Final Results
Ingenta PLC
3 December 2001
Date: Embargoed until 07.00, Monday 3rd December 2001
Contacts: Ingenta Website: www.ingenta.com
Martyn Rose, Chairman (On 3rd Dec): 020 7796 4133
Mark Rowse, Chief Executive Thereafter: 01865 799010
David Callcott, Finance Director 01225 361020
Hudson Sandler
Alistair MacKinnon-Musson Tel: 020 7796 4133
Philip Dennis email: ingenta@hspr.co.uk
Meetings: A presentation for analysts will be held today at 9.30am and a
press briefing at 11.30am. For further information, please contact Hudson
Sandler, as above, on 020 7796 4133.
Ingenta plc
Preliminary Results and Board Appointment
Ingenta plc, which manages and distributes published scientific, professional
and academic research via the Internet and develops and maintains specialist
websites for publishers, self-publishing societies and libraries, is pleased
to announce its preliminary results for the 12 months to 30th September 2001.
Highlights
* Turnover increased 130%
* Gross profit increased 161%
* Gross margins up from 72% to 82%
* Generated monthly profit ahead of schedule in September
* 28% increase in specialist websites to 163 live and a further 24 in
the pipeline
* 154% increase in publisher customers to 183 (including nine of the
world's top 10 publishers in this market)
* Over 3.5m visits to the Company's websites in October 2001 - one of
the 10 largest web service providers in the UK
* High forward visibility - over 50% of anticipated 2002 turnover
already contracted or expected repeat business
* Current trading continues to show substantial growth.
Commenting on the results, Martyn Rose, Chairman, said:
'Achieving profitability ahead of schedule demonstrated that Ingenta is
well-placed to deliver its strategy of rapid and sustainable growth. With
current and expected repeat business for 2002 already at over 50% of our
expectations for the year, management is confident that Ingenta will continue
to increase profitability as expected.'
Mark Rowse, Chief Executive, added:
'Operating in the niche industry of 'must-have' online scientific,
professional and academic research information, Ingenta has been largely
unaffected by the global slowdown, achieving strong results in 2001. With only
around 10% of this type of research material currently available online, we
expect demand to remain strong. We look forward to reinforcing our
market-leading position by substantially extending our activities with
publishers, libraries and researchers again in 2002.'
Notes to Editors
Ingenta is the global market leader in the management and distribution of
published scientific, professional and academic research via the Internet, and
develops and maintains specialist websites for publishers, self-publishing
societies and libraries.
For publishers of scientific, professional and academic periodicals, journals
and reference works, Ingenta provides a suite of publisher services including
data conversion, secure online hosting, access control and distribution
services. This research content - 11.9 million articles from over 5,500
online publications and 20,000 fax delivered publications - is accessed by
over 3.5 million researchers a month via ingenta.com and other websites,
making Ingenta one of the 10 largest web service providers in the UK.
Ingenta's revenue streams derive from:
* Fees paid by customers for publisher services.
* Fees paid by customers for specialist website build and maintenance.
* A share of pay-per-view article purchases and website subscription
revenues.
For more information, see www.ingenta.com.
Preliminary results for the 12 months to 30th September 2001
and Board Appointment
The Board is pleased to report that Ingenta generated profits ahead of
schedule in the month of September. During the year to 30th September 2001 the
Company continued to experience rapid sales growth in all its core markets, as
well as a change in the mix of its business that led to and will sustain
higher margins and profitability growth at lower levels of turnover going
forward.
Over the past twelve months the Company has launched an additional 36
specialist websites (previously termed E-communities), on behalf of third
parties such as publishers, self-publishing societies and libraries. This
brings the total number of specialist websites developed and managed on an
ongoing basis to 163, with a further 24 in the pipeline.
Within its Publisher Services operations, Ingenta converts 'raw' text and data
into an 'intelligent' format for use on the web and also provides online
distribution services. During the year, the Company added an additional 111
publishers and self-publishing societies as customers, bringing the total
number of clients to 183 - including nine of the World's top 10 scientific and
academic publishers.
Pay-per-view download of professional and academic articles via Ingenta's
website (www.ingenta.com) also increased. The overall usage of Ingenta's sites
in September 2001 was more than 1.4 million visits, which compares with some
750,000 visits in September 2000. Together with its specialist websites,
Ingenta delivered over 3.5 million visits in October, making the Company one
of the 10 largest web service providers in the UK.
