Imaginatik PLC IMTK Half Yearly Report

  Imaginatik PLC (IMTK) - Half Yearly Report

RNS Number : 6311R
Imaginatik PLC
21 November 2012




21 November 2012

                                Imaginatik Plc

                       ("Imaginatik" or the "Company")

                               Interim Results



Imaginatik plc  (AIM: IMTK.L),  a leading  provider of  enterprise  innovation 
services including a range of  technology products and consultancy,  announces 
its unaudited interim results for the half year ended 30 September 2012.



Key points



· Revenue increased by 8% to £1.75 million (H1 2011: £1.62 million)

· Operating losses before share option costs reduced to £0.36 million (H1
2011: £0.43 million)

· Substantial number  of new customer  wins: 17 new  customers on  either 
annual or pilot contracts (H1 2011: 6)

·  Increasing  proportion  of   customers  taking  consultancy   services 
alongside software offering including Mead  Johnson, Proctor & Gamble and  The 
Society of Petroleum Engineers

· Successful conclusion of litigation

· Placing in June 2012 raising £1.0 million before expenses



Matt Cooper, Executive Chairman of Imaginatik, commented, "We believe we  have 
now entered the 'age of innovation' -  a unique time in the world of  business 
when globalisation, the  availability of data  and the fast  moving nature  of 
product development means that innovation is a required business competence to
survive. It is now  imperative that companies understand  how to innovate  and 
adapt to  these fast-changing  markets, yet  many companies  do not  have  the 
internal processes  or  know  how to  make  it  a fundamental  part  of  their 
operations. This is our opportunity and our challenge.



Trading in the  second half  has begun  well and,  with a  strong pipeline  of 
opportunities and  renewals  for  the  second half,  we  are  confident  of  a 
successful outcome for the year as a whole." 



For further information please contact: 



Imaginatik plc                                      Tel: 020 7917 2975
Matt Cooper, Executive Chairman / Shawn Taylor, CFO
Northland Capital Partners Limited                  Tel: 020 7796 8800
Edward Hutton / Tim Metcalfe
Newgate Threadneedle                                Tel: 020 7653 9850
Caroline Evans-Jones / Hilary Millar



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, 
Boeing, Pfizer, Goodyear, Paccar, Kellogg  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)  and  is  a  World  Economic  Forum 
Technology Pioneer  with offices  in Boston,  MA, and  Fareham, UK.  For  more 
information visitwww.imaginatik.com.







Introduction



We believe we have now entered the 'age of innovation' - a unique time in  the 
world of business when  globalization, the availability of  data and the  fast 
moving nature  of product  development  means that  innovation is  a  required 
business competence to survive. It is now imperative that companies understand
how to innovate and adapt to these fast-changing markets.



We continue to see evidence  that companies are recognising this  requirement; 
for example the role of the Chief Innovation Officer within a large enterprise
is becoming more commonplace and companies are now seeking external assistance
in developing innovation strategies.  While many are  making good progress  in 
this respect there remains substantial scope for improvement and this presents
a significant opportunity for us.



Over the  past  decade  Imaginatik  has built  the  skills,  competencies  and 
insights to understand how innovation is best achieved at scale. It is not the
domain of a single individual, but rather best accomplished through harnessing
the collective wisdom of a company's employees, customers and partners. Via  a 
series of processes,  innovation can  be learned,  institutionalized and  then 
repeated. Our  mission is  to ensure  innovation becomes  embedded within  our 
customers, achieved through  a mixture  of sophisticated  software and  market 
leading consultancy.



We continue to make good progress in the execution of our strategy to  provide 
a complete innovation  solution comprising software  and consultancy, and  are 
seeing a growing amount  of evidence vindicating  our strategic direction.  We 
continue to receive market validation  from industry research houses, such  as 
Forrester, from  the increasing  proportion  of customers  taking  consultancy 
services alongside our software offering and the accelerated pace at which  we 
have added new customers. We have  also been pleased by the positive  response 
to our increased activities  in Europe, securing  several new customers,  with 
many more opportunities in the pipeline.



We believe we now have the right strategy, the right people, the most complete
technology solution and the  broadest consultancy offering  in the market.  We 
are now moving into the next phase  which is a focus on the broader  marketing 
of our business, raising awareness of our  offering in our two key markets  of 
North America and Europe.



