Final Results

Imaginatik PLC 12 June 2007 Imaginatik Plc ('Imaginatik' or the 'Company') Preliminary Results for the year ending 31 March 2007 Imaginatik plc (AIM: IMTK), a leading provider of Innovation and Collaborative Problem Solving software and process, announces its first preliminary results since its successful admission to trading on AIM in December 2006. Financial Highlights • Turnover up 77% to £2.5m (2006: £1.4m) • Operating loss before exceptionals of £0.4m (2006: profit £0.05m) • Loss before tax of £1.1m (2006: profit £0.02m) • Cash at bank and in hand of £0.9 (2006: £0.14) • Company raised £1.5m (net of expenses) in December 2006 by way of a placing Corporate Highlights • Consolidation of industry leading position with addition of GE Aviation, IBM, KPMG and Lexmark as clients, among others • Appointment of UK MD; with 4 pilot projects signed in the UK and Europe, post period end • Total number of active customers on pilot and long term contracts at year end was 50, (2006: 37) • Strengthening of the partnership with IBM Chief Executive, Mark Turrell commented: 'This has been a year of transition, establishing the foundations for further growth supported by a successful IPO on AIM. Whilst the process of the IPO was time consuming and did have a temporary adverse effect on the operational performance of the business, the Directors consider the IPO an integral part of the Company's business development plan. With the progress that has been made since the start of 2007, and the changing dynamics of the market, we look forward to continued success in the future. 'Since we came to market, we have signed further European projects and strengthened relationships with our European partners, enhancing our capacity to assist major global organisations to innovate. This is partly a function of our success in bringing our offering to the market, but also the result of a much greater appreciation by the market of the business benefits that can be derived from tapping into the 'collective genius' within organisations.' For further information please contact: Imaginatik plc Tel: 020 7917 2975 Mark Turrell, CEO / Shawn Taylor, CFO WH Ireland Tel: 0121 616 2101 Tim Cofman / Katy Birkin ICIS Tel: 020 7651 8688 Tom Moriarty / Laura Cocker Chairman's Statement Imaginatik was admitted to the market in December 2006 and I am delighted to be able to report to shareholders on a successful year. Since its inception in 2000, Imaginatik has grown into an international company, providing market leading innovation technology and services to some of the world's top organisations. In the last year we have expanded our offices in both the UK and US, and this year achieved revenue growth of almost 80% to £2.5m. We are the leading global provider of innovation and problem-solving technology and services. No other company has our depth of experience in this field, and this is undoubtedly the key to our continued growth. The innovation market is growing at pace, both in the US, which continues to be our core market, and now also in the UK and Europe. Our blue chip client base continues to grow and includes companies such as AstraZeneca, Chevron, Cargill, Coca Cola, Colgate Palmolive, General Electric, Hewlett-Packard, IBM, Merck, Pfizer, Weyerhaeuser and Whirlpool. We intend to continue this momentum into the next financial year and beyond. The successful IPO in December of last year gave us the funds to invest in further marketing and people, enabling us to capitalise on our market-leading position. I am delighted to welcome Geoff Carss as UK Managing Director with additional responsibility for the Company's strategic partner programme. Since joining us in January 2007, Geoff has driven a successful programme here in the UK, increasing our UK client base to 6 companies, all of which are currently working on pilot programmes. We hope to update shareholders on progress with these pilots in the coming months. We were very proud to be given the Queen's Award for International Trade in April 2007 in recognition of our substantial growth in overseas earnings and our commercial success. This is a great endorsement of our fast developing business. I would like to take this opportunity to thank our employees, partners and shareholders for their continued support. The current year has started slower than we would have liked but we are still looking forward to further progress for the full year. Howard Cleveley Marshall Non-Executive Chairman 12 June 2007 Chief Executive's Review The year ended 31 March 2007 has seen the achievement of a significant milestone in the development of Imaginatik. The Board took the decision to list on AIM at an early stage in our development, in order to gain access to funding and give us the additional credibility of being a public company as we looked to enter the next stage of our growth. Following our flotation and fund raising in December 2006, our efforts have now turned to the execution of our growth strategy, and the delivery of our award winning software to an ever increasing number of global clients. In order to achieve scale in the business, we have increased our headcount from 17 people at 31 March 2006 to 35 at 31 March 2007. The growth was mainly within sales, marketing, development and customer support, with the geographical split of the Company remaining evenly divided between the US and UK. Products and Services Idea Central is a software platform