Inghams Group Limited Annual Report 2019

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FY2019 Annual Report · Inghams Group Limited

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Annual Report

Ingenta plc

For the year ended

31 December 2019

Registered number: 00837205l

Annual Report
For the year ended 31 December 2019

Contents

Directors and advisers............................................................................................................................... 1

Highlights .................................................................................................................................................. 2

Board members ........................................................................................................................................ 3

Chairman’s statement ............................................................................................................................... 11

Group strategic report .............................................................................................................................. 12

Directors’ report ....................................................................................................................................... 16

Corporate governance statement ............................................................................................................. 18

Directors’ remuneration report ................................................................................................................ 21

Independent auditor’s report to the members of Ingenta plc .................................................................. 22

Group statement of comprehensive income ............................................................................................ 29

Group statement of financial position ...................................................................................................... 30

Group statement of changes in equity ...................................................................................................... 31

Group statement of cash flows ................................................................................................................. 32

Notes to the Group financial statements .................................................................................................. 33

Company statement of financial position ................................................................................................. 60

Company statement of changes in equity ................................................................................................. 61

Notes to the Company financial statements ............................................................................................. 62

The Directors submit to the members their report and accounts of the Group for the year ended
31 December 2019. Pages 1 to 21, including the Chairman's statement, Corporate governance
statement and Directors’ remuneration report, form part of the Directors’ report.

Directors and advisers

Executive Directors

Banker

G S Winner, Chief Executive Officer
J R Sheffield, Chief Financial Officer

Non-Executive Directors

M C Rose, Chairman
M A Rowse
N W Kirton
S J G White
B H Holmström

Company Secretary

J R Sheffield

Registered Office

8100 Alec Issigonis Way
Oxford
OX4 2HU

Auditor

Grant Thornton UK LLP
Registered Auditor
3140 Rowan Place
John Smith Drive
Oxford
OX4 2WB

HSBC Bank plc
71 Queen Victoria Street
London
EC4V 4AY

Solicitor

Memery Crystal LLP
165 Fleet Street
London
EC4A 2DY

Registrar

Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Nominated Adviser

Cenkos Securities plc
6-8 Tokenhouse Yard
London
EC2R 7AS

Annual Report
For the year ended 31 December 2019

Highlights



6 new customer sales of the Commercial product suite with one off fees of £1.4m and recurring fees of £0.2m.

Vista as a service launched with a significant sale made in the year and further opportunities being progressed in 2020.

Revenues of £10.9m (2018: £12.0m) reflecting increased emphasis on higher quality contracts.

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

 Over 70% of the reported revenues highly visible and recurring in nature.

 Operating cash inflows of £3.6m in the year (2018: £2.4m), including accelerated renewal receipts of £0.5m and before expenditure on research

and development of £1.4m and reorganisation costs of £0.5m.



Cash balances at year end of £2.6m (2018: £1.3m) with a normalised balance of £2.1m.

Adjusted EBITDA* up c. 43% to £1.3m (2018: £0.9m).

* Adjusted EBITDA – earnings before interest, tax, depreciation, amortisation, impairment, restructuring costs and foreign exchange gains / losses. A
calculation is provided in note 5 to the accounts.

Board members

Scott Winner,
Chief Executive Officer
As CEO, Scott Winner builds and drives the
organisation to deliver successfully across all
areas of Professional Services, Research and
Development, Customer Service and Service
Delivery. Scott is responsible for overseeing
and evolving how Ingenta creates and delivers
new products, for deploying its innovations to

Jonathan Sheffield,
Chief Financial Officer and Company
Secretary
As Chief Financial Officer, Jon is
responsible for the financial well-being and
stability of the organisation, as well as
communicating with the investor
community. Jon leads the Enterprise
Services division of Ingenta with

customers and managing the overall operational execution, all with a strong
metrics and analytics driven approach. Prior to his role as COO, Scott was EVP,
Global Projects for Ingenta, but has previously held roles managing product
line P&L, driving product development efforts and building successful
organizations to deliver. He has worked across several different industries,
including educational publishing, manufacturing and financial services, and has
held roles at Pearson Education, Amplify Learning, McGraw-Hill and the
Fireman’s Fund insurance company.

responsibility for HR, Facilities and Technology Infrastructure. Prior to his
appointment as CFO, as Group Financial Controller, Jon managed the Ingenta
Finance function, including all aspects of compliance, forecasting and
reporting. An ACA qualified accountant, Jon spent the early part of his career
in practice, latterly at Pricewaterhousecoopers LLP, managing audits and
compliance over a broad range of companies and market sectors. Prior to
joining Ingenta, he held similar finance roles in the IT and Retail industry. Jon
qualified as a chartered accountant in 2001 before joining Ingenta in 2010.

Mark Rowse,
Non-executive Director
Mark Rowse is a media and publishing
entrepreneur who specialises in creating
and developing businesses where content
meets the internet, particularly in the areas
of digital publishing and online television.
After graduation from the University of
Cambridge with a first-class honours
degree in Law, Mark worked at investment bank NM Rothschild & Sons
Limited in mergers and acquisitions. Following this he entered the media
industry and since the mid 1990’s Mark has principally worked in the areas of
the internet and digital television, pioneering digital interactive TV on airlines,
co-founding Yes TV, now one of the major operators of on-demand TV in
Asia, and launching Luxury Life, an international digital satellite TV channel. In
1998 he founded Ingenta plc, taking the company to a £120m flotation in
2000 and is now a non-executive director of Ingenta as a result of the merger
of Ingenta and VISTA International Limited in 2007.

Sebastian White,
Non-executive Director
Sebastian is an Investment Director at
Kestrel Partners. Prior to joining Kestrel, he
had 14 years as head of corporate
development at UK AIM listed Alternative
Networks plc, a communications and
hosting provider to the mid-market.
Sebastian’s responsibilities included
business planning, M&A process

management, commercial due diligence and acquisition integration.

Martyn Rose,
Chairman
Martyn Rose is an entrepreneur specialising
in refinancing and restructuring smaller
companies and Chairman and a non-
executive director of Ingenta. Martyn has
helped steer the company toward its
continued growth, stability and success since
1999 before the merger of Ingenta and VISTA

International Limited to become Ingenta in 2007. Martyn is also a qualified
barrister and became Chairman of his first publicly listed company at the age of
34. Since that time, he has been Chairman of over twenty five public and
private companies with a present involvement in publishing software, online
academic research, financial services, manufacturing, recruitment and
commercial radio. In addition to his other commercial interests, Martyn has
been a trustee of the Cystic Fibrosis Trust since 2000, a school governor and
co-chaired the National Citizen Service.

Neil Kirton,
Non-executive Director
Neil Kirton is currently a Managing Director
and Head of Business Intelligence in the
London office of Kroll, a global leader in
corporate investigations and risk consultancy.
Prior to joining Kroll he was a Group Board
Director at The Arbuthnot Banking Group plc
having been Head of Corporate Finance and
Chief Executive Officer of its securities business. Previously he held a range of
senior equity market positions with Bridgewell Securities and ABN AMRO Hoare
Govett Limited (now known as RBS HG (UK) Limited) where he was Deputy
Chief Executive and Global Head of Equity Sales.

Henrik Holmstrom,
Non-executive Director
Henrik founded the content management
company Polopoly AB in 2000 which focuses
on online media. He developed the business
until it was acquired by Atex in 2008, after
which Henrik became Group Chief Architect
and later Chief Technology Officer heading up

the global R&D function. Since 2014, Henrik has been building online security
products and acting as an advisor to a number of unlisted Swedish companies.
Henrik holds a M.Sc. in Computer Science and Engineering from the Royal
Institute of Technology, Stockholm

Annual Report
For the year ended 31 December 2019

Ingenta Products

Ingenta Commercial
The Ingenta Commercial framework provides a range of applications designed to move your content
forward in today’s marketplace, combining the best business solutions for both print and digital
products.

Royalties
Permissions
Editorial and Production




 Online Sales & Marketing

Digital & Print Distribution

Subscription Management

Ingenta Content
Our Ingenta suite of hosting platforms enable publishers of any size, discipline or technical proficiency
to convert, store, deliver and monetise digital content.

Semantic Enrichment

 Online Platforms

 Mobile



E-commerce
Access Entitlement

Ingenta Advertising
Our advertising solution is a complete, browser-based multimedia advertising, CRM and sales
management platform for content providers. With the ability to sell and track digital and print ads in a
single system, maximise the value of your audience with streamlined ad sales, packaged ad buys and
multi-channel campaigns, generating new revenues from previously untapped sources.

 Multimedia bookings

Packages and bundles

Inventory management

Finance/credit control

CRM

The Ingenta Audience data management platform (DMP) processes enriched data to gain valuable
insights on your users. These insights empower advertisers to ensure that their creative advertising
campaigns reach and engage with their target audiences.

Ingenta Services

Publishers Communication Group
Publishers Communication Group (PCG), is an internationally recognised sales and marketing consulting
firm providing a range of services designed to support and drive clients’ sales strategy. PCG has
advocated for scholarly publications and digital content around the world for over a quarter of a
century.

The Ingenta suite of products has been developed to mirror the needs and anticipate the future direction of global content providers. Many of
world’s leading publishers turn to Ingenta to advance their content strategies. We can assist clients every step of the way, from editorial acquisition
through to the end-user, with our premier asset management systems, sales and marketing consulting, and digital hosting platforms.

Ingenta Product Families offer a choice of deployment models: Enterprise or Express.

Product family

Product

Implementation Methodology

Enterprise

Express

Contracts, Rights and Royalties (CRR)
Content Lifecycle Manager (CLM)
Order to Cash (O2C)
Ingenta Aperture
Ingenta ConChord
Vista

Ingenta Edify
Ingenta Connect
Ingenta Connect Unity
Ingenta Link

Ingenta ad DEPOT
Ingenta Audience
Ingenta Market Place

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Enterprise deployments will be product-based but allow for bespoke changes and customisations to be made to the software. Express deploys an
“off the shelf” software package which allows the Group to sell at a lower price point with a standard implementation. Express products have full
capability with limited flexibility and are designed for publishers prepared to adapt their processes rather than customise the software. Ingenta has
adopted best practices when defining the Express offerings.

Annual Report
For the year ended 31 December 2019

Ingenta Commercial

The Ingenta Commercial suite is an ERP solution for publishers which supports any product from ideation, contract management through to order
fulfilment and cash collection.

The following components of the Commercial system can be purchased separately, in any combination, or as a complete enterprise system:

Content lifecycle manager (CLM)
This module helps manage product processes and control workflow. It provides a central repository in which core bibliographic data, associated
assets and rights can be stored and organised.

Users can create highly configurable product types at a granular level or building block level. Being product agnostic any complex combination, set,
collection of physical or digital bundle can be set up, decreasing time to market.

Contracts, Rights and Royalties (CRR)
Managing electronic rights, sub rights, fragments and permissions, the Rights element of CRR ensures that content owners get the most from their
assets, no matter the size, format, or fine details of the transaction.

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Real-time visibility of rights inventory
Complete tracking of expiration, publication, and sales histories
Support for chapter, image, and fragment sales
Full downstream management of rights income

In addition, CRR manages the full IP lifecycle, ensuring legal issues, from territorial rights and marketing obligations to supply chain management
and insurance, are properly considered and consistently administered. Contracts management within CRR underpins the system and enables
consistency and compliance across your organisation, to avoid potentially costly disputes.

CRR enables data owners and users to confidently fulfil contractual obligations, decrease operating expenses and boost revenue potential with a
complete intellectual property system which leverages rights, royalties and permissions compliance with accurate cash flow forecasting,
multicurrency calculations and tracking across various products and content types.

The Royalties element of the CRR application enables publishers to calculate complex royalties quickly, easily and with confidence, and provides
authors with a self-service interface. This allows publishers to better serve their authors, contributors, illustrators, and other rights owners from initial
contract to final payment. CRR is considered the only system on the market able to handle the complexities and nuances of today’s most creative
deals.






Complex royalty calculations
Support for multiple currencies and international tax reporting
Streamlined operations and cash flow forecasting
Improved author care with user-friendly interface

Order to Cash (O2C)
The Order to Cash application allows publishers to package, market, sell and deliver content in the formats that readers demand, where and when
they seek it. O2C has the range and depth of features necessary to integrate the delivery of diverse product types and billing methods via multiple
channels, including e-books, online subscriptions, social commerce, digital access, downloads and service billing, while providing full support for
print and physical products.

Ingenta Aperture
Launched in 2018, Ingenta Aperture allows customers to create a view into their data which can be accessed on demand, regardless of where the
information is stored. Access rights can be set to make sure sensitive information is shared on a ‘need to know’ basis. This allows business to share
insights, securely, on their own terms. Typical uses include:

Authors accessing royalty statements
Detailed product, pricing, bundling and order information; on demand for bookstores



 Metadata access for project contributors
 On-the-go access for representatives

Ingenta ConChord
Ingenta ConChord is a configurable browser-based platform that helps manage the complexities of music contracts, copyright and associated
royalties. It provides a complete solution for music publishers wanting more control and better visibility over licenced content. It also allows you to
sell the music rights onto third parties and track earnings received. Music can be experienced in different ways and Ingenta ConChord provides the
flexibility to handle:

 Mechanical royalties

Print royalties

Performance royalties

Sync royalties

Vista
Vista, a legacy enterprise level product family, provides a range of applications enabling Book Fulfilment, Subscription Management, Third Party
Distribution and Royalties Management, delivered through several managed services, including:






Applications Implementation Services (AIS)
Applications Support and Updates (ASU)
Applications Management Services (AMS)
Applications Hosting Services (AHS)

Vista continues to be an important part of Ingenta’s product portfolio. Service of the product and existing customers continues to evolve. 2018
marked the first “Vista as a service” deployment of the product; a modern cloud-based service, in-line with today’s expectations of software services.

Annual Report
For the year ended 31 December 2019

Ingenta Content

Our Content products deliver over 700 million page views and data requests per year through our fully outsourced Ingenta Connect scholarly portal,
our custom, semantically enriched, multi-format Ingenta Edify platform and E-commerce solution.

These products enable publishers of any size, discipline, or technical proficiency to convert, store, deliver, and monetise digital content.

Ingenta Edify
The Ingenta Edify platform is a custom hosting solution that supports and delivers all the information a data provider will publish. The result of a
multi- year research and development program, our solution has been built from the ground up using a powerful combination of industry standard
architecture and semantic web technologies. Ingenta Edify maximises the visibility, usage, and value of publishers’ content via semantic enrichment
while optimising content licensing around flexible E-commerce and access controls regardless of format or type.



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Provides seamless access to all content in all its formats
Harnesses semantic discovery and drives usage with intuitive routes into research
Allows content to be repackaged easily to experiment with new business models
Delivers content via desktop, tablet, or smartphone
Uses sophisticated access control

Ingenta Connect
Ingenta Connect hosts content for around 300 publishers and is the home of scholarly research. Academics and students from over 25,000
registered institutions around the world have access to tens of thousands of publications, leading to an average of 32 million page views per year,
delivering over 200,000 downloads per month. Our fully outsourced e-publishing package is a turn-key platform solution and a proven channel to
get content online quickly, easily and affordably.

On Ingenta Connect, there is a broad spectrum of cost-effective services to choose from, whether a publisher is taking content online for the first
time, looking to increase revenues through online activity or thinking of creating a custom-branded website.

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Data conversion & enhancement
Secure web hosting
Flexible E-commerce
Linking and distribution
Ahead-of-publication solutions
Continuous publishing models
Collection bundling and Virtual Publication creation
Archival Digitisation and delivery

Ingenta Connect Unity
The Ingenta Connect Unity option provides publishers with a branded view of Ingenta Connect. It is ideal for publishers wanting to utilise all the
features the Ingenta Connect platform offers through their own website.

Ingenta Link
Ingenta Link is a universal authentication system that enables easy access control to content at a granular level that is spread across various content
silos. The system provides a convenient means for both customers and internal publishing staff wanting access to a complex content infrastructure
with an easy, single set of login credentials, to grant access across silos. This simplistic approach provides quicker access to more content,
eliminating the hassle for users who would otherwise need to remember and use multiple login credentials to access each and providing a single
customer view for publishers.

Ingenta Advertising

Ingenta Advertising is the division of products which caters for advertising and media products which are used by a variety of consumer, media,
broadcast and media organisations:

Ingenta ad DEPOT
Ingenta ad DEPOT is a complete, browser-based multimedia advertising, CRM and sales management platform for content providers. With the
ability to sell and track digital and print ads in a single system, publishers can maximise the value of their audience with streamlined ad sales,
packaged ad buys and multi-channel campaigns, generating new revenues from previously untapped sources.

Ingenta ad DEPOT manages:

CRM


 Multimedia bookings

Packages and bundles

Inventory management

Traffic

Finance/credit control

Features:


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




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In-house and third-party CRM integration
Finance production integrations
Billing invoicing and accruals
Receivables
Print, digital and events bookings managed as single order
Contact management
Reporting, analysis and interactive dashboards
Traffic and ad copy tracking
Internal and external inventory management

Ingenta Audience
Ingenta Audience is an audience profiling platform. It provides customer intelligence to help users engage the right audiences and make better
informed marketing decisions. The profiling platform provides tools to segment audiences. These audience insights help optimise advert positioning
by helping to determine which areas of content are most likely to be relevant and of interest to target audiences.