Financial Review



Total revenue for the  half year ended  30 September 2012  increased by 8%  to 
£1.75 million (H1 2011: £1.62 million).  During the period, 7% of revenue  was 
generated from up-selling our software and consultancy services into  existing 
customers, 69%  from  selling  into  new customers,  and  24%  from  recurring 
business (H1 2011:  18%: 29%:  53% respectively). We  secured a  significantly 
higher level of new customers during the period, adding 17 (H1 2011: 6),  with 
9 of these being on annual contracts (H1 2011: 3).



The US  continues to  be our  core market,  with revenues  generated from  the 
region in the period  accounting for 93% (H1  2011: 98%). The European  market 
offers significant opportunity  and, following  an increased  presence in  the 
region, we are encouraged by the progress achieved in the period. Revenue from
the European market grew to 7% (H1 2011: 2%).



Investment into our technology  and software platform remains  a key focus  of 
the Company,  and  we have  continued  to invest  in  the development  of  our 
software   platform,   including    improved   functionality,    multi-lingual 
capabilities and  connectors  for  various corporate  platforms.  During  the 
period the Company has capitalised development costs amounting to £0.12m,  (H1 
2011: £nil) as the Company now meets the necessary accounting requirements set
out in IAS38: Intangible assets.



We have once again secured  an R&D tax credit from  HMRC of £0.13 million  (H1 
2011: £0.11  million) reflecting  the pioneering  nature of  the research  and 
development work we undertake. This is  reflected in the taxation line in  the 
income statement.



Administrative expenses for the period  were £1.99 million, a slight  increase 
on the  previous year  (H1 2011:  £1.96 million).  This was  a result  of  the 
addition of  senior  headcount in  the  US and  Europe  but mitigated  by  the 
capitalisation of certain development costs referred to previously. 



Operating losses before share-based payments have again been reduced to  £0.36 
million (2011:  £0.43 million)  and is  a  function of  both the  increase  in 
revenues and the stable cost base.



Cash outflows from operating activities narrowed to £1.01 million in the first
six months of the  year (H1 2011:  £1.20 million). As a  result of the  strong 
close to the period, the Company had short term receivables amounting to £1.74
million (H1  2011: £1.62  million) and  longer term  receivables amounting  to 
£0.34 million (H1 2011: nil). The longer term receivables arose as a result of
a number  of  multiyear contracts  entered  into  during the  half.  The  vast 
majority of the  short term  receivables are expected  to be  received in  the 
second half of the year.



During the period  the Company successfully  concluded its litigation  against 
the former CEO Mark Turrell. In a concluding hearing on the 27 September  2012 
the High Court granted the  Company and Matt Cooper an  order over all of  Mr. 
Turrell's 64.4 million shares in Imaginatik plc. Those shares have been  split 
in an equitable manner between  the Company and Matt  Cooper, as a result  the 
Company has an order over 54.1  million shares. It is the Company's  intention 
to dispose of the  shares in an  orderly manner. Under IAS  32 the shares  may 
only be recognized as an asset to the Company at the point of disposal.



The Company completed a placing of new ordinary shares with institutional  and 
other investors in  June 2012 raising  £1.0 million before  expenses. The  net 
proceeds are being used to  expand the Company's US  based sales team, to  add 
further consultancy capacity in both the  US and European markets, to  further 
develop the Company's  technology and  to develop our  branding and  marketing 
efforts.



Operational Review



Customers



During the period we added 17 new customers, compared to six in the first half
of the previous  year. Of  these, nine  were annual  contracts, including  Air 
Products and Chemicals, Inc. and Chartis Global Services, Inc., and five  were 
pilot projects, including MillerCoors and Merck & Co., Inc., with the  balance 
being consultancy-led engagements.



The general economy  stills poses  a challenge, as  evidenced by  the loss  of 
three customers in  the period  due to  budgetary constraints.  Each of  these 
contracts was based on our 'old model' with no consultancy support and we  are 
confident that as an increasing number of our customers rely on Imaginatik  to 
provide  them  with  full  innovation  capabilities,  we  will  increase   the 
resilience of our customer base.



Technology



The investments we  have made in  our technology platform  over the past  year 
have been directed towards the expansion of our product offerings. We now have
a suite  of  products  which  spans the  innovation  spectrum.  Starting  with 
Discovery  Suite,  which  helps  customers  identify  where  to  focus   their 
innovation efforts, through its 'four  lens' methodology, through to the  core 
platform, Innovation Central, which enables companies to engage the collective
brain  power  of  their  employees,  partners  and  customers  in   innovation 
challenges, and finally to Results Engine which allows organizations to manage
and track projects resulting in implemented ideas.