that enables our customers to solve business challenges rapidly and efficiently, providing benefits to the business in real, measurable, ways. During the year our product development has been focused on further increasing the scalability as well as the usability of our software, while better aligning the processes and systems to human behaviour. To that end - in conjunction with a partner we have worked with for a number of years - we developed Orchid, an additional software module that incorporates an innovation personality test which integrates with the existing Idea Central software environment. This is a module that further helps differentiate the Company from its competitors. The second release of the Orchid module will be launched in the next few months. Early in 2007, we took the decision to accelerate an investment in our server capacity, laying the foundations for the future scaling of the business. This additional server capacity directly enabled us to support our first event for over 100,000 users post year end with Hewlett-Packard. Customer Growth We saw a significant increase in customer numbers over the period, with an additional 8 customers moving from pilot contracts onto an annual contract during the year, bringing the total number of customers on annual contracts to 38. At the end of the period we had 12 companies on pilot contracts with us, compared to 6 at the end of March 2006, and we will be working to move them onto annual contracts in the current financial year. Of particular note was the evolution of General Electric's account from a pilot project to an annual contract. Also of significance was a project carried out by Pfizer, a long-standing customer, which initiated the first open deployment of our Idea Central software, allowing people outside of the organisation to take part in its Pfizer Incubator programme, via an online portal. At the Imaginatik User Group Conference held in Boston in May 2007, Whirlpool announced that within a two month period the use of Idea Central had resulted in the identification of $38m of cost savings - a great endorsement of the power of our software and innovation process. Another client to benefit from our technology is Weyerhaeuser, which in the first two years of using Idea Central delivered $40m in net benefits. Chevron has also benefited from the use of our software, as it was able identify seven key initiatives to boost customer loyalty for the Chevron franchise network. The Board believe that we are currently on average approximately 3% deployed across all of the organisations in which we have an installation of our software. Part of our growth strategy therefore is to continue to work with existing customers on extending our reach into other areas of these organisations, including via the development of their open innovation platforms. During the period, Dow Chemical, Pfizer and Weyerhaeuser all increased their number of annual licences and their use of our system. Partnering and Reselling A significant development towards the end of the year has been the introduction of our strategic partner programme. In this financial year our partnership with IBM in particular has had a material impact on our business. We currently have a master service agreement with IBM in both the US and in Europe, allowing us to partner on specific opportunities. We are now examining ways in which we can further strengthen that relationship and expect to be able to update shareholders in due course. We are also in the process of identifying additional consulting alliance partners. We anticipate that this initiative will enable us to speed up the sales cycle, justify a higher price point and enable the winning of larger revenue deals, whilst reducing our go-to-market cost and the overhead required for the delivery of our services. Sales Strategy and Market As stated in our Admission Document we are seeing a considerable increase in the level of interest in innovation as a business process. This market dynamic is being jointly driven at board level and from within IT departments as well as by sales, marketing and HR departments, all of which are increasingly being given a remit to develop an innovation infrastructure. The pressure to innovate is growing as company boards are seeing the real and substantial benefits being achieved by their competitors who have invested in this area, as they seek to increase margins and gain competitive advantage. With this in mind, and by focusing on developing the right partner channels, we have been able to rapidly gain access to the very top levels within major global organisations. We continue to build a large pipeline of opportunities both in the US and Europe and are confident of our ability to convert these opportunities and maintain high rates of growth in the coming year. Marketing Activities As a result of a growing awareness of the innovation market, the number of specific innovation related conferences has significantly increased in the last year. We sponsored and helped organise the first major UK innovation conference, hosted by the Financial Times in December 2006, and also sponsored the Front End conference in Munich in January 2007, the Front End conference in Boston in May 2007 and the World Innovation Forum in New York in June 2007. The funding from the IPO has enabled us to expand our presence at these conferences and take a more prominent sponsorship position. We have