Ingenta Audience ingests multiple data sources to gain a holistic view of the customers digital platform visitors. Ingenta Audience has the ability to
interpret data such as consumers’ interests and attractions across digital channels and interact with other data points to create a ‘single consumer
view’ of the customers, this first party data provides the opportunity to serve relevant content and ads albeit from the customers own inventory or
via ad exchanges.

Ingenta Market Place
Ingenta Market Place provides a means for suppliers to book advertising space(s) on a retailer’s website. This enables the retailer to easily view,
select and confirm optimum suppliers’ product(s) for each position, to maximise revenues. One of our customer’s, J Sainsbury plc, is successfully
using this platform.

Annual Report
For the year ended 31 December 2019

Publishers Communication Group

Publishers Communication Group (PCG), an Ingenta company, is an internationally recognised sales and marketing consulting firm providing a
range of services designed to support and drive clients’ sales strategy. PCG has advocated for scholarly publications and digital content around the
world for over a quarter of a century.

PCG sales, marketing and research professionals have executed successful campaigns, forged relationships with top global consortia and scrutinised
the ever-changing academic marketplace on behalf of over 100 industry clients, generating more than $50 million for clients in sales.

Established in 1990, PCG manages strategic sales and marketing operations for publishers including The Royal Society of London, Mary Ann Liebert
and SAE International, and conducts individual and repeat projects for a variety of publishers around the world.

Experience
Now in its third decade, PCG has helped publishers launch sales and marketing efforts in new regions, shore up existing business, conduct market
research and analysis, and negotiate lucrative consortia deals. Our established network of faculty, library selectors, consortia leaders and end-users,
paired with our seasoned, multilingual sales teams makes us an ideal partner for a publisher of any size.

Connections
PCG team members have held positions at academic and medical libraries, subscription agents and publishers including, Wiley, Mango Languages,
OCLC, Ingram, Lyrasis, LexisNexis, the MIT Press, Elsevier, Cengage, NEJM, JBJS, Forrester Research, Sage, and Taylor & Francis, resulting in over 200
years of collective industry experience. Their extensive global network includes tens of thousands of library selectors from academic, corporate,
medical libraries and consortia worldwide.

Trusted Partner
PCG clients include commercial publishers, non-profit associations and electronic services providers. Publishers trust that we will promote their
content to the right people and in the most impartial manner possible by providing measurable results and explicit data to help justify marketing
expenditure.

Global Reach
PCG’s multilingual team consistently develops new relationships with key decision-makers across the world.

Chairman’s statement

Overview

2019 was the first year the business has operated under its new structure and the results to date have been encouraging. The overriding aim of the
restructuring effort was to remove product silos and encourage a unified approach to all aspects of business operations. The benefits of this are a
more integrated service provision to customers across all products allowing efficient use of resources to meet or exceed customer requirements. In
order to achieve this transformation, the business incurred a further £0.5m of restructuring costs in the year.

Strategically, the business has also switched its focus away from large bespoke ERP solutions to more productised offerings aimed at SMEs. The
software solutions still retain the configurability options necessary to satisfy changing customer requirements, but these are offered after go-live as
and when the need arises. The success of this approach is evidenced by the business winning 6 new SME customer deals for our Commercial
product. In total these deals are anticipated to deliver initial implementation fees of approximately £1.4m with recurring revenues of £0.2m. From the
existing customer base, we are pleased to report 3 go-lives during the year, 2 for our Edify content platform and 1 for the Commercial product
which will enhance recurring revenues for 2020 and beyond.

Looking forward, Ingenta is planning to leverage existing expertise in contracts, rights and royalties developed in the traditional publishing sector
into adjacent verticals with music being the primary target. The concepts are very closely aligned, and we released our ConChord product during
2019 to address the challenges faced in this growing industry.

Another way of driving value is to increase recurring revenue streams. To this end, we have had notable success selling Vista as a Service to an
existing customer in 2019 and we will promote this product to our customers more widely in 2020. We also intend to accelerate growth in recurring
revenues from our Commercial and Content product suites. Ingenta has previously sold perpetual software licences and annual support contracts,
alongside project implementation revenues. Going forward it is our intention to prioritise contractually recurring revenues over perpetual licence
and project revenues. This will enhance shareholder value in the longer term at the expense of revenues in the current period. This transition is
facilitated by our strong financial foundations, and the board is confident this strategy is the right one for Ingenta shareholders, customers and
employees.

Results

The underlying results of the Group in 2019 were strong but have been impacted by £2.2m of one-off charges which contributed to the
comprehensive loss of £1.35m. These one-off costs include a non-cash £1.7m goodwill impairment charge relating to historic acquisitions and a
£0.5m restructuring charge relating to the structural reorganisation mentioned above. The impairment charge relates to goodwill associated with
the advertising and consulting revenue streams which the business anticipates will become less discrete and measurable as they are integrated into
the commercial and content sectors of the business. Further details are included within note 10.

The revenue base continues to be aligned towards fewer, higher quality contracts with approximately 70% of the reported revenues highly visible
and recurring in nature. From this revenue base, the Group generated operating cash inflows of £3.6m (2018: £2.4m), before expenditure on
research and development of £1.4m (2018: £1.8m) and the planned reorganisation costs of £0.5m (2018: £0.8m), resulting in net cash balances at
year-end of £2.6m (2018: £1.3m). The Group expects that the new organisational structure will help deliver improved cash generation.

Shareholders’ returns and dividends

During the year, the Company announced a share buyback programme pursuant to which 66,104 Ordinary 10 pence shares were repurchased. At
year end, these shares were held in treasury meaning 16,853,505 of the Company’s total issued shares had voting rights.

Prior to the COVID-19 outbreak, the Directors declared their intention to pay a dividend in 2020 of at least 1.5 pence per share (2018: 1.5 pence).
Given the current economic uncertainties, the Board consider it prudent to delay any dividend announcement until later in the year when a clearer
outlook is available.

M C Rose
Chairman
1 June 2020

Annual Report
For the year ended 31 December 2019

Group strategic report

2019 is the first year the Group has operated under its new organisational structure which sets the foundations for a more responsive business which
is better positioned for growth.

Business Strategy
The Business has moved away from a product siloed divisional structure to a product agnostic services architecture. The benefit of this is an
integrated approach to servicing our customers whereby we can standardise service levels and utilise resources more efficiently. In conjunction with
this, the Group is now targeting SME businesses with a standard product offering and 6 new customer sales were made during the year to this
target market. This version of the product has been rebranded as ‘Express’ and is available across the Ingenta product portfolio.

The Group is also looking to leverage its existing expertise in contracts, rights and royalty’s management by expanding into adjacent verticals.
During the year, the business announced the release of ConChord, a solution designed for the music industry, where we believe there are further
opportunities to pursue.

Product review

Ingenta Commercial
Ingenta Commercial provides enterprise and ‘Express’ level publishing management systems for both print and digital products.

All modules of the product are now fully referenceable and live on customer sites allowing the business to step up its marketing and sales activity.
These efforts produced positive results and the business won 6 new customer contracts in the SME market tier. Encouragingly, the wins were
diversified and included wider media companies and customers in the UK, US and France.

The Group have identified the concepts of intellectual property and the management associated rights and royalties as a potential opportunity in
associated vertical markets. The most closely related vertical is music and the Group launched a new product labelled ConChord to address this
market.

Ingenta Content
The Ingenta Content suite of products enable publishers of any size, discipline or technical proficiency to convert, store, deliver and monetise digital
content.

As in other parts of the software business, Ingenta’s Edify content management solutions is offered in an Express format as well as the full enterprise
version. During the year, there were 2 new go-lives for the content product with one enabling an Arabic interface for the software which provides
further scope for the Group to expand into a wider geographical market.

Ingenta Advertising
Ingenta Advertising provides a complete browser-based multimedia advertising, CRM and sales management platform for content providers.

Within the advertising space, traditional newspaper and magazine customers are adopting a cautious approach to investment decisions. The Group
remains well placed to service these customers and has an upgraded platform solution on offer to address the changing requirements of its
customer base. In addition, the business has developed a new portal with specific application to the retail business and its management of
advertising and promotions which has already been taken up by J Sainsbury plc. The business anticipates that the Group’s Advertising offering will
become a component of the larger Commercial and Content Products divisions and its revenues will be less clearly distinguished as a separate CGU.
As a result, £1.2m of goodwill associated with the Advertising segment was impaired.

PCG
The PCG consulting arm provides a range of services designed to support and drive a business’s sales strategy.

PCG delivered impressive results to its customer base and maintained its revenue levels in line with the prior year. However, the Group expects that
revenue will decline in 2020 with the loss of a significant contract and this has led to a goodwill impairment of £0.5m as detailed in note 10.

Financial Performance
Group revenues for the year were £10.9m (2018: £12.0m) reflecting our focus on higher quality earnings from which the restructured business can
deliver improved margins.

The Group’s cost of sales, sales and marketing and administrative costs have all declined driven by the business reorganisation to move away from a
product siloed structure. The business incurred £1.7m of impairment charges (2018: £0.9m) and these relate to goodwill from historic business
combinations. Further details on the impairment charge are included within note 10. Going forward, the overall cost base of the Group is
approximately £9.5m before accounting for impairments, depreciation and restructuring costs.

No tax credit is included in 2019 (2018: £0.3m) as the Group intends to use losses against future taxable profits rather than claim cash receipts via the
research and development tax credit scheme.

Financial Position
Non-current assets include goodwill and intangibles recognised on historic acquisitions. The intangibles relate to Advertising software technology
acquired in 2016 and were originally valued at £0.5m using a discounted cashflow model. These are being amortised over 5 years. Goodwill relating
to historic acquisitions was tested for impairment using discounted cashflows resulting in an impairment charge of £1.7m (2018: £0.6m). Further
details are included within note 10 of the accounts. Property, plant and equipment now includes a right of use asset in alignment with IFRS 16
‘Leases’. The Group have performed a retrospective transition and restated the comparative balances. Details of the transition are found in note 1
and 29.

Current assets have decreased compared to 2018 mainly because the business is not anticipating a tax credit refund (2018: £0.3m). It is believed it
will be more beneficial to use these losses against future taxable income rather than cash them in at a discount. Net cash and trade other
receivables are broadly in line.

Total liabilities have also declined compared to 2018. The main contributory factor here is a more efficient cost base meaning year end creditors and
accruals for ongoing costs are lower.

Cashflow
The Group generated a net cash increase of £1.3m (2018: £0.8m reduction) during the year. Operating cash inflows of £3.6m (2018: £2.4m) were
reported before expenditure on research and development of £1.4m and reorganisation costs of £0.5m. The cash balances were improved by
accelerated collections of approximately £0.5m compared to the prior year. As a result, these increased cash collections from the year end renewals
cycle meant the Trade and other receivables were lower.

Key Performance Indicators
The Board and senior management review a number of KPI’s continually throughout the year, all of which form part of the monthly management
accounts process and include:







Revenue versus budget and monthly reforecast
Adjusted EBITDA (see note 5 for calculation) versus budget
Group cashflow versus budget
Sales pipeline growth and conversion analysis
Time utilisation statistics

Any deviations or anomalies are investigated, and corrective action taken where appropriate.

Full year revenues were below budget and the prior year, and have been impacted by the strategy to focus on higher quality revenue streams which
the Group believe will deliver better margins. Sales and marketing efforts have been targeted towards the SME market sector and this has helped
generate the 6 new customer sales wins reported in the year.

Adjusted EBITDA numbers are lower than budgeted with details included in the segmental information by product in the Group accounts. These
shortfalls to budget were driven by lower sales mentioned above. Internally, the Group is moving away from a product reporting structure to that
based around activity service streams which more closely mirror the new organisational structure of the business.

Year-end cash balances were £0.2m ahead of budget at £2.6m. The business reorganisation has dramatically improved cash generation within the
business which was further boosted by the annual renewals cycle at the end of the year which continued into 2020.

The Group monitor sales activity with reference to monthly sales pipeline reports. These reports detail sales opportunities by product with metrics
around expected project timelines and revenue recognition estimates so that management can deploy resources adequately to ensure the best
chance of success in the bidding process. When any items are removed from the pipeline due to either a successful sale or a lost opportunity,
management carry out a detailed analysis to ensure the reasons are understood and any actions required are taken. Such analysis has led to the
development of Express products designed to meet the needs of the SME market.

The business monitors time utilisation at a contract level to enable accurate pricing decisions to be made ensuring profitable service delivery.
Internal development costs are also reviewed to ensure the appropriate effort is spent supporting the products and deliver an effective product
roadmap.

Section 172(1) Statement
The Directors continually monitor the operations of the business and take decisions to promote the success of the Group for the benefit of all its
members. As described in the Business Strategy section of this report, the Directors have selected a business model and operational structure
designed to maximise the effectiveness of the business for all stakeholders. The likely consequences of any decisions are modelled to provide
assurance that they are in the long-term interest of stakeholders and, as detailed in the Corporate Governance Report, risk management and
internal controls are a key oversight to ensure objectives are met. The Group have also adopted the QCA Corporate Governance code which is
designed to foster strong relations with all stakeholders and details are included on the company website. In addition to our shareholders, the Board
considers the employees, customers and suppliers to be critical to the long-term success of the business.

Annual Report
For the year ended 31 December 2019

The Board is committed to maintaining active dialogue with its shareholders to ensure that its strategy, business model and performance are
understood. The AGM is the main forum for dialogue between retail shareholders and the Board. The notice of the AGM is sent at least 21 days
before the meeting which is held at the Companies Head Office and all Board members routinely attend. For each vote, the number of proxy votes
received for, against and withheld is announced at the meeting. During the meeting, the Board members are available to answer any questions
raised by shareholders. The results of the AGM are subsequently published on the Company’s corporate website. The Chief Executive Officer and
Chief Financial Officer are primarily responsible for shareholder liaison and can be contacted on 01865 397 800. The executive management make
presentations to institutional shareholders and analysts each year following the release of full year and half year results. Conversations, when
requested, are also held at other points in the year. The corporate website also includes details of recent annual and interim results plus a listing of
the Companies RNS and RNS reach publications.

Staff are invited to regular Company wide meetings where the Executive Team share information and updates on strategy and recent news. At these
meetings, there is also a forum where all members of staff can ask questions. The Company also carries out a formal staff survey so senior
management and the Board can be kept abreast of major staff concerns. Ingenta also retain an independent HR resource to ensure all HR issues are
dealt with in accordance with best practice and all rules and regulations are adhered to.

The Group have many customers of differing size and complexity with a variety of requirements. To best service them, the business has rolled out a
new operating model to standardise its approach to all customers and provide a consistent level of service and support. The business also keeps
regular contact with customers via account managers and user groups where demand exists so that our customers can feed back any issues, share
experiences and help shape the development of our products. To ensure the business is keeping abreast of wider industry challenges, we actively
participate in a variety of annual trade events.

The Group makes every effort to ensure our suppliers are treated fairly and paid on time and on average they are paid within 34 days. Ingenta
opposes modern slavery in all its forms and endeavours to make sure any concerns raised are investigated. Where offshore resourcing is used, the
business meets the suppliers prior to contract signing to satisfy itself that they are operating in a responsible manner.

The Board and senior management expect everyone in the company to act in a responsible and ethical manner because the reputation of the
business is key to our success. The company does not let cost concerns override its ethics and behaviour. For example, we only contract with
offshore resourcing entities who commit to fair working practices. The Company is committed to minimising negative environmental impact in
terms of energy usage at our offices, digitising our content and using responsible methods to dispose of electrical equipment. The Company and
staff are also active in the local community supporting charities and sponsoring good causes. Feedback from all stakeholders allow the Board to
monitor the Company’s culture, as well as the ethical values and behaviours within the business.

Outlook
Ingenta can look forward to 2020 with cautious optimism. The Group has a focussed product set tailored to meet the needs of all sizes of customer,
retaining the flexibility to grow with them and supplement additional services as required. The business intends to secure new Commercial
customers on a recurring revenue model as in other parts of the business. This change is enabled by our strong financial footing and will impact
short term revenue growth but will drive contracted revenue into the future adding long term value to the company.

As these results indicate, the operational structure is much improved and capable of dealing with fluctuations in activity. In that respect, we
anticipate a reduction in PCG’s revenues in 2020 of around £0.8m with associated cost savings of £0.4m after the completion of a long-term
contract. As a result of this, and the intention to grow recurring revenues, we anticipate that profits and cashflow will be lower than 2019 subject to
the issues identified in the risks and uncertainties section of this report.

Elsewhere, in the software core of the Group’s business, we see further opportunities to leverage our expertise in intellectual property and rights
management outside of traditional publishing sector markets and into the wider media sectors of music, film and gaming. The business has geared
up its investment to capitalise on this and ensure software delivery quality.

Risks and uncertainties

COVID-19
The COVID-19 pandemic is considered a principal risk to the business bringing with it many significant uncertainties over the remainder of 2020. The
Group has analysed the potential impacts and tailored its business continuity plan in response to the anticipated threats. All staff within the business
have remote working capabilities and for many this is a normal operating procedure. In addition, the Group’s new operating structure has fostered
teams with interchangeable skills across the product offerings and technology stacks which, along with remote working, provides a more flexible
staffing model better equipped to deal with illness and absence. The Group’s IT infrastructure is hosted on resilient platforms using large corporate
providers ideally suited to providing uninterrupted service.