Substantial progress has also  been made during  this period in  incorporating 
multi-lingual capabilities into the platform and establishing connectors  into 
some of the fastest growing corporate platforms, such as SharePoint, Jive  and 
Yammer. Both of these initiatives are significantly increasing our addressable
market.



Consultancy



We are experiencing solid  growth in the number  of contracts for  consultancy 
where we  provide  both  guidance  to senior  management  on  their  long-term 
innovation strategies and more targeted innovation support in the form of  new 
product, marketing and  brand positioning  projects. Contracts  in the  period 
include with  Mead Johnson,  Proctor &  Gamble and  The Society  of  Petroleum 
Engineers. In addition,  most new  annual contracts and  renewals now  include 
some element of operational  consultancy, to ensure successful  implementation 
of challenges.  The  period also  saw  the  Company secure  the  first  annual 
technology contract  generated  from  a consultancy  lead.  We  believe  these 
factors are a strong endorsement of our strategy.



The focus in the second  half of the year will  be the further integration  of 
our technology and  consultancy offering.  This includes  the development  and 
launch of a  completely new  innovation offering that  is supported  by a  new 
technology for creative  collaboration and  insight generation.  It will  also 
include a  suite  of  new  innovation programmes  for  senior  management  and 
innovation teams designed to strengthen their innovation competency.



Sales and Marketing



Web-based lead generation  continues to  be a significant  contributor to  our 
sales pipeline and as a  result much focus in the  first half of the year  has 
been on the development  of a new  website to enhance  our web presence.  This 
project is approaching completion and is expected to be launched in the second
half of the  year. We continue  to host  well attended webinars  on a  regular 
basis, with four taking place in the first half of the year. These are proving
to be a useful lead generation tool. This will be continued in the second half
of the year, supplemented  by our annual Innovation  Leaders Forum which  will 
take place in Boston the early part of 2013. In order to develop the  business 
further we have  secured relationships  with various third  parties to  assist 
with lead generation in both the US and Europe which is delivering  additional 
opportunities.



Outlook



We continue  to  believe  the  prospects for  Imaginatik  to  be  significant. 
Innovation is now a crucial business skill and yet many companies do not  have 
the internal processes  or know how  to make  it a fundamental  part of  their 
operations. This is our opportunity and our challenge.



Trading in the  second half  has begun  well and,  with a  strong pipeline  of 
opportunities and  renewals  for  the  second half,  we  are  confident  of  a 
successful outcome for the year as a whole.



Condensed unaudited  consolidated interim  statement of  Comprehensive  Income 


For the six months ended 30 September 2012



                                      Unaudited 6  Unaudited 6 Audited Year to
                                     months to 30 months to 30   31 March 2012
                                             Sept         Sept

                                             2012         2011
                                Note        £'000        £'000           £'000
Revenue                                     1,754        1,624           3,447
Cost of sales                               (170)        (158)           (321)


Gross profit                                1,584        1,466           3,126
Administrative expenses                   (1,997)      (1,958)         (4,211)
Operating loss before financing             (413)        (492)         (1,085)
and taxation
Operating loss before share                 (363)        (434)           (976)
option costs
Share option costs                           (50)         (58)           (109)
Finance income/(costs)                          -            -             (8)
Loss on ordinary activities                 (413)        (492)         (1,093)
before taxation
Taxation                                      131          108             108
Loss on ordinary activities for             (282)        (384)           (985)
the period
Basic and diluted loss per       3         (0.04)       (0.15)      
share (p)                                                               (0.28)



All amounts are attributable  to equity holders of  the parent, and all  arise 
from continuing operations.  No amounts were  recognised directly in  equity, 
and  therefore  no  separate  statement  of  comprehensive  income  has   been 
presented.





