net (decrease)/increase in
cash and cash equivalents (102) 31
Cash and cash equivalents
at 1 April 125 94
-------- --------
Cash and cash equivalents
at 31 March 23 125
======== ========
Imaginatik plc
Consolidated Statement of Changes in Equity for the Year Ended
31 March 2016
Retained
Share capital Share premium Other reserves earnings Total Total equity
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2014 1,940 6,405 967 (10,409) (1,097) (1,097)
------------- ------------- -------------- --------- -------- ------------
Employee share-based payment
options - - 109 - 109 109
Issue of share capital 1,214 75 - - 1,289 1,289
------------- ------------- -------------- --------- -------- ------------
Transactions with owners 1,214 75 109 - 1,398 1,398
Loss for the year and total
comprehensive income - - - (1,463) (1,463) (1,463)
------------- ------------- -------------- --------- -------- ------------
At 31 March 2015 3,154 6,480 1,076 (11,872) (1,162) (1,162)
============= ============= ============== ========= ======== ============
Retained
Share capital Share premium Other reserves earnings Total Total equity
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
At 1 April 2015 3,154 6,480 1,076 (11,872) (1,162) (1,162)
------------- ------------- -------------- --------- -------- ------------
Employee share-based payment
options - - 67 - 67 67
Issue of share capital 220 403 - - 623 623
------------- ------------- -------------- --------- -------- ------------
Transactions with owners 220 403 67 - 690 690
Loss for the year and total
comprehensive income - - - (945) (945) (945)
------------- ------------- -------------- --------- -------- ------------
At 31 March 2016 3,374 6,883 1,143 (12,817) (1,417) (1,417)
============= ============= ============== ========= ======== ============
Imaginatik plc
Notes to the Financial Statements for the Year Ended 31 March
2016
1. General Information
The group headed by Imaginatik PLC is one of the leading
providers of collaborative innovation software and related
professional services to large and medium-sized enterprises.
The Company is a public company limited by share capital
incorporated and domiciled in the UK.
The address of its registered office is:
22 Melton Street
London
NW1 2BW
The Company's ordinary shares are traded on the AIM market of
the London Stock Exchange.
The Company has adopted the requirements of International
Financial Reporting Standards (IFRS) and IFRIC interpretations
endorsed by the European Union (EU) and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention and are in accordance with applicable accounting
standards.
The financial information set out in this preliminary results
announcement does not constitute the Group's statutory financial
statements for the year ended 31 March 2016 or 2015 but is derived
from those financial statements. Statutory financial statements for
2015 have been delivered to the Registrar of Companies. Those for
2016 will be delivered following the Company's Annual General
Meeting, which will be convened on 13 September 2016. The auditors
have reported on those accounts: their reports on those financial
statements were unqualified and did not contain statements under
section 498 of the Companies Act 2006.
The financial statements, and this preliminary statement, of the
Group for the year ended 31 March 2016 were authorised for issue by
the Board of Directors on 17 August 2016 and the balance sheet was
signed on behalf of the board by 17 August 2016.
These financial statements have been prepared in accordance with
the accounting policies set out below, which have been consistently
applied to all the years presented. These accounting policies
comply with applicable IFRS and IFRIC interpretations issued and
effective at the time of preparing these statements.
2. Accounting Policies
Going concern
The group posted a loss of GBP945,000 (2015: GBP1,463,000) for
the period, has current net liabilities of GBP1,466,000 (2015:
GBP1,068,000) and retained losses of GBP12,817,000 (2015:
GBP11,872,000). The group has net funds at 31 March 2016 of
GBP23,000 (2015: GBP125,000).
The group meets its financing requirements through the regular
placing of new shares and completed a placing of new ordinary
shares with institutional and other investors in May 2015 raising a
total of GBP504,000 before expenses. The Company completed a
further placing of new ordinary shares in July 2015, raising a
total of GBP120,000 before expenses. During the prior period the
group also announced that Matt Cooper, Non-Executive Chairman, had
agreed a loan of $250,000 which remained in place at the period
end. This loan was repaid in full after the end of the year,
following the equity fundraise carried out in June 2016. There are
no further Director loans outstanding.
Subsequent to the period end, the Company raised GBP1.58m gross
via a placing and a further GBP0.09m via an Open Offer to
shareholders. These funds will be used to add additional sales and
consulting capabilities to capture increased volume of
opportunities, to increase the marketing spend to build the
Company's brand in the marketplace, to build new technology
capabilities to capture growing market demand, and to hire a
full-time CTO and add additional developer capacity. An increase in
working capital will allow the Company to smooth out the
seasonality in the sales pipeline.