also seen a significant increase in the number of attendees at our semi-annual user group events, with attendance up threefold on the meetings held in 2006. In the last few months we have begun a series of webinars aimed at new prospects as well as existing clients, as a means of demonstrating our capabilities and differentiating ourselves from our competitors. Geographic Expansion Since the appointment in January 2007 of Geoff Carss as UK Managing Director, we have seen a significant increase in opportunities within the UK and Europe. Post year end we have signed pilot contracts with several major UK organisations, including COSI, KPMG, Norwich Union, as well as a project for the internal use of our system within IBM. We are seeing new opportunities in the Australasian market through IBM, as well as in Western Europe. The level of penetration of our type of technology remains extremely low in the majority of markets and we expect to quickly benefit from our first-mover advantage. Financial Review Turnover for the year ended 31 March 2007 grew by 77% to £2,491,708 (2006: £1,410,610). This was driven by increased sales into the customer base, and additional customer acquisition in the US, UK and Europe. Revenue split between the geographies was 95% USA and 5% UK and Europe (2006: USA 86%, UK 14%). The operating loss before exceptional items for the year was £432,567, moving from a profit of £46,618 in the previous year. This result was driven by increased staff costs and operating charges, including the costs of the improved server capacity. There were exceptional costs of £611,930 (2006: £nil) in respect of share awards provided to the key management team responsible for the future development of the business. We incurred an interest charge of £92,930 (2006: £28,977) which arose mainly from the interest charged on various loan notes provided to the Company by certain employees and other individuals. These loan notes were converted into equity at the time of the IPO. This resulted in a loss before tax of £1,128,976 for the year (2006: profit of £17,641). Cash at bank and in hand at the year end was £862,446 (2006: £142,426). We raised £1.5 million (net of expenses) in December 2006 via a placing of 27,793,345 ordinary shares at 7.5p per share, to fund the continued development of the business through the addition of further sales executives, marketing resources and implementation staff in both the US and UK, enabling the Company to take advantage of the expanding market for its products. Board Appointments I would like to thank Howard Marshall, our Non-executive Chairman, and Paul Morland and Phil Nutburn, our Non-executive Directors, for their time and ongoing support and guidance during the IPO process, and I look forward to their continuing support as we seek to grow our business. Current Trading and Prospects This has been a year of transition, establishing the foundations for further growth supported by a successful IPO on AIM. Whilst the process of the IPO was time consuming and did have a temporary adverse effect on the operational performance of the business, the Directors consider the IPO an integral part of the Company's business development plan. With the progress that has been made since the start of 2007, and the changing dynamics of the market, we look forward to continued success in the future. Since we came to market, we have signed further European projects and strengthened relationships with our European partners, enhancing our capacity to assist major global organisations to innovate. This is partly a function of our success in bringing our offering to the market, but also the result of a much greater appreciation by the market of the business benefits that can be derived from tapping into the 'collective genius' within organisations. Mark Turrell Chief Executive 12 June 2007 Preliminary announcement of results for the year ended 31 March 2007 Consolidated profit and loss account Results before Exceptional Exceptional Note items items 2007 2006 £ £ £ £ Turnover 2,491,708 - 2,491,708 1,410,610 Other external charges (176,664) - (176,664) (61,582) Staff costs 2 (1,693,704) (611,930) (2,305,634) (791,649) Depreciation written off tangible fixed assets (18,626) - (18,626) (2,888) Other operating charges (1,035,281) - (1,035,281) (507,873) ______ ______ ______ ______ Operating (loss)/profit (432,567) (611,930) (1,044,497) 46,618 Interest receivable 8,451 - 8,451 - Interest payable (92,930) - (92,930) (28,977) ______ ______ ______ ______ (Loss)/profit on ordinary activities before taxation (517,046) (611,930) (1,128,976) 17,641 Taxation - - ______ ______ (Loss)/profit on ordinary activities after taxation transferred to reserves (1,128,976) 17,641 ______ ______ (Loss)/earnings per share: Basic and diluted 3 (2.43p) 1,102.56p ______ ______ All amounts relate to continuing activities. Preliminary announcement of results for the year ended 31 March 2007 Reconciliation of movements in shareholders' funds 2007 2006 £ £ (Loss)/profit for the year (1,128,976) 17,641 Shares issued at nominal value 72,875 - Share premium arising on issue 1,690,235 - Share-based payments 446,949 - ________ ________ Net increase in shareholders' funds 1,081,083 17,641 ________ ________ Opening shareholders' deficit (469,600) (487,241) ________ ________ Closing shareholders' funds/(deficit) 611,483 (469,600) ________ ________ Preliminary announcement of results for the year ended 