The Group’s customer base is reasonably diverse including trade and academic publishers who are not deemed to be at high risk at the present
time. The Group also considers over 70% of its revenue to be recurring in nature with many customers on multiyear contracts. The Ingenta systems
are central to the operations of its customer base and not deemed to be a discretionary spend although some project work may be impacted as
customers wait to see what the implications of COVID-19 hold for them. The key concern identified by management is the inevitable delay in new
sales as major investment decisions are put off. However, the Group have modelled a worst-case scenario of no new sales made in the year and
predict the business will continue to operate profitably with ample working capital headroom. Also, a significant amount of the Group’s renewals
and cash were received in the first quarter of 2020 and at the end of April cash balances remained over £3m with additional facilities in place with
HSBC bank if required.

Sales risk
The major risks for future trading are converting sales of Ingenta Edify and the Commercial product suite (Ingenta Rights, Royalties, Product
Manager and Order to Cash), and generating revenue within PCG. Most of the business costs are fixed in the medium-term, being people and
premises costs, and therefore there is a risk to Group profitability when budgeted revenue is not delivered as cost reductions will lag behind
revenue reductions. Management undertake detailed monthly revenue forecasting and assess risk on an ongoing basis. Procurement processes
remain difficult to predict, and any delays during contract negotiation will impact on the timing of project commencement and the level of revenue
that can be recognised in the year. This is considered a principal risk for the business.

Project risk
There are two principal project risks: risk of fixed priced projects running over and the risk on all projects where there is development required that
we are unable to deliver to the specification agreed.

Fixed price project risk relates to the accuracy of project estimates and the time it will take to complete the tasks as specified in the customer
contract. Management mitigate this risk by hiring the best staff who are able to estimate projects accurately and by building in a contingency to
fixed priced contracts. Management also closely monitor contracts to ensure all work performed is in accordance with the agreement and any new
requests are separately contracted for. Management also mitigate the risk by taking on new projects on a time and materials basis wherever
possible.

Projects requiring bespoke development also carry the risk that the development will not be able to be delivered in the way envisaged at the time of
contract. Management take care to fully scope these development projects and use developers who understand the products and the complexities
of building bespoke elements. This is considered a principle risk for the business.

IT risk
Internal IT services are deployed onto fault tolerant platforms and spread over multiple locations including the Group’s offices, co-location facilities,
Infrastructure as a Service (IAAS) and Office365. Regular backups and securing of data offer multiple restore points in the event of a critical failure
outside of the scope of the in-built resilience. E-mail is a cloud-based deployment that staff can access from any working PC/smart phone. Staff
have access to cloud-based storage (OneDrive) in addition to co-location deployed file servers where data cannot be stored in e-mail. Key staff have
mobile phones and access to resilient telephony services for the purposes of contacting each other and customers. Through Remote Working staff
can access their data and customer sites in the event that it was not possible to gain access to our offices.

Customer facing services are monitored for both stability and performance, wherever possible proactive maintenance is undertaken to avoid
performance problems and/or downtime. All customer deployments are done to fault tolerant hardware either in one of our co-location facilities or
to a cloud-based service, both offering high levels of resiliency and multiple, redundant access.

The Group’s business continuity plan is available from multiple locations and is regularly updated to cover new services and deployments.

FX risk
The risk associated with generating revenue and suffering costs in a currency other than sterling is mitigated naturally within Ingenta plc as revenues
and associated costs are generally denominated in the same currency. Overall the Group is a net generator of USD.

HR risk
In a company with a high proportion of people-based revenue there is a risk of key staff leaving or being absent through sickness. This is mitigated
by having appropriate notice periods built into employee contracts and ensuring there is adequate coverage for all staff roles with no individual
solely responsible for significant revenue generation.

Brexit
Management continue to monitor the UK’s exit from the EU and its implications for the business. It is not anticipated the UK’s exit from the EU will
affect software sales and the majority of its revenue is within the UK and US markets. At present, the main risks identified are currency fluctuations
which have been reviewed above.

On behalf of the Board.

G S Winner
Chief Executive Officer
1 June 2020

Annual Report
For the year ended 31 December 2019

Directors’ report

The Directors present their report and the audited financial statements for the year ended 31 December 2019.

Directors
The Directors of the Company who held office during the year were:

Executive Directors:

G S Winner, Chief Executive Officer

J R Sheffield, Chief Financial Officer

Non-Executive Directors:

M C Rose, Chairman

M A Rowse

N W Kirton

B H Holmström

M M E Royde (resigned 1 April 2020)
S J G White (appointed 1 April 2020)

The interests of Directors in the shares of the Company at 31 December 2019 are disclosed in the Directors’ remuneration report.

Corporate governance
Details of corporate governance for the year to 31 December 2019 are disclosed in the corporate governance statement. The Directors of the
company pay particular attention to maintain good working relationships with the Group’s shareholders, customers, employees and suppliers.
Further details are included on the Company website. The main effort in the year has been embedding the new Group structure which has the
benefit of removing risk from the business ensuring a stable foundation is in place for the benefit of all stakeholders.

Research and development activities
The Group carries out research and development activities in connection with administration systems, web delivery, access control and linking
technologies. All costs relating to these activities are charged to profit and loss within the Group Statement of Comprehensive Income as incurred.
The charge to the Group Statement of Comprehensive Income was £1.4m (2018: £1.9m) in the year to 31 December 2019.

Substantial shareholdings
As at 14 January 2020, the Company had been notified of the following shareholders who are interested, directly or indirectly, in three percent or
more of the issued share capital of the Company:

Name

M C Rose

Kestrel Partners LLP

Miton Group plc

Criseren Investments Limited

Canaccord Genuity Wealth Management

Emslie Family

L B Gibson

Financial risk management
Details of the Group’s financial risks are given in note 26.

Number of ordinary 10p
shares

Percentage of issued
ordinary share capital

4,645,412

4,601,754

1,707,671

827,785

715,000

679,250

563,399

27.56%

27.30%

10.13%

4.91%

4.24%

4.03%

3.34%

Employment policy
Group employees are regularly consulted by Management and kept informed of matters affecting them and the overall development of the Group.
The Group’s policy is to give disabled people full and fair consideration for job vacancies, having due regard for their abilities and the safety of the
individual. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and
appropriate training is arranged.

Directors’ and officers’ liability insurance
The Group, as permitted by sections 234 and 235 of the Companies Act 2006, maintains insurance cover on behalf of the Directors and Company
Secretary indemnifying them against certain liabilities which may be incurred by them in relation to the Group.

Future developments
The business is looking to leverage its expertise in rights and royalty’s management to other adjacent vertical markets. The Group’s first venture is
into the music industry with its Conchord product. If this proves successful, then other verticals will also be explored.

Going concern
The Directors have prepared the financial statements on the going concern basis. In assessing whether this assumption is appropriate, management
have taken into account all relevant available information about the future including a revenue, profit and cash forecast, and management’s ability
to affect costs and revenues. Management regularly forecast profit, financial position and cash flows for the Group and a rolling forecast is updated
monthly. Revenue is forecast in detail with all revenue contracts individually listed and ranked by probability from firm to prospect. Management
have reviewed forecast costs for reasonableness against prior years in light of known changes and have concluded that forecast costs are robust.
Further details on going concern are included within note 1 to the accounts (principal accounting policies).

Auditor
Grant Thornton UK LLP, offer themselves for re-appointment as auditor. A resolution to re-appoint Grant Thornton UK LLP will be proposed at the
forthcoming Annual General Meeting.

On behalf of the Board.

G S Winner
Director
1 June 2020

Annual Report
For the year ended 31 December 2019

Corporate governance statement

The Board of Ingenta plc have adopted the Quoted Companies Alliance Corporate Governance Code (the QCA Code).

It is the Board’s responsibility to ensure that the Ingenta Group is managed in the long-term interests of all shareholders and stakeholders in the
business. The Board believes a strong and effective corporate governance culture is critical in this respect as we endeavour to grow a resilient and
sustainable business for the benefit of our shareholders, customers, people and suppliers.

The QCA code is constructed around 10 broad principles which are detailed in full on the Company’s website.

Strategy and business model
Ingenta seeks to solve the unique problems faced by information providers. We tailor our suite of industry-specific technology products to create
robust solutions to manage our customers’ IP, content and advertising requirements.

Our business model is to deliver profitable services enabling us to invest in the development of software solutions that help our customers manage
and monetise their content. We generate revenue via professional service fees for implementing our solutions, providing ongoing licence, hosting
and support services plus a range of ancillary consulting services. We then reinvest some of these profits into our products and the development of
next generation solutions to ensure we have the required product capabilities to deliver revenue and profit into the future.

The Group strategic report provides further information on the results of the business.

Risk management
The Board of Directors acknowledges its responsibility for the Group’s system of risk management and internal control, including suitable
monitoring procedures. There are inherent limitations in any system of risk management and internal control and accordingly, even the most
effective system can provide only reasonable, and not absolute, assurance with respect to the preparation of financial information and the
safeguarding of assets. The Group’s control environment is the responsibility of the Group’s Directors and managers at all levels.

The Directors and management have considered the risks facing the business with the key items discussed in the Group strategic report section of
the financial statements. These are assessed on an ongoing basis. Other risks which come under the direct control of the Directors include treasury
management, capital expenditure, insurance, health and safety and regulatory compliance. Risk assessment includes the review of potential
mitigations.

The Company has an established framework of internal controls covering the following areas:



The Board reviews and approves company strategy and the associated annual budgets.


 Monthly management information packs are produced which report performance to the Board and management team. These include income
statements, balance sheets and cash flows. Actual results are reported against budget, latest forecast and prior year with an updated forecast
for the expected full year outcome.
Any new business goes through a deal review meeting to determine expected profitability and identify any risks and how they can be
mitigated in the contract. New contracts must be signed by a member of the Board and where material they are reviewed by the Companies
advisors.
A Company-wide timesheet system is in place to enable management to effectively monitor projects, both internal and external, and report
on profitability throughout the duration of the work.
A clear organisational structure with defined levels of authority and approval.
Close supervision of the daily operations by the Executive Directors and management team.
Central control over banking facilities with defined authority limits.
The Audit Committee reviews the independent audit findings report each year to ensure compliance with financial reporting regulations and
that its internal control procedures are being adhered to and remain effective.








The Group continues to review its internal controls and will be including further key performance indicators into the monthly reporting cycle to
assist management and the Board in understanding the performance of the business. The Board considered the usefulness of appointing a
dedicated legal counsel and internal audit function but decided in view of the size of the Group it was not effective to do so. This will be kept under
review.

Further detail on the key risks faced by the business are set out in the Group strategic report.

Management framework
Ultimate responsibility for corporate governance lies with the Chairman of the Board. At present the Board comprises the Non-Executive Chairman,
four Non-Executive Directors and two Executive directors. N W Kirton and B H Holmstrom are deemed to be independent Board members.

The Board is satisfied that it has the right mix of skills covering finance, investor relations, technology and industry experience to enable it to
discharge its duties and responsibilities effectively and is supported by an Audit and a Remuneration Committee which meet separately through the
year. Any conflicts of interest at Board level are reviewed regularly through the year and disclosed at the Board meeting as appropriate.

There are normally eleven Board meetings scheduled as standard through the year with further meetings set up as required. In the year to 31
December 2019 there were 11 Board meetings held with attendance records below:

Name
G S Winner

J R Sheffield

M C Rose

M A Rowse

N W Kirton

M M E Royde

B H Holmström

Attendance

11 out of 11

10 out of 11

11 out of 11

Each month the Board is supplied with a comprehensive management information pack covering financial performance for the month and forecast
for the full year. The management team also provide an in-depth commentary on the divisional operations of the business to ensure the Board is
kept abreast of the latest developments.

Board of Directors
Between them, the Board members provide skills in finance and reporting, public markets, investor relations, technology and the publishing
industry. These skills are kept up to date via training courses and current on the job experience. The Company’s Nomad strengthens the Board’s
professional development by providing guidance and updates on corporate governance and regulatory matters as required.

The Board composition is under regular review and has widened over recent years to include specialists in public markets and technology where the
Board felt there was a need for additional expertise. All Directors can take independent professional advice in order that they can effectively carry
out their duties and have access to the services of the Company secretary as required.

Each board member’s biography is available on the Company’s website and on page three of the financial statements and detail their skills,
experience and capabilities.

The Company secretary is responsible for guiding the Chairman and Board on their responsibilities and how those responsibilities should be
discharged. This includes ensuring good information flows within the Board and its committees and also between senior management. Other
responsibilities include shareholder relations, administration of the Company’s records and ensuring compliance with legal and statutory
requirements.

Board performance
The Chairman continually monitors performance of the Board at the regular board meetings. The Executive Director roles of Chief Executive Officer
and Chief Financial Officer are clearly defined with performance targets relating to Revenue, EBITDA, Earnings per share and cash balances set each
year. The Company’s auditors provide an annual finding report which is used as a tool to identify any areas of improvement for the Board, and these
are reviewed and acted upon as appropriate. Where further training requirements have been identified, the Company then ensures that these are
carried out.

In terms of succession planning, the Board are encouraged to maintain dialogue regarding individual member’s future plans to enable the Company
to complete an orderly transition. The succession process involves a thorough review of potential internal and external candidates to ensure the best
person is selected. While no formal nomination committee has been established, board and other senior management appointments are regularly
considered at a board level.

Corporate culture
The Board and senior management expect everyone in the company to act in a responsible and ethical manner because the reputation of the
business is key to our success. The company does not let cost concerns override its ethics and behaviour. For example, we only contract with
offshore resourcing entities who commit to fair working practices. The Company is committed to minimising negative environmental impact in
terms of energy usage at our offices, digitising our content and using responsible methods to dispose of electrical equipment.

The Company and staff are also active in the local community supporting charities and sponsoring good causes. Feedback from all stakeholders, as
described in further detail on the Company’s website, allow the Board to monitor the Company’s culture, as well as the ethical values and
behaviours within the business.

Remuneration Committee
The Remuneration Committee is composed of three Non-Executive Directors: M C Rose (Chairman), M A Rowse and N W Kirton. It is responsible for
the terms, conditions and remuneration of the Executive Directors and senior management. The Remuneration Committee may consult external
agencies when ascertaining market salaries. The Chairman of the Remuneration Committee will be available at the AGM to answer any shareholder
questions.

Annual Report
For the year ended 31 December 2019

Audit Committee
The Audit Committee is comprised of three Non-Executive Directors: M C Rose (Chairman), M A Rowse and N W Kirton. It monitors the adequacy of
the Group’s internal controls and provides the opportunity for the external auditor to communicate directly with the Non-Executive Directors.

The Audit Committee also ensures that the external auditor is independent via the segregation of audit related work from other accounting
functions and non-audit related services provided and measures applicable fees with similar auditors. The Group only use the auditing firm for
compliance and corporation tax related work when fees are competitive. Any significant project work would be awarded to an independent firm of
accountants.

Relations with shareholders
The Group gives high priority to its communication with shareholders. This is achieved through the Group’s website, correspondence and extensive
corporate information. In addition, the Group visits its main institutional investors on an ongoing basis and makes available to all shareholders, free
of charge, its Interim and Annual Reports online, from the Group’s head office or via the Financial Times Annual Report Service. At the AGM the
shareholders are given the opportunity to question members of the Board. The notice of the AGM is sent to shareholders at least 21 business days
before the meeting.

Statement of Directors’ responsibilities
The directors are responsible for preparing the Group Strategic Report and Directors’ Report and the financial statements in accordance with
applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to prepare the financial
statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the
directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or
loss of the Company and Group for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;


 make judgements and accounting estimates that are reasonable and prudent;


state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and
explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.



The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The directors confirm that:




so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.

On behalf of the Board.

M C Rose
Chairman of the Audit Committee
1 June 2020

Directors’ remuneration report

Alternative Investment Market rules require the disclosure of certain information regarding the remuneration earned by each director. The
Remuneration Committee comprises M C Rose (Chairman), M A Rowse and N W Kirton who are Non-Executive Directors. The Remuneration
Committee decides the remuneration policy that applies to Executive Directors and senior management. The Remuneration Committee meets
regularly in order to consider and set the annual remuneration for the Executive Directors, having regard to personal performance and industry
remuneration rates.

In determining that policy, it considers a number of factors including:





the basic salaries and benefits available to Executive Directors of comparable companies,
the need to attract and retain Directors of an appropriate calibre, and
the need to ensure Directors’ commitment to the success of the Group.

Non-Executive Directors are appointed on a contract with a three-month notice period and may be awarded fees in relation to the Board and
committee meetings attended. Any fee awards to Non-Executive Directors are determined by the Board. Non-Executive Directors do not participate
in the Company’s share option scheme and do not receive the benefit of pension contributions.

The Group made contributions to externally administered defined contribution pension schemes for two Executive Directors.