The Directors have reviewed the group's budgets and forecasts
for the coming 12 months, which have been prepared with appropriate
regard to the current macroeconomic environment and the conditions
in the principal markets served by the group. The Directors have
taken into consideration the group's net funds, the level of
anticipated renewals by reviewing on a customer by customer basis,
forecast new and up sell revenues based on sales in the pipeline
and anticipated costs. There is inherent uncertainty in the level
of anticipated renewals and up sell revenues and assumptions are
based on reasonable expectations taking into account historic
experience and current knowledge. The forecasts include investments
and additional costs commensurate with expected levels of growth
and options available to the Directors include the ability to flex
these investments and costs should predicted revenues be lower than
forecast.
As a result, at the time of approving the financial statements,
the Directors consider that the group has sufficient financial
resources to continue in operational existence for the foreseeable
future and, therefore, that it is appropriate to adopt the going
concern basis in preparing these financial statements. As with all
business forecasts, the Directors' statement cannot guarantee that
the going concern basis will remain appropriate given the inherent
uncertainty about future events.
Basis of consolidation
The group financial statements for the year ended 31 March 2016
consolidate the financial statements of Imaginatik PLC and its
subsidiary undertaking using the acquisition method. Subsidiaries
are entities that are directly or indirectly controlled by the
group. Inter-company balances are eliminated on consolidation.
The Company has taken advantage of the exemption under S408 of
the Companies Act 2006 and has not presented its own statement of
comprehensive income. Of the consolidated result for the year ended
31 March 2016 a loss of GBP974,000 (2015: loss of GBP1,487,000) is
attributable to the Company.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable net of sales related taxes. Income for the
group is derived from two sources: Technology and Consultancy.
These sources are service-based rather than through the sale of
goods. Following the principles of IAS 18 Revenue, the policies for
income recognition in respect of each of the different sources of
income are such that income is recognised by reference to the stage
of completion of the transaction at the end of the reporting
period. In applying the income recognition policies below where
there is a requirement for a contract to be signed, income is
recognised in accordance with the policy when the contract has been
signed or persuasive evidence of an arrangement exists.
a) Consulting:
Income derived from our consulting offering subject to contracts
is recognised in the month in which the consulting takes place.
Income from longer term consulting arrangements shall be recognised
evenly over the term of the contract.
b) Technology:
The provision of our suite of technology products includes
provision of software licences, hosting and maintenance in relation
to the product over the contract term. Income arising from the
provision of these bundled services are recognised evenly over the
term of the contract, once an agreement has been signed or
persuasive evidence of an arrangement exists.
Critical judgements and significant accounting estimates
In determining and applying accounting policies, judgement is
often required in respect of items where the choice of specific
policy, accounting estimate or assumption to be followed could
materially affect the reported results or net asset position of the
Group should it later be determined that a different choice would
be more appropriate. The most significant areas where judgements
and estimates have been applied are as follows:
Judgements
The value of the awards under the modified and new share option
scheme was measured, in accordance with IFRS 2, by reference to
their fair value at the date on which they were granted. Judgement
was required in determining the most appropriate valuation
model.
Estimates
Significant assumptions were necessary in arriving at the inputs
into the valuation model for modified and new share option
scheme.
3. Segmental Reporting
Management currently identifies the Group's two revenue streams
as its operating segments. These operating segments are monitored
by the Group's Chief Operating Decision Maker. For these operating
segments only revenues are reported to the Group's Chief Operating
Decision Maker as results, other costs and assets and liabilities
cannot be reliably allocated to the operating segments.
2016 2015
GBP'000 GBP'000
Segmental revenue:
Technology 2,778 2,465
Consultancy 1,115 871
------- -------
3,893 3,336
======= =======
All other information presented to the Chief Operating Decision
Maker is the same as is reported in these financial statements.
The Group's revenues from external customers and its non-current
assets are divided into the following geographical areas:
2016 2015
GBP'000 GBP'000
Segmental revenue:
United States of America 2,977 2,383
Rest of the World 916 953
------- -------
3,893 3,336
======= =======
Segmental non-current assets:
United States of America 219 314
Rest of the World 566 443
------- -------
785 757
======= =======
Revenues from external customers have been identified on the
basis of the customer's geographical location. Non-current assets
are allocated based on their physical location.
The Group has nil customers (2015: one customer), who accounted
for revenues of more than 10% of Group revenues (2015: revenues of
GBP357,000). These 2015 revenues arose in the Technology
segment.