Condensed unaudited consolidated interim Statement of Financial Position

As at 30 September 2012

 

                                          Unaudited Unaudited

                                            30 Sept   30 Sept
                                                              Audited 31 March
                                               2012      2011             2012
                                     Note     £'000     £'000            £'000
ASSETS
Non-current assets
 Property, plant and              46        70
equipment                                                                   51
 Intangible assets               161        73               51
 Trade & other                      346         -              106
receivables
                                                553       143              208
Current assets
 Trade and other               1,735     1,624
receivables                                                              1,034
 Cash and cash                   305       244
equivalents                                                                543
                                              2,040     1,868            1,577
Total assets                                  2,593     2,011            1,785
EQUITY AND LIABILITIES
Equity
 Issued capital                  341       267              321
 Share premium                 6,591     5,539            5,704
 Other reserves        5     (5,706)   (4,924)          (5,474)
Total equity attributable to equity           1,226       882              551
holders of the parent
Liabilities
Non-current liabilities
 Other payables                       -         -              136
Total non-current liabilities                     -         -              136
Current liabilities
 Trade and other               1,367     1,129            1,098
payables
                                              1,367     1,129            1,098
Total liabilities                             1,367     1,129            1,234
Total equity and liabilities                  2,593     2,011            1,785





Condensed unaudited consolidated interim statement of cash flows

For the six months ended 30 September 2012





                                         Unaudited

                                          6 months
                                                        Unaudited
                                        to 30 Sept                Audited Year
                                                   6 months to 30  to 31 March
                                   Note       2012      Sept 2011         2012
                                             £'000          £'000        £'000
Cash outflows from operating
activities                6      (1,007)        (1,204)      (1,115)
Investing activities
Acquisition of property, plant and
equipment                                     (18)            (1)          (9)
Acquisition of intangible assets             (120)              -            -
Net cash used in investing
activities                                   (138)            (1)          (9)
Net cash flow before financing
activities                                 (1,145)        (1,205)      (1,124)
Financing activities
Net proceeds from the issue of
share capital                                  907            980        1,199
Net cash generated from financing
activities                                     907            980        1,199
Net (decrease)/increase in cash
and cash equivalents                         (238)          (225)           75
Cash and cash equivalents at start
of period                                      543            469          469
Net foreign exchange difference                  -              -          (1)
Cash and cash equivalents at end
of period                                      305            244          543

 



Condensed unaudited consolidated interim statement of changes in equity

For the six months ended 30 September 2012





                                                                         Total
                          Share        Share  Share option      Retained
                        capital      premium       reserve      earnings     
                          £'000        £'000         £'000         £'000 £'000
Balance at 1 April
2011                        135        4,691           655       (5,253)   228
Loss for the
period                        -            -             -         (384) (384)
Share option costs            -            -            58             -    58
Shares issued               132          848             -             -   980
                            132          848            58         (384)   654
Balance at 30
September 2011              267        5,539           713       (5,637)   882
Loss for the
period                        -            -             -         (601) (601)
Share option costs            -            -            51             -    51
Shares issued                54          165             -             -   219
                             54          165            51         (601) (331)
Balance at 31
March 2012                  321        5,704           764       (6,238)   551
Loss for the
period                        -            -             -         (282) (282)
Share option costs            -            -            50             -    50
Shares issued                20          887             -             -   907
                             20          887            50         (282)   675
Balance at 30
September 2012              341        6,591           814       (6,520) 1,226



Notes to the unaudited condensed consolidated interim financial statements



1. Background



Imaginatik plc (the "Company") is a  company domiciled in the United  Kingdom. 
The unaudited  condensed  consolidated  interim financial  statements  of  the 
Company for the six  months ended 30September 2012  comprise the Company  and 
its subsidiary (together referred to as the "Group").



The condensed consolidated  interim financial statements  were authorised  for 
issue on 21 November 2012.



The interim financial statements are  not statutory accounts for the  purposes 
of section 435 of the Companies Act 2006. The comparative figures for the year
ended 31  March  2012  are  not the  Company's  statutory  accounts  for  that 
financial year. The financial information for the year ended 31 March 2012 is
based on the  statutory accounts for  the financial year  ended 31 March  2012 
restated for the effects of the adoption of International Financial  Reporting 
Standards in issue and adopted for use in the European Union ("IFRSs"). Those
accounts have been reported on by the Company's auditors and delivered to  the 
Registrar of Companies. The report of the auditors was (i) unqualified,  (ii) 
did not  include  a  reference to  any  matters  to which  the  auditors  drew 
attention by way of  emphasis without qualifying their  report, and (iii)  did 
not contain a statement under section 498(2) or (3) of the Companies Act 2006.



2. Basis of preparation



The financial  statements are  presented in  pounds sterling,  rounded to  the 
nearest thousand, unless stated otherwise.They are prepared on the historical
cost basis.