The interests of the Directors at 31 December 2019 in the shares of the Company were as follows:

Name

M C Rose

M A Rowse

N W Kirton

M M E Royde

G S Winner

J R Sheffield

Number of ordinary shares of 10p in Ingenta plc
31 December 2019

Number of ordinary shares of 10p in Ingenta plc
31 December 2018

4,645,412

440,277

44,250

4,601,754

22,000

13,872

4,645,412

440,277

44,250

4,526,754

M M E Royde is a partner of Kestrel Partners LLP (resigned 1 April 2020)

Directors’ interests
The Directors at 31 December 2019 had an interest in 648,912 options over the ordinary shares. The Directors had no post-employment benefits,
other long-term benefits, termination benefits or share-based payments in the year.

The market price of the Company’s shares at the end of the year was 81.5p and the price ranged in the year between 64.5p and 94.0p.

Directors’ remuneration

Salary
and
fees
£’000

200

128

394

Benefits
£’000

Sums paid
to a third-
party for
Directors’
services
£’000
-

138

Pension
contribution
£’000

Total
remuneration
£’000

Group
National
Insurance
costs
£’000

2019 Total
cost of
employment
£’000

2018 Total
remuneration
£’000

2018 Total
cost of
employment
£’000

215

143

562

226

159

596

142

239

663

159

255

704

Name

G S Winner

J R Sheffield

M C Rose

M A Rowse

N W Kirton

M M E Royde

B H Holmström

D R Montgomery

D R Montgomery resigned on 22 August 2018.

On behalf of the Remuneration Committee.

M C Rose
Chairman
1 June 2020

Annual Report
For the year ended 31 December 2019

Independent auditor’s report to the members of Ingenta
plc

Opinion

Our opinion on the financial statements is unmodified

We have audited the financial statements of Ingenta plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December
2019 which comprise the Group statement of comprehensive income, the Group statement of financial position, the Group statement of changes
in equity, the Group statement of cash flows, the Company statement of financial position, the Company statement of changes in equity and
notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards
the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:



the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2019 and of
the group’s loss for the year then ended;

the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act 2006; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent
of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The impact of macro-economic uncertainties on our audit
Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence
of macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the directors
and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on
assessments of the future economic environment and the group’s future prospects and performance.

Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report its effects are subject
to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide
approach in response to these uncertainties when assessing the group’s future prospects and performance. However, no audit should be expected
to predict the unknowable factors or all possible future implications for a group associated with these particular events.

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:



the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s
or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.

In our evaluation of the directors’ conclusions, we considered the risks associated with the group’s business, including effects arising from macro-
economic uncertainties such as Covid-19 and Brexit, and analysed how those risks might affect the group’s financial resources or ability to continue
operations over the period of at least twelve months from the date when the financial statements are authorised for issue. In accordance with the
above, we have nothing to report in these respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a
guarantee that the group will continue in operation.

Overview of our audit approach

 We performed a full scope audit over Ingenta plc (the ‘parent’) and Ingenta UK Limited, and we

performed targeted procedures for group purposes for Ingenta Inc and PCG Inc.

 Overall group materiality: £200,000, which represents 1.8% of group revenue.



Key audit matters were identified as Revenue Recognition, Impairment of Intangible Assets and
Impairment of Investments (parent company only).

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those that had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter - Group
Revenue recognition
Group revenue of £10,920,000 has been recognised in the year ended
31 December 2019, arising substantially from the sales of services.

Revenue is the most significant item in the Group statement of
comprehensive income and impacts several key performance
indicators, and key strategic indicators set out in the Chief Executive’s
Statement and Strategic Report.

The Group has a number of revenue streams that have differing
recognition requirements and which, therefore, require individual
approaches to audit testing.

We therefore identified revenue recognition as a significant risk, which
was one of the most significant assessed risks of material
misstatement.

How the matter was addressed in the audit - Group
Our audit work included, but was not restricted to:


Assessing the group’s accounting policy against the
requirements of IFRS 15, for Contract Based Revenue (Hosting,
Licence and Maintenance), PCG Revenue, and Time-Based
Revenue.



Reading revenue contracts and discussing with management
to confirm our understanding of the performance obligations
for each revenue stream.

For Contract Based Revenue (Hosting, Licence and
Maintenance), testing a sample of individual revenue items
during the year, by:

- Agreeing the selected items to underlying contractual
agreements, the related remittance advice or cash
received, and communications between the project
manager and customer to support delivery of the service;
and

- Recalculating any accrued or deferred income.



For Time Based Revenue:

- Agreed a sample of individual revenue line items during
the year to underlying contractual agreements, and the
time spent per time sheet.



For Application Support:

- Agreed a sample of individual revenue line items during

the year to underlying contractual agreements.
- Recalculated any accrued or deferred income.



For PCG Revenue:

- Revenue was traced through to agreement stating

commission terms. Commissions were recalculated and
compared to managements recognition.



Assessing the design effectiveness of controls.

Key observations
Our testing did not identify any deficiencies in the design
effectiveness of controls which would require us to amend the
nature or scope of our planning detailed testing. Overall, based on
our audit work, we did not identify and material misstatements
within the revenue balance recognised.

Annual Report
For the year ended 31 December 2019

Key Audit Matter - Group
Impairment of Intangible Assets
Management are required to make an annual assessment to
determine whether the Group’s goodwill and intangible assets, which
are valued at £2,819,000 in the Group statement of financial position,
are impaired.

The process for assessing whether impairments exist under
International Accounting Standards, IAS 36 ‘Impairment of assets’ is
complex. The process of determining the value in use, through
forecasting cash flows related to cash generating units (CGU’s) and
the determination of the appropriate discount rate and other
assumptions to be applied can be highly judgmental and can
significantly impact the result of the impairment review.

We therefore identified the goodwill and intangible assets impairment
review as a significant risk, which was one of the most significant
assessed risks of material misstatement.

How the matter was addressed in the audit - Group
Our audit work included, but was not restricted to:


Obtaining management’s assessment of the relevant CGU’s
used in the impairment calculation (covering a five-year
period) and ensuring that assessment reflected our
understanding of the business units and operating structure
of the group, challenging management’s assumptions and
checking the arithmetical accuracy of management’s
impairment model.



Performing sensitivity analysis to assess the impact of possible
different assumptions utilised in the impairment models
included growth rates, and discounted rates to assess what it
would take to result in an impairment against each CGU.

Testing the accuracy of management’s historic forecasting
through a comparison of prior year impairment reviews to
actual results.

Reading the detailed disclosure to ensure information
provided in the financial statements is compliant with the
requirements of IAS 36 and consistent with the results of the
impairment review.

The group’s accounting policy which is to “Review goodwill annually
for impairment and ensure it is carried at cost less accumulated
impairment loss” is shown on page 34.

Key observations
Based on the calculated present value of future cash flows over the
next five years, a goodwill impairment charge has been recognised
in respect of the PCG CGU of £500,000 and in respect of the
Advertising CGU of £997,000.

On the basis of the audit work performed on the calculations and
forecasts used by management there have been no material
misstatements identified within either the goodwill balances or other
intangible assets recognised in the group statement of financial
position.

Key Audit Matter - Parent
Impairment of investment
Investments in subsidiaries are carried at cost less necessary
impairments and valued on an individual basis. The investments in
subsidiaries are included within the company only balance sheet of
Ingenta Plc and recorded at £3,258,000. Management assesses
whether there are any losses in the carrying value of the investments
in subsidiaries.

The determination of whether an investment in subsidiary needs to be
impaired includes assumptions about the profitability of the
underlying business and growth, which involves management’s
judgment.

We therefore identified the impairment of investments as a significant
risk, which was one of the most significant assessed risks of material
misstatement.

How the matter was addressed in the audit - Parent
Our audit work included, but was not restricted to:



Assessing the parent company’s accounting policy for
impairment of investments for compliance with the financial
reporting framework and whether management has
accounted for impairment of investments in accordance with
that policy.

Assessing market capitalisation of the Group compared to the
investment value of its investments.

Comparing the book value of the investments in subsidiaries
as at year end 2019 to the company’s valuations as
determined by management by:

Checking the calculations within the impairment model and
comparing the results to the investment carrying values in
question to determine whether there is impairment;

Testing the assumptions utilised in the impairment models by
calculation of our own estimates of growth rates and discount
rates to evaluate management’s point estimate; and

Testing the accuracy of management’s forecasting through
comparison of budget to actual data and historical variance
trends and checking the cash flows for exceptional or unusual
items or assumptions to consider whether management has a
robust process for assessing impairment.

The parent company’s accounting policy is that “Investments held as
fixed assets are stated at cost less any provision for impairment in
value and is shown on page 62.

Key observations
Based on our audit work, we considered the calculations and
forecasts used by management in the impairment calculations for
the carrying value of investments in subsidiaries and the conclusions
reached to be reasonable, including the impairment charge of
£824,000 recognised against the investment in 5 Fifteen Limited
(which represents the advertising CGU noted in the Group risk
above). We did not identify any material misstatements within the
investment in subsidiaries within the company only balance sheet.

Annual Report
For the year ended 31 December 2019

Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit
work and in evaluating the results of that work.

Materiality was determined as follows:

Materiality Measure
Financial statements as a
whole

Group
£200,000 which is 1.8% of revenue. This benchmark
is considered the most appropriate because it is a
stable and prominent key performance indicator.

Parent
£92,000 which was 1% of total assets. This
benchmark is considered the most appropriate
because the entity is a holding company.

Materiality for the current year is lower than the
level that we determined for the year ended 31
December 2018 to reflect the reduction in revenue
from the prior year.

Materiality for the current year is lower than the
level that we determined for the year ended 31
December 2018 to reflect the reduction in total
assets in the period.

75% of financial statement materiality.

Performance materiality
used to drive the extent
of our testing

Communication of
misstatements to the
audit committee

£10,000 and misstatements below that threshold
that, in our view, warrant reporting on qualitive
grounds.

£4,600 and misstatements below that threshold
that, in our view, warrant reporting on qualitive
grounds.

The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected
misstatements.

Overall materiality – Group

Overall materiality – Parent

25%

75%

Tolerance for potential uncorrected mis-statements

Performance materiality

An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile and in
particular included:



Evaluating the Group’s internal control environment;

Performing process walkthroughs and documenting the controls covering all of the Key Audit Matters and Other Risks, to assess the design
effectiveness of controls;

A full scope audit of the financial statements of the Ingenta plc (“parent” company) and Ingenta UK Limited;

Targeted audit procedures, most significantly in respect of revenue, for group purposes for Ingenta Inc and PCG Inc for the purpose of forming a
group opinion;

 Our full scope and targeted audit procedures covered 100% of the revenue recognised and 100% of the assets held.

Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:



the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and



the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the directors’ report.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our
opinion:



adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 20, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Annual Report
For the year ended 31 December 2019

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Mark Bishop FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
1 June 2020

Group statement of comprehensive income

note

Year ended
31 Dec 19
£’000

10,920

(6,184)

Restated
Year ended
31 Dec 18
£’000

12,001

(7,258)

4,736

4,743

(819)

(3,502)

(1,663)

(1,074)

(3,948)

(896)

(1,248)

(1,175)

(18)

(29)

(1,266)

(83)

(1,349)

(1,204)

407

(797)

(4)

(31)

(1,353)

(828)

(7.98)

(4.71)

Group revenue

Cost of sales

Gross profit

Sales and marketing expenses

Administrative expenses

Impairment of intangibles and investments

Loss from operations

Finance costs

Loss before income tax

Income tax

Loss for the year attributable to equity holders of the parent

Other comprehensive expenses which will be reclassified subsequently to profit or
loss:

Exchange differences on translation of foreign operations

Total comprehensive loss for the year attributable to equity holders of the parent

Basic loss per share (pence)

Diluted loss per share (pence)

All activities are classified as continuing.

The accompanying notes form part of these financial statements.

Annual Report
For the year ended 31 December 2019

Group statement of financial position

Non-current assets

Goodwill
Other intangible assets
Property, plant and equipment

Current assets

Trade and other receivables
Investments classified as held for sale
Research and Development tax credit receivable
Cash and cash equivalents

Total assets

Equity

Share capital
Share Premium
Merger reserve
Reverse acquisition reserve
Share option reserve
Translation reserve
Retained earnings
Total equity

Non-current liabilities

Deferred tax liability
Leases

Current liabilities

Trade and other payables
Deferred income

Total liabilities
Total equity and liabilities

note

10
11
12

13
3,14
8
15

19
20

31 Dec 19
£’000

Restated
31 Dec 18
£’000

Restated
1 Jan 18
£’000

2,661
158
473
3,292

3,219
-
-
2,600
5,819
9,111

1,692
-
11,055
(5,228)
23
(880)
(3,131)
3,531

32
206
238

2,459
2,883
5,342

5,580
9,111

4,324
258
583
5,165

4,627
-
336
1,323
6,286
11,451

1,692
-
11,055
(5,228)
16
(876)
(1,477)
5,182

52
355
407

2,757
3,105
5,862

6,269
11,451

4,900
358
627
5,885

4,688
320
180
2,131
7,319
13,204

1,692
8,999
11,055
(5,228)
51
(845)
(9,425)
6,299

72
455
527

3,435
2,943
6,378

6,905
13,204

The financial statements were approved by the Board of Directors and authorised for issue on 1 June 2020 and were signed on its behalf by:

J R Sheffield
Director

G S Winner
Director

Registered number: 00837205
The accompanying notes form part of these financial statements.

Group statement of changes in equity

For the year ended 31 December 2019

Share
capital
£’000

Merger
reserve
£’000

Reverse
acquisition
reserve
£’000

Translation
reserve
£’000

Retained
earnings
£’000

Share
option
reserve
£’000

Total
attributable
to owners
of parent
£’000

Restated balance at 1 January 2019

1,692

11,055

(5,228)

(876)

(1,477)

Dividends paid

Shares bought back into treasury

Share options granted in the year

Transactions with owners

Loss for the year

Foreign exchange differences on translation
foreign operations

Total comprehensive expense for the year

(4)

(254)

(51)

(305)

(1,349)

5,182

(254)

(51)

(298)

(1,349)

(4)

(1,353)

Balance at 31 December 2019

1,692

11,055

(5,228)

(880)

(3,131)

3,531

For the year ended 31 December 2018

Balance at 1 January 2018 as
previously reported
Adjustment from the adoption of
IFRS16

Restated balance at
1 January 2018

Dividends paid

Capital reconstruction
(note 21)

Share options lapsed in the year

Transactions with owners

Loss for the year (restated)

Foreign exchange differences on
translation foreign operations

Total comprehensive expense for
the year
Restated balance at
31 December 2018

Share
capital
£’000

Share
premium
£’000

Merger
reserve
£’000

Reverse
acquisition
reserve
£’000

Translation
reserve
£’000

Retained
earnings
£’000

Share
option
reserve
£’000

Total
attributable
to owners
of parent
£’000

1,692

8,999

11,055

(5,228)

(845)

(9,424)

6,300

1,692

8,999

11,055

(5,228)

(845)

(9,425)

(1)

1,692

(8,999)

(31)

(254)

8,999

(35)

(797)

11,055

(5,228)

(876)

(1,477)

8,745

(35)

(289)

(1)

6,299

(254)

(35)

(797)

(31)

(828)

5,182

Annual Report
For the year ended 31 December 2019

Group statement of cash flows

Loss before taxation

Adjustments for

Impairment of intangibles

Depreciation

Loss / (profit) on disposal of fixed assets

Interest expense

Unrealised foreign exchange differences

Decrease in trade and other receivables

Decrease in trade and other payables and deferred income

Cash inflow / (outflow) from operations

Research and Development tax credit received

Tax paid

Net cash inflow / (outflow) from operating activities

Cash flow from investing activities

Acquisition of subsidiaries, net of cash acquired

Purchase of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Interest paid

Payment of lease liabilities

Dividend paid

Costs of capital restructure

Costs of buy back of shares into treasury

Net cash used in financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Exchange difference on cash and cash equivalents

Cash and cash equivalents at the end of the year

The accompanying notes form part of these financial statements.

15, 23

note

Year ended
31 Dec 19
£’000

(1,266)

Restated
Year ended
31 Dec 18
£’000

(1,204)

1,663

372

(4)

1,408

(499)

1,694

282

(49)

1,927

(132)

(4)

(213)

(254)

(51)

(522)

1,273

1,323

2,600

896

349

(2)

(31)

(346)

(248)

235

(6)

(19)

(248)

(61)

(309)

(8)

(183)

(254)

(31)

(476)

(804)

2,131

(4)

1,323

Notes to the Group financial statements

For the year ended 31 December 2019

General information and nature of operations
Ingenta plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is a
provider of content management, advertising and Commercial enterprise
solutions and services to publishers, information providers, academic libraries
and institutions. The nature of the Group’s operations and its principal activities
are set out in the Chairman’s statement and Group Strategic report.

The Company is incorporated in the United Kingdom under the Companies Act
2006. The Company’s registration number is 00837205 and its registered office
is 8100 Alec Issigonis Way, Oxford, OX4 2HU. The consolidated financial
statements were authorised by the Board of Directors for issue on 27 March
2019.

Principal accounting policies

New Standards adopted as at 1 January 2019

IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4
‘Determining whether an Arrangement contains a Lease’, SIC 15 ‘Operating
Leases-Incentives’ and SIC 27 ‘Evaluating the Substance of Transactions
Involving the Legal Form of a Lease’).