31 March 2007 Consolidated balance sheet Note 2007 2006 £ £ £ £ Fixed assets Intangible assets 207,510 - Tangible assets 91,991 8,504 _____ _____ 299,501 8,504 Current assets Debtors 797,993 477,732 Cash at bank and in hand 862,446 142,426 ________ ________ 1,660,439 620,158 Creditors: amounts falling due within one year (1,309,400) (936,391) ________ ________ Net current assets 351,039 (316,233) ________ ________ Total assets less current assets 650,540 (307,729) Creditors: amounts falling due after more than one year (39,057) (161,871) ________ ________ Net assets 611,483 (469,600) ________ ________ Capital and reserves Called up share capital 72,876 1 Share premium account 4 1,690,235 - Profit and loss account 4 (1,151,628) (469,601) ________ ________ Shareholders' funds/(deficit) 611,483 (469,600) ________ ________ Preliminary announcement of results for the year ended 31 March 2007 Consolidated cash flow statement 2007 2006 Note £ £ £ £ Net cash outflow from operating activities 5 (379,024) (76,392) Returns on investments and servicing of finance Interest received 8,451 - Interest paid (105,041) (14,875) _______ _______ Net cash outflow from returns on investments and servicing of finance (96,590) (14,875) Taxation Corporation tax received - 7,198 Capital expenditure Purchase of tangible fixed assets (102,113) (11,392) Purchase of intangible fixed assets (54,510) - _______ _______ Net cash outflow from capital expenditure (156,623) (11,392) _______ _______ Net cash outflow before financing (632,237) (95,461) Financing Inception of loans - 293,474 Loan repayments (120,712) (6,654) Net proceeds of shares issued 1,472,969 - _______ _______ Net cash inflow from financing 1,352,257 286,820 _______ _______ Increase in cash 720,020 191,359 _______ _______ Preliminary announcement of results for the year ended 31 March 2007 Notes to the preliminary announcement 1. Results and accounting policies The preliminary results have been prepared under the historical cost convention, in accordance with applicable Accounting Standards in the United Kingdom and with the group's accounting policies as will be set out in the financial statements for the year ended 31 March 2007. The preliminary results were approved by an authorised committee of the Board on 11 June 2007 and are unaudited. The financial information contained in this unaudited preliminary announcement does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985. There have been no changes in accounting policy in the year. 2. Exceptional items 2007 2006 £ £ Exceptional staff costs 611,930 - _______ _______ Certain directors and staff were issued shares upon the floatation of the company in respect of services to the company. In accordance with FRS 20 'Share-based payment' these shares are recognised as an expense in the profit and loss account with a corresponding increase in equity. The exceptional staff costs include the fair value of the shares issued together with the related national insurance and other issue costs. 3. Basic and diluted loss/earnings per share Basic (loss)/earnings per share (EPS) have been calculated in accordance with FRS22 'Earnings per share'. The calculation of EPS is based on losses of £1,128,976 (2006: a profit of £17,641) and on a weighted average number of ordinary shares in issue during the year of 46,456,587 (2006: 1,600). The share options issued on admission to AIM are considered to be anti-dilutive, and therefore diluted EPS equals basic EPS. 4. Reserves Share Profit premium and loss account account £ £ At 1 April 2006 - (469,601) Loss for the year - (1,128,976) Premium on shares issued in the year 1,690,235 - Share-based payments to employees - 446,949 ________ ________ At 31 March 2007 1,690,235 (1,151,628) ________ ________ Preliminary announcement of results for the year ended 31 March 2007 Notes to the preliminary announcement (continued) 5. Reconciliation of operating loss/profit to net cash outflow from operating activities 2007 2006 £'000 £'000 Operating (loss)/profit (1,044,497) 46,618 Depreciation 18,626 2,888 Share based payments 423,982 - Increase in debtors (320,260) (397,082) Increase in creditors 543,125 271,184 _______ _______ (379,024) (76,392) _______ _______ 6. Analysis of changes in net funds/debt Other non cash 2006 Cashflow changes 2007 £ £ £ £ Bank and cash 142,426 720,020 - 862,446 Debt due within one year: Bank loans (26,616) 19,995 (20,430) (27,051) Other loans (98,333) 23,333 75,000 - Debt due after more than one year: Bank loans (59,487) - 20,430 (39,057) Other loans (102,384) 77,384 25,000 - _______ _______ _______ _______ Net (debt)/funds (144,394) 840,732 100,000 796,338 _______ _______ _______ _______ Non-cash movements to other loans relate to the issue of shares in repayment of loans. 7. Reconciliation of net cash flow to movement in net funds/(debt) 2007 2006 £ £ Increase in cash in the year 720,020 191,359 Cash inflow/(outflow) from bank and other loans 120,712 (286,820) _______ _______ Change in net funds/(debt) resulting from cashflows 840,732 (95,461) Non-cash changes to net funds/(debt) 100,000 - _______ _______ Movement in net funds/(debt) in the year 940,732 (95,461) Net debt at start of year (144,394) (48,933) _______ _______ Net funds/(debt) at end of year 796,338 (144,394) _______ ______ This information is provided by RNS The company news service from the London Stock Exchange

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