These  interim  financial  statements  have  been  prepared  using  accounting 
policies based on  IFRS as adopted  by the European  Union (including IAS  and 
interpretations   issued    by   the    International   Financial    Reporting 
Interpretations Committee ("IFRIC"))  that are expected  to be applicable  for 
the full reporting year  in 2012. These remain  subject to ongoing  amendment 
and/or  interpretation  and  are   therefore  subject  to  possible   change. 
Consequently, information contained in these interim financial statements  may 
need updating for any subsequent amendments to IFRS, or for any new  standards 
that the Group may elect to adopt early.



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



3. Loss per share



Basic loss per share

The calculation of basic loss per share for the period ended 30 September 2012
was based  on  the loss  attributable  to ordinary  shareholders  of  £282,000 
(period ended 30 September 2011:£384,000; year ended 31 March 2012: £985,000)
and a weighted average number of ordinary shares outstanding during the period
ended  30  September   2012  of   684,252,511  (period   ended  30   September 
2011:256,097,842; year ended 31 March 2012: 347,464,893).



Diluted loss per share

The options  in  place during  the  periods ended  30  September 2012  and  30 
September 2011 and during the year ended 31 March 2012 are considered to  have 
an anti-dilutive effect. Therefore, basic and  diluted loss per share is  the 
same for each of the three periods.



4. Segment reporting



Segment  information  is  presented  in  the  condensed  consolidated  interim 
financial statements in  respect of the  Group's geographical segments,  which 
are the primary basis of segment reporting. The geographical segment reporting
format reflects the Group's management and internal reporting structure.



Segment results include items  directly attributable to a  segment as well  as 
those that can be allocated on a reasonable basis. 



Geographical segments

The Group's  operations comprise  the  following main  geographical  segments, 
determined on the basis of the location of customers:



                      Unaudited

                       6 months
                                                             
                     to 30 Sept                                Audited Year to
                                 Unaudited 6 months to 30 Sept
                           2012                           2011   31 March 2012
                                                         £'000           £'000
Segment revenue
United States of
America                   1,633                          1,590           3,122
Rest of the world           121                             34             325
                          1,754                          1,624           3,447
Segment (loss)
United States of
America                   (253)                          (163)           (896)
Rest of the world          (29)                          (221)            (89)
                          (282)                          (384)           (985)
                      Unaudited                      Unaudited

                        30 Sept                        30 Sept         Audited

                           2012                           2011   31 March 2012
Segment total assets      £'000                          £'000           £'000
United States of
America                   2,054                          1,517           1,333
Rest of the world           538                            494             452
                          2,592                          2,011           1,785



5.  Share Capital and Reserves



                                  Unaudited

                                   6 months                    Audited Year to

                                 to 30 Sept Unaudited 6 months        31 March

                                       2012    to 30 Sept 2011           2012
                                      £'000              £'000           £'000
Share Capital
At the beginning of the period          321                135             135
Shares issued                            20                132             186
At the end of the period                341                267             321
Share premium
At the beginning of the period        5,704              4,691           4,691
Shares issued in the period, net
of expenses                             887                848           1,013
At the end of the period              6,591              5,539           5,704
Other reserves
At the beginning of the period      (5,474)            (4,598)         (4,598)
Loss for the period                   (282)              (384)           (985)
Share-based payments                     50                 58             109
At the end of the period            (5,706)            (4,924)         (5,474)





6. Cash flows from operating activities



                                 Unaudited

                                  6 months

                                to 30 Sept Unaudited 6 months Audited Year to

                                      2012     to 30 Sept 2011   31 March 2012
                                     £'000               £'000           £'000
Operating loss                       (282)               (384)         (1,085)
Depreciation of tangible fixed
assets                                  23                  31              59
Amortisation of intangible
fixed assets                            10                  31              53
Share-based payment expense             50                  58             109
Operating cash flows before
movements in working capital         (199)               (264)           (864)
(Increase) in trade and other
receivables                          (941)               (641)           (157)
(Decrease) / increase in
payables                               133               (299)           (194)
Net movement in working capital      (808)               (940)           (351)
Cash used by operations            (1,007)             (1,204)         (1,215)
Corporation tax received                 -                   -             108
Net interest expense                     -                   -             (8)
Net cash from operating
activities                         (1,007)             (1,204)         (1,115)



 


7. Availability of announcement



Copies of this announcement  will be available from  the Company's offices  at 
Carnac Cottage, Cams Hall  Estate, Fareham, Hampshire, PO16  8UU and from  its 
website, www.imaginatik.com. 





                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR BKKDNOBDDADB -0- Nov/21/2012 07:00 GMT