The adoption of this new Standard has resulted in the Group recognising a
right-of-use asset and related lease liability in connection with its leased UK
Head Office.

The new Standard has been applied retrospectively in line with IAS 8.

Going concern
The accounts are prepared on a going concern basis. In assessing whether the
going concern assumption is appropriate, management have taken into
account all relevant available information about the future including revenue,
profit and cash forecast and management’s ability to affect costs and revenues.

Management regularly forecast profit, financial position and cash flows for the
Group. The rolling annual forecast is normally updated monthly.

Management have reviewed forecast costs for reasonableness against prior
years and with knowledge of expected movements and concluded that forecast
costs are robust.

As at 31 December 2019 the Group had net current assets of £0.5m (2018:
£0.4m), of which £2.9m (2018: £3.1m) relates to deferred income which will be
recognised in the year ending 31 December 2020.

The Group has positive cash balances of £2.6m as at 31 December 2019 (2018:
£1.3m). The Group held linked accounts with HSBC Bank plc such that any
facility was based on the net balance of all accounts taken together.
Management have assured themselves that cash is sufficient for the needs of
the business based on the cash flow forecast.

The major risks for future trading are the uptake of new generation products
Ingenta Edify and the Commercial product suite (Ingenta Rights, Royalties,
Product Manager and Order to Cash), which to some extent is reliant on the
macro-economy and the willingness of data providers to commit to capital
expenditure projects.

Since 31 December 2019, the COVID-19 outbreak continues to add some
uncertainty to financial forecasting and modelling. However, the Group’s
operating results to the end of April 2020 have been largely unaffected by any
short-term consequences of the disease. The Group has fully embraced remote
working without any significant impact to services and continues to host,
maintain and support existing customers. Any ongoing implementations and
time-based services can also be continued remotely by Ingenta personnel. The
Group can exert less control over third parties, but the internal business

infrastructure is contracted with large multinational corporations and remains
resilient. On the customer front, there is a trend to delay discretionary spend
and this will impact on new sales activity for the remainder of the year. The
Group have modelled various downside scenarios and consider it appropriate
to use the going concern basis to compile these financial statements.

Basis of preparation
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all years presented.

The accounting policies applied have been applied consistently throughout the
Ingenta Group. The financial statements have been prepared under the
historical cost convention.

Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the
European Union. The accounting policies set out below have been applied
consistently to all periods presented in these consolidated financial statements.

Significant management judgements in applying accounting policies
The following are the significant management judgements used in applying the
accounting policies of the Group that have the most significant effect on the
financial statements.

Consulting service revenue
Please refer to the Revenue section of the accounting policies note for detailed
disclosure. The area where significant management judgement is applied is in
estimating project percentage complete assessments for any fixed price
elements of work.

Deferred tax assets
The assessment of the probability of future taxable income against which
deferred tax assets can be utilised is based on the Group’s latest approved
forecast, which is adjusted for significant non-taxable income and expenses and
specific limits to the use of any unused tax loss or credit. The tax rules in the
numerous jurisdictions in which the Group operates are also carefully taken into
consideration. If a positive forecast of taxable income indicates the probable
use of a deferred tax asset, especially when it can be utilised without a time
limit, that deferred tax asset is usually recognised in full. The recognition of
deferred tax assets that are subject to certain legal or economic limits or
uncertainties are assessed individually by management based on the specific
facts and circumstances.

Research and development expenditure
Research and development expenditure is fully written off to the Group
Statement of Comprehensive Income as costs are incurred. The Board have
taken into account the inherent risks in all research and development
expenditure and specifically the expenditure being incurred by the business in
the year and have concluded that the requirements of IAS 38 to capitalise
development expenditure have not been met.

Estimation uncertainty
When preparing the financial statements management make a number of
estimates and assumptions about recognition and measurement of assets,
liabilities, income and expenses. The actual results are likely to differ from the
judgements, estimates and assumptions made by management, and will
seldom equal the estimated results. Information about the significant
judgements, estimates and assumptions that have the most significant effect on
the recognition and measurement of assets, liabilities, income and expenses are
discussed on the following pages.

Impairment
An impairment loss is recognised for the amount by which an asset’s, or cash
generating unit’s, carrying amount exceeds its recoverable amount. To
determine the recoverable amount, management estimates expected future
cash flows from each asset, or cash-generating unit, and determines a suitable
pre-tax discount rate in order to calculate the present value of those cash flows.
In the process of measuring expected future cash flows management makes
assumptions about future gross profits. These assumptions relate to future
events and circumstances. The actual results may vary and may cause
significant adjustments to the Group’s assets within the next financial year. In

Annual Report
For the year ended 31 December 2019

most cases, determining the applicable discount rate involves estimating the
appropriate adjustment to market risk and the appropriate adjustment to asset-
specific risk factors. See note 10 for details of the review.

Leasehold improvements
Computer equipment
Fixtures, fittings and equipment

Over the term of the lease
3 years
5 years

Basis of consolidation
The Group financial statements consolidate those of the parent Company and
all of its subsidiaries as of 31 December 2019. All subsidiaries have a reporting
date of 31 December.

All transactions and balances between Group companies are eliminated on
consolidation, including unrealised gains and losses on transactions between
Group companies. Where unrealised losses on intra-group asset sales are
reversed on consolidation, the underlying asset is also tested for impairment
from a Group perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries acquired or
disposed of during the year are recognised from the effective date of
acquisition, or up to the effective date of disposal, as applicable.

The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.

Unrealised gains on transactions between the Group and its subsidiaries are
eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.

The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that
control ceases.

Acquisitions of subsidiaries are dealt with by the purchase method. The
purchase method involves the recognition at fair value of all identifiable assets
and liabilities, including contingent liabilities of the subsidiary, at the acquisition
date, regardless of whether or not they were recorded in the financial
statements of the subsidiary prior to acquisition. The acquisition cost is
calculated as the sum of the acquisition date fair values of the assets transferred
by the acquirer and excludes any transaction costs. On initial recognition, the
assets and liabilities of the subsidiary are included in the consolidated
statement of financial position at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group accounting
policies. Goodwill is stated after separating out identifiable intangible assets.
Goodwill represents the excess of acquisition cost over the fair value of the
Group’s share of the identifiable net assets of the acquired subsidiary at the
date of acquisition.

Investments in Joint Ventures are initially recognised at cost and subsequently
accounted for using the equity method. Any goodwill or fair value adjustment
attributable to the Group’s share in the Joint Venture is not recognised
separately and is included in the amount recognised as investment in Joint
Ventures. The carrying amount of the investment in Joint Ventures is increased
or decreased to recognise the Group’s share of the profit or loss and other
comprehensive income of the Joint Venture, adjusted where necessary to
ensure consistency with the accounting policies of the Group. Unrealised gains
and losses on transactions between the Group and its Joint Ventures are
eliminated to the extent of the Group’s interest in those entities. Where
unrealised losses are eliminated, the underlying asset is also tested for
impairment.

Share options
The Group operates an unapproved Executive Management Incentive (EMI)
Share Option plan. £7K (2018: £35K reduction) has been recognised during the
year as an increase of the fair value of the options. Full details are in note 22.
Property, plant and equipment

Cost
Property, plant and equipment is stated at cost, net of depreciation and any
provision for impairment.

Depreciation
Depreciation is calculated using the straight - line method to allocate the cost
of assets less their estimated residual value over their estimated useful lives, as
follows:

The residual value and the useful life of each asset are reviewed at least at each
financial year-end and, if expectations differ from previous estimates, the
change(s) are accounted for as a change in an accounting estimate.

Disposal of assets
The gain or loss arising on the disposal or retirement of an asset is determined
as the difference between the sales proceeds and the carrying amount of the
asset and is recognised within profit or loss within the Group Statement of
Comprehensive Income.

Intangible assets

Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group’s interest in the fair value of the identifiable assets
and liabilities of a subsidiary at the date of acquisition. Goodwill is tested
annually for impairment and is carried at cost less accumulated impairment
losses. Impairment losses are recognised immediately in the income statement
and are not subsequently reversed.

Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts subject to being tested for
impairment at that date and at least annually thereafter.

On disposal of a subsidiary, the attributable net book value of goodwill is
included in the determination of the profit or loss on disposal.

Technology based intellectual property
Intangible assets relating to the technology acquired from business
combinations that qualify for separate recognition are recognised as intangible
assets at their fair value. The assets are valued using a discounted cash flow
model for the revenues they will generate over the next 5 years.

The asset is amortised on a straight-line basis over a 5 year period. Residual
values and useful lives are reviewed at each reporting date. Amortisation is
included within depreciation, amortisation and impairment of non-financial
assets.

Impairment of intangibles and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level. Goodwill is allocated to those cash-
generating units that are expected to benefit from synergies of the related
business combination and represent the lowest level within the Group at which
management monitors the related goodwill.

Goodwill, other individual assets or cash-generating units that include goodwill
and other intangible assets with an indefinite useful life are tested for
impairment at least annually. All other individual assets or cash-generating units
are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.

Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes
a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows
from the financial asset expire, or when the financial asset and all substantial
risks and rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured initially at fair value plus
transactions costs, except for financial assets and financial liabilities carried at
fair value through profit or loss, which are measured initially at fair value.
Financial assets and financial liabilities are measured subsequently as described
herein.

Financial assets

Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for transaction
costs (where applicable).

Financial assets, other than those designated and effective as hedging
instruments, are classified as at amortised cost. In the periods presented the
corporation does not have any financial assets categorised as FVOCI.

The classification is determined by both:



the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit
or loss are presented within finance costs, finance income or other financial
items, except for impairment of trade receivables which is presented within
other expenses.

Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets meet the following
conditions (and are not designated as FVTPL):


they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding



After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Group’s cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments as well
as listed bonds that were previously classified as held-to-maturity under IAS 39.

Trade receivables
Trade receivables are recognised initially at transaction price in accordance with
IFRS 15 and subsequently reviewed for expected credit losses in line with IFRS 9.
In measuring the expected credit losses, the trade receivables have been
assessed on an individual basis. Where trade receivables were found to be
individually impaired an allowance for credit losses has been recorded within
“sales and marketing” in the Group Statement of Comprehensive Income. This
allowance has been determined by reference to expected receipts after
considering historical experience, readily available external indicators and
forward-looking information. Trade receivables are written off (i.e.
derecognised) when there is no reasonable expectation of recovery. Failure to
make payments within 6 months from the invoice date, failure to engage with
the Group on alternative future payment arrangements and bankruptcy or
administration of the customer are indicators of a potential expected credit loss.
The Group has a stable customer base with strong relationships built up over
time allowing it to make reasonable assessments of recoverability. Most trade
receivables relate to customers ongoing ability to function and past experience
indicates the balances are recoverable subject to any future information that
becomes available. Where an expected credit loss is recognised it will be
significantly influenced by additional forward-looking information such as
industry discussion papers, repayment plan reasonableness and direct account
management negotiation. When a trade receivable is uncollectible, it is written
off against the credit loss provision. Subsequent recoveries of amounts
previously provided for are credited against ‘Sales and marketing expenses’ in
the Group Statement of Comprehensive Income.

Available for sale financial assets
Available for sale financial assets are non-derivative financial assets that are
either designated in this category or are not classified in any other category.
They are included in non-current assets unless management intends to dispose
of the investment within 12 months of the Statement of Financial Position date.

On initial recognition, financial assets are measured at fair value plus
transaction costs that are directly attributable to the acquisition or issue of the
financial assets. After initial recognition, financial assets are measured at fair
value, without any deduction of transaction costs.

Gains and losses arising from changes in the fair value of a financial asset are
recognised in other comprehensive income, except for impairment losses.
When securities classified as available for sale are sold or impaired, the

accumulated fair value adjustments recognised in equity are reclassified from
equity to profit or loss.

The fair values of quoted investments are based on current bid prices. If the
market for a financial asset is not active the Group establishes fair value by
using valuation techniques. These include the use of recent arm’s length
transactions, reference to other instruments that are substantially the same,
discounted cash flow analysis and option pricing models making maximum use
of market inputs and relying as little as possible on entity specific inputs.

Financial liabilities
The Group’s financial liabilities include borrowing and trade and other payables.

Trade payables
Trade payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.

Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised within profit or loss within the Group Statement of Comprehensive
Income over the period of the borrowing using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12 months
after the reporting date.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits
together with other short term highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value. Cash and cash equivalents include bank
overdrafts as they are repayable on demand and form an integral part of the
Group’s cash management. The Group’s banking facility is all with one bank
(HSBC Bank plc) and the accounts are linked such that any facility limit is based
on the net balance of all accounts.

Equity
Share capital represents the nominal value of shares that have been issued.

The translation reserve within equity relates to foreign currency translation
differences arising on the translation of the Group’s foreign entities.

Retained earnings include all current and prior year retained profits and losses.

Reverse acquisition reserve and merger reserve represent balances arising on
the acquisition of Ingenta plc in 2007. The IFRS 3 acquisition adjustment reflects
the entries required under reverse acquisition accounting, whereby
consolidated shareholders’ funds comprise the capital structure of the legal
parent combined with the reserves of the legal subsidiary and the post-
acquisition reserves of the parent.

Where any Group company purchases the Company’s equity share capital
(treasury shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to
the Company’s equity holders until the shares are cancelled or reissued. Where
such shares are subsequently sold or reissued, any consideration received, net
of any directly attributable incremental transactions costs and the related
income tax effect, is included in equity attributable to the Company’s equity
holders.

Revenue
Revenue comprises the fair value of the consideration received or receivable for
the sale of goods and services in the ordinary course of the Group’s activities.
Revenue is shown net of value added tax, returns, rebates and discounts after
eliminating sales within the Group.

To determine whether to recognise revenue, the Group follows a 5-step
process:
1 Identifying the contract with a customer
2 Identifying the performance obligations
3 Determining the transaction price
4 Allocating the transaction price to the performance obligations
5 Recognising revenue when/as performance obligation(s) are satisfied.

Annual Report
For the year ended 31 December 2019

The Group often enters into transactions involving a range of the Group’s
products and services, for example for the delivery of licences, consulting
services, hosting services, managed services and support and upgrade services.
These services and performance obligations are separately identifiable and
contracted for allowing a reasonable allocation of price to each component.

Revenue is recognised either at a point in time or over time, when (or as) the
Group satisfies performance obligations by transferring the promised goods or
services to its customers.

The Group recognises contract liabilities for consideration received in respect of
unsatisfied performance obligations and reports these amounts as other
liabilities in the statement of financial position. Similarly, if the Group satisfies a
performance obligation before it receives the consideration, the Group
recognises either a contract asset or a receivable in its statement of financial
position, depending on whether something other than the passage of time is
required before the consideration is due.

Where certain products are sold as multi element arrangements, the Group
evaluates the separability of the goods or services based on whether they are
distinct. A good or service is distinct if both:



the customer benefits from the item either on its own or together with
other readily available resources, and
it is ‘separately identifiable’ (i.e. the Group does not provide a significant
service integrating, modifying or customising it).

Recognition of Ingenta Connect Revenue (within the Content products division):
Ingenta Connect revenues comprise ‘Hosted services’ and ‘Consulting Services’
revenue.

Hosted services:
Hosted services include annual fees for hosting publishers’ content on the
Ingenta Connect platform and revenues from document delivery under pay-
per-view access, clearance and digitisation services.

Hosting revenue is recognised over time with reference to the contracted
period. The performance obligation of hosting customers content on servers
does not materially change over time and is recognised evenly over the
contract period.

Pay per view revenue is recognised at a point in time when the documents are
delivered to a customer. The performance obligation is to deliver content to an
end user and facilitate a transfer of money for the purchase.

Consulting Services:
Consulting services includes revenues from the processing of e-journal content
and ongoing services.

The consulting fees are based on a per article charge and are recognised at a
point in time when the article is processed. The performance obligation is to
convert a specified piece of content into a format suitable for ingestion onto
the Ingenta Connect platform.

Recognition of Ingenta Commercial products, Ingenta Edify (within the Content products
division), and Ingenta Advertising:
Revenues from these divisions comprise ‘Licences’, ‘Consulting Services’, Hosted
Services’, ‘Managed Services’ and ‘Support and Upgrade’ revenue.

Licences:
Licences can be sold as perpetual or under a software as a service (SaaS)
agreement.

Perpetual software licence revenues are recognised at a point in time if there
are no associated implementation requirements. This will only be the case
where an existing customer purchases additional licences to increase the
number of users on an existing installed software system.

Where perpetual software licences require consulting services to make the
licences usable, the licence revenue is linked to the consulting services and is
recognised over the period of the associated consulting services on a
percentage complete basis. The software is deployed immediately onto the
customer network and consulting services are used to perform integration work
which enhances the software’s functionality. The customer has benefit from the
software over the implementation and gains increased benefit as the

functionality extends. The percentage complete assessment is made by
reference to the estimated project days in the project planning documentation,
amended for project change requests and the days worked on the project to
the year end.

For SaaS licence arrangements, licences are deemed to be a right to access and
revenue is recognised over time and taken in equal instalments over the period
of the contract from the point the software is functional.