Financial Review
During the period, turnover increased by 130% to £9.9m (2000: £4.3m). This
includes a contribution from CatchWord, which the Company acquired with effect
from 1st February 2001, amounting to some 15% of the Company's turnover in the
period. Gross profits were up by 161% to £8.1m (2000: £3.1m). Gross margins
increased markedly from 72% to 82%, reflecting increased efficiency and
greater relative contribution from the high margin specialist websites
business. EBITDA loss before non-recurring items was £(4.5)m, which was in
line with expectations.
As a result of growth rates exceeding expectations, a decision was taken
during the period to make an additional investment in the Company's technology
platform to significantly expand its scalability. The costs of this
investment, together with the costs involved in integrating acquired
businesses, have been fully provided for in the 2001 year, resulting in
integration and non-recurring costs of £5.9m and contributing in part to the
reduction in cash balances to £2.2m. In addition, pay-per-view sales were held
back for a short period in the second half while this process was completed,
but these are now again showing strong growth. As a result of this investment
the Company should be able to sustain further growth with higher margins and
lower operating costs than previously anticipated. We believe that the
Company's cash resources are sufficient for its foreseeable trading needs.
Operations Review
Ingenta's revenue is derived from three core areas, namely:
1) fees from scientific, professional and academic publishers and
self-publishing societies for the conversion of 'raw' data into a web usable
format and hosting and distributing that content over the Internet - Publisher
Services;
2) fees from scientific, professional and academic publishers,
self-publishing societies and libraries for the development and maintenance of
custom-developed websites, and a share of subscriptions paid to access those
websites - Specialist Websites; and
3) revenue from end-users on a per article basis for downloading material
to which they do not currently have access - Pay-Per-View.
The Company has long-term contracts with many of its customers, which provides
it with a highly visible and sustained income stream. Additionally, around
80% of pay-per-view transactions are debited against pre-paid and corporate
accounts.
Publisher Services
By acquiring CatchWord, which was fully integrated into Ingenta's business
during the year, the Company gained supplementary proprietary software,
enabling it to provide publishers with additional services and greater added
value in converting 'raw' data into an intelligent format for use on the web,
particularly in terms of cross referencing. This broader service offering has
enhanced Ingenta's appeal to the many small and medium sized scientific,
professional and reference publishers who find in-house data conversion
uneconomical. This is reflected in the number of publishers working with
Ingenta rising from 72 a year ago to 183 at the year end. This brings the
number of publications handled by Ingenta to over 5,400 titles, from a
potential market of 11,000 publishers providing 100,000 titles.
Specialist Websites
To date Ingenta has been contracted to develop and maintain 163 specialist
websites, with a further 24 already in the pipeline. This service represents
53% of Ingenta's overall turnover, an increase from the 45% contribution in
the previous year. The market for building and maintenance of specialist
websites on behalf of publishers, self-publishing societies and libraries is
significant, with this service likely to be of benefit to over 20,000 further
potential customers. Typical build fees range from £30,000 to over £1million,
and recent site launches include www.ency-astro.com and www.els.net for
Macmillan Publishers and www.heinemannexplore.com for Reed Educational
Publishing, as well as the launch of services for McGraw-Hill, the American
Dental Association and Nature Publishing Group.
Pay-Per-View
The process of merging the ingenta.com and catchword.com web services is now
well underway, providing access to over 2.5m on-line articles and involving
the progressive rebranding to Ingenta of the catchword.com site. This has
contributed to rapid growth in usage of the sites, with the number of user
sessions in September 2001 more than doubling over the previous year.
Staff
Principally as a result of the CatchWord acquisition, the number of staff grew
to 217 compared with 168 at the September 2000 year-end. The Board is
confident this overall level of staffing will be broadly sufficient to sustain
the Company's plans for the foreseeable future.
To have managed and integrated the acquisition of a major competitor while
continuing to produce rapid and accelerating organic growth is a very
considerable achievement. The staff and management at every level should be
proud of what has been achieved and on the Board's behalf we would like to
thank everyone for their dedication and effort.
Board Appointment
The Board is also pleased to announce the promotion to the Board of Simon
Dessain, Chief Technology Officer. The appointment will take effect from 1st
January 2002. Simon has 21 years experience in the IT industry and will
continue to make a significant contribution to the management and progress of
the Company.
Current trading and outlook
With only around 10% of published scientific, professional and academic
research currently available in online format, the potential for Ingenta, with
its first mover advantage and market leadership, remains significant.
Since the year-end, the Company has continued to move ahead strongly with
current trading levels in all areas of the business continuing to show
substantial growth, both in terms of turnover and gross profits. With the
Company's high level of operational gearing and with over 50% of expected
revenue for this year already either contracted or repeat business, the Board
is confident of the outcome for the year ahead.