4. Other operating income
The analysis of the group's other operating income for the year
is as follows:
2016 2015
GBP 000 GBP 000
Sub lease rental income 14 -
======== ========
5. Operating Profit
Arrived at after charging/(crediting)
2016 2015
GBP 000 GBP 000
Depreciation expense 17 20
Amortisation expense 163 101
Research and development
cost 165 182
Foreign exchange losses 150 199
Operating lease expense -
property 76 89
========= =========
6. Auditor's Remuneration
2016 2015
Auditors Remuneration GBP 000 GBP 000
Fees payable to the company's
auditor for the audit of
the company's annual accounts 22 22
Fees payable to the company's
auditor and its associates
for other services:
Audit of the accounts of
subsidiaries 1 1
Tax advisory services 3 3
--------- ---------
26 26
========= =========
7. Finance income and costs
2016 2015
GBP 000 GBP 000
Finance costs
Other finance costs 65 28
======== ========
8. Income Tax
Tax charged/(credited) in the income statement
2016 2015
GBP 000 GBP 000
Current taxation
UK corporation tax (165) (119)
======== ========
The tax on (loss)/profit before tax for the year is less than
(2015 - less than) the standard rate of corporation tax in the UK
of 20% (2015 - 20%).
The differences are reconciled below:
2016 2015
GBP 000 GBP 000
Loss before tax (1,110) (1,582)
======== ========
Corporation tax at standard rate (183) (293)
Effect of revenues exempt from
taxation (39) (29)
Effect of expense not deductible
in determining taxable profit
(tax loss) 15 24
Effect of tax losses - 251
Other timing differences - 2
Increase (decrease) from effect
of tax incentives 1 (5)
Increase (decrease) in UK and
foreign current tax from unrecognised
tax loss or credit 206 190
Increase (decrease) in UK and
foreign current tax from adjustment
for prior periods (165) (119)
Other tax effects for reconciliation
between accounting profit and
tax expense (income) - (140)
-------- --------
Total tax credit (165) (119)
======== ========
Factors that may affect future tax charges
Based on current capital investment plans, the group expects to
be able to continue to claim capital allowances in excess of
depreciation in future periods at a slightly lower level than in
the current period.
At 31 March 2016 the group has estimated tax losses of
GBP9,981,625 (2015: GBP8,923,275) carried forward and available
indefinitely for offset against future profits. No deferred tax
asset has been recognised in respect of these losses as there is
insufficient evidence that future profits will be sufficient for
recovery of the losses.
9. Earnings per share
The calculation of basic loss per share (EPS) is based on the
loss attributable to equity holders of the parent for the year of
GBP945,000 (2015: loss of GBP1,463,000) and a weighted average of
81,948,369 (2015: 59,547,244) ordinary shares in issue.
The share options issued during the current and prior year are
anti-dilutive due to losses, and therefore diluted EPS equals basic
EPS.
10. Share capital and reserves
Allotted, called up and fully paid shares
2016 2015
No. 000 GBP 000 No. 000 GBP 000
Ordinary shares
of GBP0.01 (2015
- GBP0.05) each 85,112 851 63,084 3,154
Deferred shares
of GBP0.04 (2015
- GBP0) each 63,084 2,523 - -
148,196 3,374 63,084 3,154
======= ======= ======= =======
New shares allotted
During the year 22,027,294 ordinary shares having
an aggregate nominal value of GBP220,273 were
allotted for an aggregate consideration of GBP660,737.
Issue costs relating to the above placings were
GBP38,000 and have been deducted from the share
premium account.
Share premium account
This reserve records the consideration premium for shares issued
at a value that exceeds their nominal value, less any costs
incurred relating directly to the issue of these shares.
Other reserve account
This account acts as the share option reserve and records the
charges to profit with respect to unexercised share options.
Alloted, called up and fully paid shares
2016 2015
No. 000 GBP 000 No. 000 GBP 000
At 1 April 63,084,290 3,154 3,104,694,741 1,940
Issued in the year 22,027,294 220 24,275,606 1,214
Share consolidation - - (3,065,886,057) -
Share sub-division 63,084,290 - - -
----------- ------- --------------- -------
At 31 March 148,195,874 3,374 63,084,290 3,154
=========== ======= =============== =======
In June 2015 the Company undertook a share capital
re-organisation, under which 63,084,290 ordinary shares previously
having a nominal value of 5 pence each were subdivided into one new
ordinary share of 1 pence each and one deferred share of 4 pence
each.
11. Report and Accounts
Copies of the Company's full statutory financial statements will
be available from the Company's place of business at Carnac
Cottage, Cams Hall Estate, Fareham, PO16 8UU and on its
website,www.imaginatik.com. A copy of the report and accounts will
be sent to all shareholders with the notice of the AGM in due
course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGMRVVVGVZM
(END) Dow Jones Newswires
August 17, 2016 02:00 ET (06:00 GMT)
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