Consulting Services:
Revenue recognition from long term contracts within consulting services
depends on the contractual terms.

Fixed price consulting contracts are recognised over time on the percentage of
completion method. This is assessed by reference to the estimated project days
in the project planning documentation, amended for project change requests
and the days worked on the project to the year end. The performance
obligation is to provide man time to deliver a specified level of functionality
within the software. The customer has access to the software throughout the
consulting phase and gets benefit from the consulting work as functionality is
expanded over time.

Other consulting services contracts are on a time and materials basis and
revenue is recognised over time as work is performed. The amount of revenue
is calculated by the number of days worked at the contracted day rate. As
under a fixed price contract, the customer has access to the software during the
implementation phase and gets benefit from the consulting services as
functionality is expanded over time.

Consulting services for a software implementation normally last for less than 12
months and payment terms are always in instalments during the period. As
such, the Group does not adjust the receivable amounts for the effects of
financing.

Hosted Services, Managed Services and Support and Upgrade:
Revenues collected or billed in advance for hosted services, managed services
and support and upgrade revenue are recorded as deferred income and
recognised evenly over the period to which the service relates. In all cases, the
performance obligation is to provide a service evenly over a contracted period
of time.

Recognition of PCG Revenues:
Ingenta’s PCG division earns revenue from providing services to Publishers and
Content providers. Some revenue is charged as a retainer for services provided
throughout the period. These revenues are recognised over time as the
performance obligation is to provide a dedicated sales representative over a
contracted period.

Some revenues are earned on a commission basis associated with selling
publishers’ content. This revenue is recognised at a point in time when
commission is earned which contractually is when PCG’s publishing customer
invoices the end user for the services sold by PCG. In some cases, PCG invoices
the end user on behalf of the customer for the services sold by PCG and
records PCG’s commission when the invoice is issued as agreed in the contract.
Where any sales representation and cash collection services are incorporated
into the contract the work involved is minimal and does not affect recognition
of commission.

Some further revenues are based on performing surveys for publishers. These
revenues are based on a fixed number of calls at an agreed rate per call.
Revenue is recognised at a point in time on a per call completed basis in the
period the calls were made.

Employee benefits

Pension obligations
The Group operates various pension schemes which are by nature defined
contribution plans. A defined contribution plan is a pension plan under which
the Group pays a fixed contribution into a separate entity. The Group has no
legal or constructive obligations to pay further contributions if the fund does
not hold sufficient assets to pay all employees the benefits relating to employee
service in the current and prior periods. The Group does not operate a defined
benefit plan.

For defined contribution plans, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The contributions are recognised as employee benefit expenses
when they are due.

At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Group’s
incremental borrowing rate.

Share-based employee remuneration
The Group operates equity-settled share-based remuneration plans for its
employees. None of the Group’s plans feature any options for a cash
settlement.

All goods and services received in exchange for the grant of any share- based
payment are measured at their fair values. Where employees are rewarded
using share-based payments, the fair values of employees’ services are
determined indirectly by reference to the fair value of the equity instruments
granted. This fair value is appraised at the grant date and excludes the impact
of non-market vesting conditions.

All share-based remuneration is ultimately recognised as an expense in profit or
loss. If vesting periods or other vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number
of options that are expected to become exercisable. Estimates are subsequently
revised, if there is any indication that the number of share options expected to
vest differs from previous estimates. Any cumulative adjustment prior to vesting
is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised are different to
that estimated on vesting.

Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued are
allocated to share capital with any excess being recorded as share premium.

Termination benefits
Termination benefits are payable when employment is terminated by the Group
before the normal retirement date or when an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminating the
employment according to a detailed formal plan without possibility of
withdrawal or to providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months
after the reporting date are discounted to their present value.

Leased assets
The Group as a lessee
For any contracts entered into the Group considers whether a contract is or
contains a lease. A lease is defined as ‘a contract, or part of a contract, that
conveys the right to use an asset (the underlying asset) for a period of time in
exchange for consideration’. To apply this definition the Group assesses
whether the contract meets three key evaluations which are whether:



the contract contains an identified asset, which is either explicitly
identified in the contract or implicitly specified by being identified at the
time the asset is made available to the Group

the Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract

the Group has the right to direct the use of the identified asset throughout the
period of use. The Group assess whether it has the right to direct ‘how and for
what purpose’ the asset is used throughout the period of use.

Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability, any initial
direct costs incurred by the Group, and any lease payments made in advance of
the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the
lease commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The Group also assesses the
right-of-use asset for impairment when such indicators exist.

Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in substance fixed), variable payments based on an
index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be
exercised.

Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest. It is remeasured to reflect any reassessment or
modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease term.

On the statement of financial position, right-of-use assets have been included
in property, plant and equipment and lease liabilities have been included in
trade and other payables.

Operating expenses
Operating expenses are recognised within profit or loss within the Group
Statement of Comprehensive Income upon utilisation of the service or at the
date of their origin.

Finance costs
Financing costs comprise interest payable, the amortisation of the costs of
acquiring finance and the unwinding of discounts that are recognised within
profit or loss within the Group Statement of Comprehensive Income. Interest
payable is recognised in the Group Statement of Comprehensive Income as it
accrues, using the effective interest method.

Income taxes
The tax expense recognised within profit or loss within the Group Statement of
Comprehensive Income comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity. Current
income tax assets and/or liabilities comprise those obligations to, or claims
from, fiscal authorities relating to the current or prior reporting periods, that are
unpaid at the reporting date. Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements. Calculation of current tax is
based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on the initial recognition of
goodwill, or on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.

Deferred tax on temporary differences associated with shares in subsidiaries
and Joint Ventures is not provided if reversal of these temporary differences
can be controlled by the Group and it is probable that reversal will occur in the
foreseeable future.

Deferred tax assets and liabilities are calculated, without discounting, at tax
rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted by the end of the reporting
period. Deferred tax liabilities are always provided for in full.

Deferred tax assets are recognised to the extent that it is probable that they will
be able to be utilised against future taxable income. Deferred tax assets and
liabilities are offset only when the Group has a right and intention to set off
current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of
tax income or expense in profit or loss, except where they relate to items that
are recognised in other comprehensive income (such as the revaluation of land)

Annual Report
For the year ended 31 December 2019

or directly in equity, in which case the related deferred tax is also recognised in
other comprehensive income or equity, respectively.

reporting purposes and reported in a manner which is more consistent with
internal reporting provided to the chief operating decision-maker.

Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event
will probably lead to an outflow of economic resources from the Group and
amounts can be estimated reliably. Timing or amount of the outflow may still
be uncertain. A present obligation arises from the presence of a legal or
constructive commitment that has resulted from past events, for example,
onerous contracts. Restructuring provisions are recognised only if a detailed
formal plan for the restructuring has been developed and implemented, or
management has at least announced the plan’s main features to those affected
by it. Provisions are not recognised for future operating losses.

Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the
reporting date, including the risks and uncertainties associated with the present
obligation. Where there are a number of similar obligations, the likelihood that
an outflow will be required in settlement is determined by considering the class
of obligations as a whole. Provisions are discounted to their present values,
where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a
third-party with respect to the obligation is recognised as a separate asset.
However, this asset may not exceed the amount of the related provision. All
provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate.

In those cases, where the possible outflow of economic resources as a result of
present obligations is considered improbable or remote, no liability is
recognised, unless it was assumed in the course of a business combination. In a
business combination, contingent liabilities are recognised in the course of the
allocation of the purchase price to the assets and liabilities acquired in the
business combination. They are subsequently measured at the higher amount
of a comparable provision as described above and the amount initially
recognised, less any amortisation.

Possible inflows of economic benefits to the Group that do not yet meet the
recognition criteria of an asset are considered contingent assets.

Foreign currency
The consolidated financial statements are presented in Sterling (GBP), which is
also the functional currency of the parent Company.

Foreign currency transactions are translated into the functional currency of the
respective Group entity, using a monthly estimated rate set at the beginning of
each month. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the remeasurement of monetary items at year-
end exchange rates are recognised in profit or loss. Non-monetary items
measured at historical cost are translated using the exchange rates at the date
of the transaction and not subsequently retranslated.

In the Group’s financial statements, all assets, liabilities and transactions of
Group entities with a functional currency other than Sterling are translated into
Sterling upon consolidation. The functional currencies of the entities in the
Group have remained unchanged during the reporting period. On
consolidation, assets and liabilities have been translated into Sterling at the
closing rate at the reporting date. Income and expenses have been translated
into the Group’s presentation currency at an approximation of the average rate
over the reporting period. Exchange differences are charged / credited to other
comprehensive income and recognised in the currency translation reserve in
equity. On disposal of a foreign operation the cumulative translation differences
recognised in equity are reclassified to profit or loss and recognised as part of
the gain or loss on disposal. Goodwill and fair value adjustments arising on the
acquisition of a foreign entity have been treated as assets and liabilities of the
foreign entity and translated into Sterling at the closing rate.

Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Executive Board, at which level
strategic decisions are made.

IFRS 8 “Operating segments” requires a ‘management approach’, under which
segment information is presented on the same basis as that used for internal

2. Revenue
An analysis of the Group’s revenue is detailed below by activity across the Group’s operating units:

Licences

Consulting Services

Hosted Services

Managed Services

Support and upgrade

PCG

An analysis of the Group’s revenue by business division is as follows:

Ingenta Commercial product division

Ingenta Content products division

PCG

Ingenta Advertising

A geographical analysis of the Group’s revenue is as follows:

USA

Rest of the World

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

244

1,565

3,234

2,269

2,234

1,374

10,920

2,522

3,648

2,099

2,338

1,367

12,001

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

6,247

2,442

1,374

857

10,920

Year ended
31 Dec 19
£’000

4,475

5,206

1,239

10,920

6,785

2,655

1,367

1,194

12,001

Year ended
31 Dec 18
£’000

4,487

5,331

2,183

12,001

Revenue is allocated to geographical locations based on the location of the customer. All business divisions are active in each of the geographic
areas.

Joint Venture / Investment

3.
The Group holds a 49% voting and equity interest in Beijing Ingenta Digital Publishing Technology Limited (BIDPT) which was purchased during the
year to 31 December 2012.

BIDPT has a reporting date of 31 December. The shares are not publicly listed on a stock exchange and hence published price quotes are not
available. Dividends are subject to the approval of at least 51% of all shareholders of BIDPT. The Group has received no dividends.

In the 2017 financial statements, the Group outlined it has been actively engaged in discussions to sell or dispose of its shareholding in the Chinese
Joint Venture and had reclassified it as an asset held for sale. The Board does not believe a deal is imminent and in 2018 reclassified the Group’s
holding in the Joint Venture as an investment. Given the inherent uncertainty around valuing a Chinese non-listed, minority shareholding combined
with flat earnings and an increasingly uncertain mechanism to repatriate funds, the Group fully impaired the investment. The Group’s strategy going
forward is to concentrate on its core product set and given the lack of control it exerts over the Joint Venture, it does not consolidate results into the
Group.

Annual Report
For the year ended 31 December 2019

4. Operating segments
The following segment information has been prepared in accordance with IFRS 8, “Operating Segments”, which defines the requirements for the
disclosure of financial information of an entity’s operating segments. IFRS 8 follows the management approach, which is the basis for decision
making within the Group.

The Board consider the Group on a business division basis. Reports by business division are used by the chief decision-maker in the Group.
Significant operating segments are: Ingenta Commercial products; Ingenta Content products; PCG and Ingenta Advertising. This split of business
segments is based on the products and services each offer. The segmental analysis is under review given the business is changing its operating
model away from a product siloed structure and is beginning to blend its offerings together making them less discrete.

Ingenta Commercial products are enterprise level publishing management systems. Ingenta Content products help content providers sell their
content online. PCG provides consultancy services in sales and marketing to publishers. Ingenta Advertising provides a complete browser based
multimedia advertising, CRM and sales management platform for content providers.

The reported operating segments derive their revenues from the revenue streams reported in the revenue analysis in note 2. A further discussion of
revenue streams within each division is included on pages 4 to 10. All revenues are derived from trade with external parties.

Property, plant and equipment held in the UK totals £177K (2018: £157K) and the USA £53K (2018: £61K).

Two customers contributed more than 10% of revenue (2018: two) and this amounted to £2,935K (2018: £3,077K). The Group’s operations are
located in the United Kingdom, North America, Brazil, Mexico, India, China and Australia. Any transactions between business divisions are on normal
commercial terms and conditions.

Segment information by business unit is presented below.

Year to 31 December 2019

External sales

Segment result (adjusted EBITDA, see note 5)

Depreciation

Unallocated corporate expense

Restructuring

Foreign exchange loss

Impairment of intangibles & investments

Operating loss

Finance costs

Loss before tax

Tax

Loss after tax

Other information

Statement of Financial Position

Assets

Attributable Goodwill and intangibles

Property, plant and equipment

Segment assets

Unallocated corporate assets

Consolidated total assets

Liabilities

Segment liabilities

Unallocated corporate liabilities

Consolidated total liabilities

Total equity and liabilities

Ingenta Commercial
products
£’000

Ingenta Content
products
£’000

6,247

1,041

(241)

2,442

266

(94)

PCG
£’000

1,374

(4)

Ingenta
Advertising
£’000

857

(3)

(33)

Consolidated
£’000

10,920

1,339

(372)

(2)

(513)

(37)

(1,663)

(1,248)

(18)

(1,266)

(83)

(1,349)

Ingenta Commercial
products
£’000

Ingenta Content
products
£’000

PCG
£’000

Ingenta
Advertising
£’000

Consolidated
£’000

280

3,160

2,661

128

1,448

552

158

658

3,046

1,396

502

635

2,819

472

5,818

9,111

5,579

5,580

9,111

Ingenta Commercial
products
£’000

Ingenta Content
products
£’000

6,785

1,762

(220)

2,655

(461)

(86)

PCG
£’000

1,367

143

(4)

Ingenta
Advertising
£’000

1,194

(503)

(39)

Consolidated
£’000

12,001

941

(349)

(840)

(33)

(896)

(1,175)

(29)

(1,204)

407

(797)

Ingenta Commercial
products
£’000

Ingenta Content
products
£’000

PCG
£’000

Ingenta
Advertising
£’000

Consolidated
£’000

346

3,384

2,661

159

1,551

500

636

1,421

705

3,447

1,580

523

718

Restated Year to 31 December 2018

External sales

Segment result (adjusted EBITDA, see note 5)

Depreciation

Unallocated corporate expense

Restructuring

Foreign exchange loss

Impairment of intangibles

Operating loss

Finance costs

Loss before tax

Tax

Loss after tax

Restated Other information

Statement of Financial Position

Assets

Attributable Goodwill and intangibles

Property, plant and equipment

Segment assets

Unallocated corporate assets

Consolidated total assets

Liabilities

Segment liabilities

Unallocated corporate liabilities

Consolidated total liabilities

Total equity and liabilities

Refer to note 10 and 11 for the estimates used in valuation of cash generating units.

In 2018 & 2019 there were no bank overdrafts. Social security and other taxation liabilities have been allocated to the relevant segments of the
business.

4,582

583

6,276

11,451

6,268

6,269

11,451

Annual Report
For the year ended 31 December 2019

Loss from operations

5.
Loss from operations has been arrived at after charging:

Research and development costs

Net foreign exchange loss

Depreciation of property, plant and equipment:

- owned assets

- leasehold property

- assets under leases

Auditor’s remuneration

Restructuring costs

A more detailed analysis of auditor’s remuneration on a worldwide basis is provided below

Fees payable to the Group’s auditor for:

Fees payable to the company’s auditor for the audit of the company’s annual accounts

Fees payable to the company’s auditor and its associates for other services:

Audit of the accounts of subsidiaries

Other assurance services

Tax advisory services

Tax compliance services

Year ended
31 Dec 19
£’000

1,398

122

150

513

Restated
Year ended
31 Dec 18
£’000

1,867

122

115

101

840

Year ended
31 Dec 19
£’000

Restated
Year ended
31 Dec 18
£’000

150

101

A description of the work of the Audit Committee is set out in the corporate governance statement on pages 18 to 20 and includes an explanation
of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditor.

An analysis reconciling the loss from operations to adjusted EBITDA is provided below.

Year ended
31 Dec 19
£’000

(1,248)

Restated
Year ended
31 Dec 18
£’000

(1,175)

372

1,663

513

1,339

349

896

(2)

840

941

Loss from operations

Add back:

Depreciation and amortisation

Impairment of intangibles & investments

Loss / (gain) on disposal of fixed assets

Restructuring costs

Foreign exchange losses

EBITDA before gain / loss on disposal of fixed assets, revaluation gain / loss,
foreign exchange gain / loss and restructuring costs

Staff numbers and costs

Staff numbers:

Operations

Sales and marketing

Administration

Staff numbers exclude contractors

Their aggregate remuneration comprised:

Wages and salaries

Social security costs

Contribution to defined contribution plans

Health insurance

Share based payments

Other staff costs

Total staff costs

Remuneration in respect of Directors was as follows:

Non-Executive

Executive Directors’ emoluments

Company pension contributions to money purchase schemes

Compensation to director for loss of office

Remuneration of the highest paid Director (aggregate emoluments):

Salaries

Other Benefits

Contribution to defined contribution plans

Compensation to director for loss of office

Year ended
31 Dec 19
Average number

Year ended
31 Dec 18
Average number

118

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

5,208

549

236

173

6,187

204

339

562

200

215

6,335

719

297

236

(35)

7,567

247

290

112

663

121

112

239

Further unaudited information on Directors’ remuneration is provided in the Directors’ remuneration report. Key management personnel within the
business are considered to be the Board of Directors. Pension contributions of £4K were paid in respect of the highest paid Director (2018: £6K).
There were two (2018: two) Directors in a money purchase pension scheme.