Martyn Rose Mark Rowse
Chairman Chief Executive
3rd December 2001
Consolidated profit and loss account for the year ended 30th September 2001
Note 2001 2000
£'m £'m
Turnover
Continuing operations 8.4 4.3
Acquisitions 1 1.5 -
9.9 4.3
Cost of sales (1.8) (1.2)
Gross profit 8.1 3.1
Operational costs (13.6) (6.7)
Integration and other non-recurring costs 2 (5.9) (0.5)
Goodwill amortisation and write-off 3 (5.2) (17.1)
Total administrative expenses (24.7) (24.3)
Operating loss (16.6) (21.2)
Net interest receivable 0.3 0.2
Loss on ordinary activities before tax (16.3) (21.0)
Tax 0.1 0.3
Loss for the financial year (16.2) (20.7)
Loss per share (basic and diluted) 31p 52p
Loss before interest, tax, depreciation, amortisation and £(4.5)m £(3.3)m
non-recurring items
Note 1. Turnover for 2001 includes £1.5m from CatchWord Ltd which was
acquired in February 2001.
Note 2. Integration and other non-recurring costs represent costs
incurred in integrating acquired businesses and in a one-off
development of the Company's technology platform to create additional
capacity.
Note 3. Goodwill arising on the reverse acquisition of Delyn Group plc
in May 2000 amounting to £15.6m was written off in the year to
September 2000.
Consolidated balance sheet as at 30th September 2001
2001 2000
£'m £'m
Fixed Assets
Intangible 19.8 8.1
Tangible 2.7 1.7
Total Fixed Assets 22.5 9.8
Current Assets
Work in progress 0.2 -
Debtors - amounts falling due within one year 2.2 2.0
Cash at bank and in hand 2.2 7.7
Total Current Assets 4.6 9.7
Creditors - amounts falling due within one year (6.7) (6.7)
Net current (liabilities) / assets (2.1) 3.0
Total assets less current liabilities 20.4 12.8
Creditors - amounts falling due after (0.4) (0.3)
more than one year
Provisions for liabilities and charges - (0.2)
Net Assets 20.0 12.3
Capital and Reserves
Called up share capital 2.7 2.4
Shares to be issued 5.5 0.3
Share premium account 10.3 3.2
Merger reserve 11.1 -
Reverse acquisition reserve 12.7 12.7
Profit and loss account (22.3) (6.3)
Equity Shareholders' Funds 20.0 12.3
Consolidated cash flow statement for the year ended 30th September 2001
2001 2000
£'m £'m
Cash flow from operating activities
Operating loss (16.6) (21.2)
Depreciation charge 1.0 0.3
Write-off of goodwill - 15.6
Amortisation of goodwill 5.2 1.5
Foreign exchange adjustment 0.1 -
Increase in work in progress (0.2) -
Decrease / (increase) in debtors 1.2 (0.5)
(Decrease) / increase in creditors (0.4) 0.5
(Decrease) / increase in provisions (0.1) 0.2
Net cash outflow from continuing operations (9.8) (3.6)
Net interest received 0.3 0.2
Taxation (0.1) -
Capital expenditure and financial investments
Purchase of tangible fixed assets (1.4) (0.3)
Sale of tangible fixed assets - 2.9
Net cash (outflow) / inflow from capital expenditure and (1.4) 2.6
financial investment
Acquisitions
Payments made to acquire subsidiary undertakings (0.2) (1.4)
Cash acquired with subsidiary undertakings and businesses 0.1 0.1
Payments made to acquire businesses (1.1) (2.6)
Acquisition costs in respect of Delyn Group plc (now Ingenta - (1.5)
plc)
Cash acquired on reverse acquisition of Delyn Group plc (now - 7.7
Ingenta plc)
Net cash (outflow) / inflow from acquisitions (1.2) 2.3
Cash (outflow) / inflow before financing (12.2) 1.5
Financing
Issue of ordinary share capital 6.9 10.0
Take up of cash alternative by Ingenta UK limited shareholders - (3.7)
to offer of shares in Delyn Group plc (now Ingenta plc)
Repayment of principal under finance leases (0.2) (0.1)
Cash inflow from financing 6.7 6.2
(Decrease) / increase in cash in the year (5.5) 7.7
Statement of total recognised gains and losses for the year ended 30th
September 2001
2001 2000
£'m £'m
Loss for the financial year (16.2) (20.7)
Currency translation differences on foreign currency net
investments 0.2 (0.3)
Total recognised losses for the year (16.0) (21.0)
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