The Group operates defined contribution retirement benefit schemes for all qualifying employees. The assets of the scheme are held separately
from those of the Group in an independently administered fund.

The total cost charged to income of £236K (2018: £297K) represents contributions payable to these schemes by the Group at rates specified in the
rules of the plans. As at 31 December 2019, contributions of £27K (2018: £34K) due in respect of the current reporting period were included in the
Group Statement of Financial Position for payment in January 2019.

The Group operates an Unapproved EMI Share Option plan. An increase of £7K (2018: reduction of £35K) has been recognised in the income
statement during the year. Further details on share options are included in note 22.

Annual Report
For the year ended 31 December 2019

Finance costs

Interest payable:

Interest on bank overdraft and loans

Interest on Right of Use lease

Interest on leases

Interest on other loans

8. Tax

Analysis of (charge) / credit in the year

Current tax:

Current research and development tax credit – UK

Current year State tax – US

Adjustment to prior year charge – UK

Deferred tax credit

Taxation

Year ended
31 Dec 19
£’000

Restated
Year ended
31 Dec 18
£’000

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

(49)

(54)

(83)

336

(5)

407

The Group has unutilised tax losses at 31 December 2019 in the UK and the USA of £15.6m (2018: £15.0m) and $15.4m (2018: $15.5m) respectively.
These losses are still to be agreed with the tax authorities in the UK and USA. The Board intends to make use of all losses wherever possible.

The US tax losses are restricted to $491K per annum as a result of change of control legislation. Losses carried forward from the change of control in
April 2008 are restricted and must be used within 20 years. The Board believes the Group will be able to make use of $8.7m (2018: $8.7m) of the
total unutilised losses at 31 December 2019.

No deferred tax has been recognised in accordance with advice from US tax accountants on the basis that the US losses are restricted and there is
uncertainty on the value of losses which will be able to be used.

No deferred tax assets have been recognised in relation to any other Group tax losses due to uncertainty over their recoverability.

The differences are explained below:

Reconciliation of tax charge / (credit)

Loss on ordinary activities before tax

Tax at the UK corporation tax rate of 19% (2018: 19%)

Expenses not deductible for tax purposes

Additional deduction for Research and Development expenditure

Surrender of losses Research and Development tax credit refund

Unrelieved UK losses carried forward

Utilisation of UK losses

Utilisation of US losses

Difference in timing of allowances

Adjustment to tax charge in respect of prior years

Effect of foreign tax rates

Total taxation

Year ended
31 Dec 19
£’000

Restated
Year ended
31 Dec 18
£’000

(1,266)

(241)

297

149

(110)

(103)

(13)

104

(1,204)

(229)

(285)

120

(81)

(19)

(56)

(407)

United Kingdom Corporation tax is calculated at 19% (2018: 19%) of the estimated assessable profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

9. Earnings per share and dividends

Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the year.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive ordinary
share options. Management estimate 685,000 ordinary shares will be issued (2018: 101,333) in respect of share options. In the current year, this
calculation would have an antidilutive effect on earnings per share so has been ignored.

Attributable loss

Weighted average number of ordinary shares used in basic earnings per share (‘000)

Shares deemed to be issued in respect of share-based payments

Weighted average number of ordinary shares used in dilutive earnings per share (‘000)

Basic loss per share arising from both total and continuing operations

Diluted loss per share arising from both total and continuing operations

Year ended
31 Dec 19
£’000

(1,349)

16,908

685

17,593

(7.98)p

Restated
Year ended
31 Dec 18
£’000

(797)

16,920

101

17,021

(4.71)p

Dividends
On 28th June 2019 the company paid a dividend of 1.5 pence per share to holders of ordinary shares.

Annual Report
For the year ended 31 December 2019

10. Goodwill

Gross carrying amount

Balance at 1 January

Impairment

Total goodwill

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

4,324

(1,663)

2,661

4,900

(576)

4,324

Goodwill has been recognised on historic acquisitions and is reviewed at the end of each financial period for impairment.

For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units (CGUs), which are the units expected to
benefit from the synergies of the business combinations in which the goodwill arises.

Content Products division

PCG

Advertising division

Total goodwill

Year ended
31 Dec 19
£’000

2,661

Year ended
31 Dec 18
£’000

2,661

500

1,163

4,324

At the year end, management carried out an impairment review of goodwill attached to each business unit. Following that review, management are
of the opinion that an impairment of £500K should be recognised against the goodwill attributable to the PCG division and £1,163K against the
Advertising Division.

The business anticipates that the Group’s Advertising and PCG revenue streams will become a component of the larger Commercial and Content
Products divisions and its revenues will be less clearly distinguished as a separate CGU. The advertising industry related to magazines and
newspapers is experiencing structural change as revenue models adapt to changing consumer behaviour. The Group believe it is prudent to assume
revenue will decline as customers scale back investment in systems and reduce headcount. The extent of any revenue change is uncertain, but a
decline is inevitable. As stated in the Group Strategic Report, PCG has lost a significant customer and its revenues will decline in 2020 by
approximately £0.8m which negatively impacts on the cash generation by approximately £0.4m per annum. Sales representation customers are
reluctant to pay retainer fees so PCG forecasts have to increasingly rely on sales conversion and commission calculations which are inherently
difficult to predict. Over time the addressable market becomes saturated and future sales would be expected to decline. In its review of other
assets, management is also of the opinion that the carrying value of such assets is reasonably stated and that no impairment has occurred.

The recoverable amounts of the cash generating units were determined based on value in use calculations for the next five years which
management believe they have reasonable knowledge in predicting and will benefit from the resulting cash generation. The 5 year forecast horizon
is reasonable based on past experience, contracted terms and the long lead times required for transition off software platforms. Where applicable,
management have assumed a forecast growth rate of 1-2% (2018: 1-5%).

PCG
%

Content
Division
%

Advertising
Division
%

1-2

Details are shown below.

Content sales revenue growth

Express product hosting revenue growth

Hosting revenue growth

Time-based service revenue growth

Cost base growth

Carrying amount

Value of intangibles

Total goodwill and intangibles

Recoverable amount

5-year gross profit reduction for fair value to equal carrying amount

PCG
£000

Content
Division
£000

Advertising
Division
£000

2,661

4,491

3,200

158

166

300

Total
£’000

2,661

158

2,819

4,657

3,500

Management assumptions include stable profit margins based on past experience in this market which the management see as the best available
information for the market. Management consider a pre-tax discount factor of 10% will reflect the CGU’s cost of capital during the review period
(2018: 10%) and that this is applicable to all cash-generating units.

The key assumption in the recoverable amount calculations is gross profit. This item can reasonably be expected to change, and the table above
shows the total 5-year reduction in gross profit that would be required for the recoverable amount to be equal to the carrying amount.

11. Other Intangibles

Cost

At 31 December 2018

At 31 December 2019

Accumulated amortisation and impairment

At 1 January 2018

Amortisation

At 31 December 2018

Amortisation

At 31 December 2019

Carrying amount

At 31 December 2017

At 31 December 2018

At 31 December 2019

Acquired Software
Technology
£’000

500

142

100

242

100

342

358

258

158

The cost of the acquired software was calculated by discounting expected cashflows from the acquired advertising software business over a 5 year
period. Management expect a minimum of 5 years useful life from the product as current customers are on long term contracts and any customer
migrations are very protracted in nature.

The discount rates used in the calculation of intangibles was 10%.

Amortisation has been charged on a straight-line basis from date of acquisition. All amortisation and impairment charges are included within
depreciation, amortisation and impairment of non-financial assets.

Annual Report
For the year ended 31 December 2019

12. Property, plant and equipment

Cost

At 1 January 2018

Adjustment on transition to IFRS 16

Additions

Disposals

Transfers in

Exchange differences

At 31 December 2018

Additions

Disposals

Transfers in

Exchange differences

At 31 December 2019

Accumulated depreciation and impairment

At 1 January 2018

Adjustment on transition to IFRS 16

Charge for the year

Disposals

Exchange differences

At 31 December 2018

Charge for the year

Disposals

Exchange differences

At 31 December 2018

Carrying amount

At 31 December 2019

At 31 December 2018

At 1 January 2018

Office
building
£’000

Leasehold
improvements
£’000

Fixtures
and fittings
£’000

Computer
equipment
£’000

Restated
Total
£’000

853

366

122

488

122

610

243

365

487

(6)

317

2,234

2,575

327

(238)

(2)

307

322

(238)

(1)

202

(1)

2,495

165

(863)

(9)

1,788

853

202

(1)

3,699

165

(1,107)

(11)

2,746

2,106

2,435

124

2,283

148

(863)

(7)

1,561

227

212

128

366

249

3,116

272

(1,107)

(8)

2,273

473

583

627

The Office Building category consists of a single right-of-use asset.

Right of Use Assets held under leases with a net book value of £107K (2018: £118K) are included under computer equipment in property, plant and
equipment and £58K (2018: £115K) of depreciation was charged on these assets in the year, see note 20 for further details.

13. Trade and other receivables

Trade and other receivables comprise the following:

Trade receivables - gross

Allowance for credit losses

Trade receivables - net

Other receivables

Accrued income

Financial assets at amortised cost

Prepayments

Non-financial assets

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

2,238

(57)

2,181

643

2,892

327

3,315

(40)

3,274

106

917

4,297

330

Trade and other receivables

3,219

4,627

All amounts are short term. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

Trade receivables at the reporting date comprise amounts receivable from the sale of goods and services of £2.2m (2018: £3.3m, 2017: £2.8m).

The average credit period taken on sales of goods is 56 days (2018: 58 days, 2017: 58 days).

In measuring the expected credit losses, the trade receivables have been assessed on an individual basis. Certain trade receivables were found to be
individually impaired and an allowance for credit losses of £57K (2018: £40K, 2017: £19K) has been recorded within “sales and marketing” in the
Group Statement of Comprehensive Income. This allowance has been determined by reference to expected receipts after considering historical
experience, readily available external indicators and forward-looking information. Trade receivables are written off (i.e. derecognised) when there is
no reasonable expectation of recovery. Failure to make payments within 6 months from the invoice date, failure to engage with the Group on
alternative future payment arrangements and bankruptcy or administration of the customer are considered to be indicators of a potential expected
credit loss. The Group has a stable customer base with strong relationships built up over time allowing it to make reasonable assessments of
recoverability. The majority of trade receivables relate to customers ongoing ability to function and past experience indicates the balances are
recoverable subject to any future information that becomes available. Where an expected credit loss is recognised it will be significantly influenced
by additional forward looking information such as industry discussion papers, repayment plan reasonableness and direct account management
negotiation.

On the above basis the expected credit loss for trade receivables is as follows:

Balance as at 1 January

Amounts written off (collected)

Additional allowance in year

Balance as at 31 December

14. Investments classified as held for sale

49% investment held in BIDPT

Impairment

Balance as at 31 December

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

(38)

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

320

(320)

320

(320)

Annual Report
For the year ended 31 December 2019

15. Cash and cash equivalents

Cash at bank and in hand:

Cash at bank:

- GBP

- USD

- EUR

- CNY

Cash in hand – GBP

Bank Overdraft – GBP

Net cash and cash equivalents

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

941

1,424

235

2,600

496

742

1,323

Net cash and cash equivalents’ is used for the Group Statement of Cash Flows. The net carrying value of cash and cash equivalents is considered a
reasonable approximation of fair value.

16. Trade and other payables
Trade payables and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period
taken for trade purchases is 34 days (2018: 34 days, 2017: 32 days).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Payables falling due within one year:

Trade payables

Accruals

Lease obligations

Other payables

Financial liabilities at amortised cost

Social security and other taxes

Non-financial liabilities

Trade and other payables

Included within accruals is an amount of £59K related to restructuring (2018: £195K).

As at 31 Dec 19
£’000

Restated
As at 31 Dec 18
£’000

448

468

203

948

2,067

392

612

581

222

928

2,343

414

2,459

2,757

17. Borrowings

As at 31 December 2019, there was an overdraft facility of £250K (2018: £250K & 2017: £Nil). During the year, the average effective interest rate on
bank overdrafts approximates to 2.5% over base rate (2018: 2.5%, 2017: 0%) per annum. All borrowings are measured at amortised cost.

18. Reconciliation of liabilities arising from financing activities

The changes in the Group’s liabilities arising from financing activities can be classified as follows:

Balance as at 1 January 2018

Cash-flows:

– Repayment

Non-cash:

– New leases

Balance as at 31 December 2018

Adoption of IFRS 16

Revised balance as at 1 January 2019

Cash-flows:

– Repayment

Non-cash:

– New leases

– Interest

Balance as at 31 December 2019

Lease
Liabilities
£’000
35

-112

187

110

468

578

-274

409

19. Deferred tax
A deferred tax liability of £100K has arisen from the intangible assets recognised during the business combination in 2016. The deferred tax liability
balance unwinds as the intangible asset is amortised. During the year, £20K was credited to the Group Statement of Comprehensive Income. The
closing balance was £32K (2018: £52K).

Subject to agreement with HM Revenue and Customs, the Group has unrealised losses in the UK of £15.6m (2018: £15.0m). The Group also has
unutilised losses in the USA of $15.4m (2018: $15.5m), these losses have yet to be agreed with the US tax authorities. The US tax losses have become
restricted under US change of control laws after the capital raising in April 2008. At year end $8.7m (2018: $8.7m) could potentially be used going
forward but due to US regulations and restrictions this is inherently uncertain. As a result, the Board believe conditions for the recognition of a
deferred tax asset have not been met and consequently no deferred tax asset is recognised in respect of the losses (2018: £Nil).

Annual Report
For the year ended 31 December 2019

20. Lease arrangements

The Group as lessee – IT equipment
Elements of the Group’s IT equipment are held under lease arrangements. As at 31 December 2019, the net carrying amount of equipment under
lease arrangements was £116K (2018: £27K). Lease liabilities are secured by the related assets. Future minimum lease payments are as follows:

Year ended 31 December 2019

Lease payments

Finance charges

Net present value

Year ended 31 December 2018

Lease payments

Finance charges

Net present value

< 1 year
£’000

1 – 5 years
£’000

(8)

(4)

< 1 year
£’000

1 – 5 years
£’000

(2)

Total
£’000

118

(12)

106

Total
£’000

112

(2)

110

The lease agreements include fixed payments and a purchase option at the end of the lease. The agreement is non-cancellable and does not
contain any further restrictions.

The Group as lessee - Buildings
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable leases, which fall due as
follows:

Land and buildings:

Minimum lease payments due within one year

Minimum lease payments due in the second to fifth years inclusive

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

120

149

269

273

408

681

Leases for Land and Buildings represent contracts on the following offices: Oxford, UK and New Brunswick, NJ, USA.

The office building at 8100 Alec Issigonis Way, Oxford has been classified as a Right of Use asset. The lease runs until January 2022 and has no
further extension options, payments are fixed, there is no option to purchase nor any further termination options.

The group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low
value assets. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted
to be recognised as lease liabilities and are expensed as incurred. Short-term leases amount to £78K.

The Group’s lease agreements do not contain any contingent rent clauses. None of the lease agreements contain renewal or purchase options or
escalation clauses or any restrictions regarding dividends, further leasing or additional debt.

21. Share capital

Issued and fully paid:

As at 31 Dec 19
£’000

As at 31 Dec 18
£’000

16,919,609 (2018: 16,919,609, 2017: 16,919,609) ordinary shares of 10p each

1,692

Share issues
During the year 66,104 shares (2018: Nil) were purchased for £50,501 by the company and retained as treasury shares. There were no shares issued
during the year (2018: None).

In 2018, the Group announced a court approved reduction of capital whereby the Company cancelled its share premium account and increased its
distributable reserves by £8,999K.

22. Share options
The Group have an unapproved Executive Management Incentive (EMI) share option scheme. Further details are detailed below.

Unapproved EMI scheme
This scheme is part of the remuneration package of the Group’s senior management. Options will vest if certain conditions, as defined in the
scheme, are met. It is based on Group performance compared to budget over a 3 year period and one third of the options will vest in each of the 3
reporting periods if the performance targets are met in that period. Participating employees have to be employed at the end of each period to
which the options relate. Upon vesting, each option allows the holder to purchase ordinary shares at the market price on date of grant.

Share options and weighted average exercise prices are as follows:

Outstanding at 1 January 2018

Granted

Lapsed

Outstanding at 31 December 2018

Granted

Lapsed

Outstanding at 31 December 2019

Number of shares

Weighted average
exercise price per share
(£’s)

441,000

(339,667)

101,333

612,245

(29,000)

684,578

1.31

1.27

1.33

0.74

1.28

0.80

The fair value of options granted were determined using the Black Scholes method. The following principle assumptions were used in the valuation:

Grant date

January 2016

February 2016

August 2016

Vesting period ends

Share price at grant

Volatility

Risk free investment rate

Fair value of option – 31 December 2016 vesting period

Fair value of option – 31 December 2017 vesting period

Fair value of option – 31 December 2018 vesting period

Fair value of option – 31 December 2019 vesting period

Fair value of option – 31 December 2020 vesting period

Fair value of option – 31 December 2022 vesting period

31 Dec 16

31 Dec 17

31 Dec 18

31 Dec 16

31 Dec 17

31 Dec 18

£1.27

26%

18p

26p

32p

£1.27

26%

18p

26p

32p

31 Dec 16

31 Dec 17

31 Dec 18

£1.30

16%

17p

23p

September
2019

31 Dec 22

September
2017

31 Dec 18

31 Dec 19

31 Dec 20

£1.56

16%

16p

24p

31p

£0.74

27%

18p

The underlying volatility was determined with reference to the historical data of the Company’s share price. In total £7K (2018: £35K credited) of
employee remuneration expense and has been included in the loss for the year and released to retained earnings.

Annual Report
For the year ended 31 December 2019

23. Notes to the cash flow statement
Bank balances and cash comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The
carrying amount of these assets approximates their fair value. Refer to note 15 ‘cash and cash equivalents’. The initial recognition of lease liabilities
are non-cash transactions excluded from the statement of cash flows.

24. Contingent Liabilities
The Group have entered arbitration proceedings with a former customer under the International Chamber of Commerce (ICC) Court of Arbitration
framework. The dispute concerns the termination of a contract and costs incurred during the abortive implementation phase. Management believe
the arbitration and any claim is covered under Ingenta’s professional liability insurance and lawyers have been appointed to deal with negotiations.
The policy excess was expensed during 2019 and the ongoing costs are covered by insurance and management do not anticipate further outflows.
At year end, Ingenta was owed £242K in relation to work performed prior to contract termination and management believe these amounts will be
recovered at conclusion of the case. The arbitration includes further claims on both sides which cannot be reliably estimated at this stage with the
case due to conclude in early 2021. Uncertainties include the timing of the arbitration hearing given the current COVID-19 pandemic, the findings of
technical experts employed by both sides to validate claims and how these will be interpreted by the arbitrator.

25. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual Directors is provided in the Directors’
remuneration report on page 21.

Short term employee benefits

Year ended
31 Dec 19
£’000

562

Year ended
31 Dec 18
£’000

663

Directors’ transactions
The amounts outstanding as at 31 December 2019 relate to amounts due from Ingenta plc to Directors in connection with invoiced Non-Executive
fees.

Amounts outstanding with Directors

Joint Venture transactions
The Joint Venture loan amounts to £149K (2018: £149K).

As at
31 Dec 19
£’000

As at
31 Dec 18
£’000

168

26. Financial risk management
The Group is exposed to various risks in relation to financial assets and liabilities. The main types of risk are foreign currency risk, interest rate risk,
market risk, credit risk and liquidity risk.

The Group’s risk management is closely controlled by the Board and focuses on actively securing the Group’s short to medium term cash flows by
minimising the exposure to financial markets. The Group does not actively trade in financial assets for speculative purposes nor does it write options.
The most significant financial risks are currency risk and certain price risks.

Foreign currency sensitivity
The Group trades in Sterling (GBP), US Dollars (USD) and Euros (EUR). Most of the Group’s transactions are carried out in Sterling and US Dollars.
Exposure to currency exchange rates arise from the Group’s overseas sales and purchases, which are primarily in USD, through the trading divisions
in the USA (Ingenta Inc. and Publishers Communication Group Inc.). The Group does not borrow or invest in USD other than an intercompany loan
denominated in USD between Vista International Ltd and Vista North America Holdings Ltd, the currency movement on which offsets within the
Group Statement of Comprehensive Income.

In order to mitigate the Group’s foreign currency risk, non-GBP cash flows are monitored and excess USD and EUR not required for foreign currency
expenditure are translated into GBP on an on-going basis. The Group is a net importer of USD being cash flow positive by approximately $2.0m per
annum. No further hedging activity is undertaken. The Group does not enter into forward exchange contracts.

Foreign currency denominated financial assets and liabilities, translated into GBP at the closing rate, are as follows:

31 December 2019

Financial assets

Financial liabilities

Total exposure

31 December 2018

Financial assets

Financial liabilities

Total exposure

Short-term exposure
USD
£’000

Long-term exposure
USD
£’000

1,321

(644)

677

1,171

(764)

407

The following table illustrates the sensitivity of profit and equity with regard to the Group’s financial assets and financial liabilities and the USD / GBP
exchange rate “all other things being equal”. Transactions in EUR are immaterial and therefore movements of the EUR / GBP exchange rate have not
been analysed.

It assumes a + / - 10% change of the USD / GBP exchange rate for the year ended 31 December 2019 (2018: 10%). This percentage has been
determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group
foreign currency financial instruments held at each reporting date.

If GBP had strengthened against USD by 10% (2018: 10%) then this would have had the following impact:

31 December 2019

31 December 2018

Loss for the year
USD
£’000

(108)

(75)

If GBP had weakened against USD by 10% (2018: 10%) then this would have had the following impact:

31 December 2019

31 December 2018

Loss for the year
USD
£’000

132

Equity
USD
£’000

(123)

(107)

Equity
USD
£’000

151

131

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is
considered to be representative of the Group’s exposure to currency risk
.

Annual Report
For the year ended 31 December 2019

Interest rate sensitivity
The Group’s policy is to minimise interest rate cash flow risk exposures on long term financing. Long term borrowings are therefore usually at fixed
rates. At 31 December 2019 the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates.

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of + / - 1%. These changes are
considered to be reasonably possible based on market movements and current market conditions. The calculations are based on a change in the
average market interest rate for each year, and the financial instruments held at each reporting date that are sensitive to changes in interest rates.
All other variables are held constant.

31 December 2019

31 December 2018

31 December 2017

Profit for the year
and Equity
£’000
+ 1%

Profit for the year
and Equity
£’000
- 1%

Credit risk analysis
The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised
below:

Cash and cash equivalents (note 15)

Trade receivables - net (note 13)

Other receivables (note 13)

Accrued income (note 13)

2019
£’000

2,600

2,181

643

5,492

2018
£’000

1,323

3,274

106

917

5,620

The credit risk in respect of cash and cash equivalents is considered negligible as they are held with major reputable financial institutions only.

None of the Group’s financial assets are secured by collateral or other credit enhancements.

The Group’s management considers that the financial assets above, that are not impaired or past due for each of the reporting dates under review,
are of good credit quality.

The Group continuously monitors defaults of customers and incorporates this information into its credit risk controls. Where available at reasonable
cost, external credit ratings and reports on customers are used and the Group’s policy is only to deal with creditworthy customers. The credit terms
range between 30 and 75 days and support and maintenance customers are required to pay the annual amount upfront, mitigating the credit risk.
The ongoing credit risk is managed through regular review of ageing analysis. Some of the unimpaired trade receivables are past due at the
reporting date.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk from any single customer or group of customers
having the same characteristics. Trade receivables consist of a large number of customers in different sectors of the market and geographical
locations.

The carrying amount of financial assets whose terms have been renegotiated, that would otherwise be past due or impaired is £Nil (2018 & 2017:
£Nil).

Liquidity risk analysis
The Group manages its liquidity needs by monitoring scheduled debt repayments for long term financial liabilities as well as forecast cash flows due
in day to day business. Liquidity needs are monitored in various time bands. Short term cash flow is monitored daily using known daily inflows and
outflows for cash within 8 to 12 weeks. Medium term cash flows within 12 months are monitored using monthly rolling forecast data. Longer term
cash flows are monitored using higher level management strategy documents. Net cash requirements are compared to cash balances and forecast
in order to determine headroom or any shortfalls. This analysis shows if available cash is expected to be sufficient over the lookout period of 15
months to March 2021.

The Group maintains sufficient cash balances and enters into lease arrangements to meet its liquidity requirements for the medium-term forecast
period (1 year).

As at 31 December 2019, the Group’s financial liabilities have contractual maturities (including interest payments where applicable) as summarised
below:

31 December 2019:

Bank borrowings (note 17)

Lease obligations

Trade and other payables (note 16)

Total

Current £’000

Non-current £’000

Within 6 months

6 to 12 months

1 to 5 years

Later than 5 years

1,864

1,907

This compares to the Group’s financial liabilities in the previous reporting period as follows:

31 December 2018:

Bank borrowings (note 17)

Lease obligations

Trade and other payables (note 16)

Total

Restated Current £’000

Non-current £’000

Within 6 months

6 to 12 months

1 to 5 years

Later than 5 years

2,121

2,153

The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying value of the liabilities at the reporting date.
Where the customer has a choice of when an amount is paid the liability has been included on the earliest date on which payment can be required.

The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities.

An analysis of the Group’s financial assets is set out below:

Trade and other receivables

Cash and cash equivalents

Total financial assets

Amortised cost
£’000

As at 31 December 2019
FVTPL
£’000

2,892

2,600

5,492

Total
£’000

2,892

2,600

5,492

Amortised cost
£’000

As at 31 December 2018
FVTPL
£’000

4,297

1,323

5,620

An analysis of the Group’s financial liabilities is set out below:

As at 31 December 2019

Restated As at 31 December 2018

Other liabilities
(amortised cost)
£’000
238

Other liabilities
at FVTPL
£’000
-

203

2,067

2,508

Total
£’000

238

203

2,067

2,508

Other liabilities
(amortised cost)
£’000
407

Other liabilities
at FVTPL
£’000
-

222

2,343

2,972

Non-current lease obligations

Current lease obligations

Trade and other payables

Total financial liabilities

Total
£’000

4,297

1,323

5,620

Total
£’000

407

222

2,343

2,972

Annual Report
For the year ended 31 December 2019

27. Capital management policies and procedures
The Group’s capital management objectives are:

To ensure the Group’s ability to continue as a going concern and provide an adequate return to shareholders

The Group monitors capital on the basis of the carrying amount of equity plus any loan notes less cash and cash equivalents. The Group’s goal in
capital management is a capital to overall financing ratio of 1:6 to 1:4.

The Group sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities other than loan notes. The
Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amounts of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to reduce debt.

Capital for the reporting periods under review is summarised as follows:

Total equity

Loan notes

Short term loans

Cash and cash equivalents

Capital

Total equity

Borrowings

Overall financing

Capital to overall financing ratio

2019
£’000

3,531

(2,600)

931

3,531

0.26

Restated
2018
£’000

5,182

(1,323)

3,859

5,182

0.74

28. Post balance sheet events
Prior to the COVID-19 outbreak, the Directors declared their intention to pay a dividend in 2020 of at least 1.5 pence per share (2018: 1.5 pence).
Given the current economic uncertainties, the Board consider it prudent to delay any dividend announcement until later in the year when a clearer
outlook is available.

Since 31 December 2019, the COVID-19 pandemic has significantly affected the global economy. Measures taken by governments around the world
to contain the spread of the virus including travel bans, social distancing and closure of non-essential services have had a detrimental effect on
businesses worldwide. The Group have already experienced the cancellation of trade shows and other marketing events which formed part of the
sales strategy for 2020. This combined with a more cautious investment outlook in the wider economy will cause delays to customer discretionary
spend activity affecting the Group’s new revenue targets in 2020. The Ingenta customer base is relatively diverse and the publishing industry as a
whole has been resilient to date although future impacts are hard to predict. It would be reasonable to expect that any increase in severity of the
disease may impact on customers and could potentially cause them to struggle to pay outstanding receivable balances or go into administration
and cancel ongoing services.

The Company has determined that these events are non-adjusting subsequent events and consequently the financial position and results of
operations for the year ended 31 December 2019 have not been altered. Furthermore, it is not possible to reliably estimate the duration and severity
of any future consequences of COVID-19 nor the impact they may have on financial statements.

29. IFRS16 ‘Leases’ restatement reconciliation

Group statement of comprehensive income

Administrative expenses
Finance costs

Group statement of financial position

Property, plant and equipment
Trade and other payables
Leases (non-current)
Retained earnings

31 Dec 2018
£’000
(4,894)
(8)

IAS17 reversal
£’000
172
-

IFRS16
depreciation
£’000
(122)
-

IFRS16 Interest
£’000
-
(21)

31 Dec 2018
£’000
218
2,723
52
(1,505)

31 Dec 2017
£’000
140
3,394
8
(9,424)

IAS 17 reversal
£’000
-
(131)
-
172

IAS 17 reversal
£’000
-
(140)
-
172

IFRS16
£’000
365
165
303
(143)

IFRS16
£’000
487
181
447
(173)

Prior period
restatement
£’000
-
-
-
(1)

Total Prior period
restatement
£’000
487
41
447
(1)

Restated
1 Jan 2019
£’000
(4,844)
(29)

Restated
1 Jan 2019
£’000
583
2,757
355
(1,477)

Restated
1 Jan 2018
£’000
627
3,435
455
(9,425)

Annual Report
For the year ended 31 December 2019

Company statement of financial position

note

31 Dec 19
£’000

31 Dec 18
£’000

Non-current assets

Investments

Current assets

Trade and other receivables

Cash and cash equivalents

Total assets

Equity

Called up share capital

Share premium account

Share option reserve

Retained earnings

Total Equity

Current liabilities

Trade and other payables

Non-current liabilities

Borrowings

Total liabilities

Total equity and liabilities

3,258

4,075

6,017

6,020

9,278

1,692

6,316

8,031

6,032

6,041

10,116

1,692

7,161

8,869

1,247

9,278

1,247

10,116

The loss recognised in the year was £540K (2018: £1,255K)

The financial statements were approved by the Board of Directors and authorised for issue on 1 June 2020 and were signed on its behalf by:

J R Sheffield
Director

G S Winner
Director

Registered number: 00837205

The accompanying notes form part of these financial statements.

Company statement of changes in equity

For the year ended 31 December 2019

Balance at 1 January 2019

Dividends paid

Shares bought into treasury

Share options granted

Transaction with owners

Loss for the year

Total comprehensive income / (expense) for year

Share
capital
£’000

1,692

Share option
reserve
£’000

Balance at 31 December 2019

1,692

For the year ended 31 December 2018

Balance at 1 January 2018

Capital reconstruction

Costs of capital reconstruction

Dividends paid

Share options lapsed

Transaction with owners

Loss for the year

Total comprehensive income / (expense) for
year

Share
capital
£’000

1,692

Share
premium
£’000

8,999

(8,999)

Share option
reserve
£’000

(35)

Retained
earnings
£’000

7,161

(254)

(51)

(305)

(540)

(845)

6,316

Retained
earnings
£’000

(299)

8,999

(30)

(254)

8,715

(1,255)

7,460

Total
£’000

8,869

(254)

(51)

(298)

(540)

(838)

8,031

Total
£’000

10,443

(30)

(254)

(35)

(319)

(1,255)

(1,574)

Balance at 31 December 2018

1,692

7,161

8,869

Annual Report
For the year ended 31 December 2019

Notes to the Company financial statements

1. Accounting Policies

Statement of compliance
These financial statements have been prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (FRS 101). The
preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates and management are required
to exercise judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS
101:











Paragraph 45(b) and 46 to 52 of IFRS 2 ‘Share based payment’ including details of the number and weighted average exercise prices of
share options and how the fair value of goods or services received was determined.
IFRS 7 ‘Financial instruments’ disclosures
Paragraph 91 to 99 of IFRS 13 ‘Fair value measurement’ disclosures relating to valuation techniques and inputs used for fair value
measurement of assets and liabilities.
The following paragraphs of IAS 1 ‘Presentation of financial statements’:

-
-
-
-
-
-

10(d) statement of cashflows
16 statement of compliance with all IFRS
38A requirement for a minimum of two primary statements, including cashflow statements
38B-D additional comparative information
111 Statement of cashflow information
134-136 Capital management disclosures

IAS 7 ‘Statement of cashflows’
Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ and the requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but is not yet effective.
Paragraph 17 of IAS 24 ‘Related party disclosures’ and the requirement to present key management compensation
IAS 24 ‘Related party disclosures’ and the requirement to disclose related party transactions entered into between two or more members
of a group.

Accounting policies
A summary of the principal Company accounting policies, which have been applied consistently, is set out below.

Investments
Investments held as fixed assets are stated at cost less any provision for impairment in value. The Directors have impaired the investments as
appropriate based on the findings of the wider impairment review detailed in note 10 of the Group accounts.

Borrowings
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months
after the statement of financial position date.

Going concern
The accounts are prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, management have taken
into account all relevant available information about the future including a profit and cash forecast, the continued support of the shareholders and
Directors, banking facilities and management’s ability to affect costs and revenues.

Management regularly forecast profit, financial position and cash flows for the Group. The rolling annual forecast is normally updated monthly.

Having reviewed the latest forecast, management regard the forecast to be robust. Revenue streams are forecast in detail with all recurring revenue
contracts individually listed and ranked by firmness from firm to prospect. Management have reviewed forecast costs for reasonableness against
prior years and with knowledge of expected movements and concluded that forecast costs are robust (refer to the Group Strategic report on pages
12 to 15 and the Group accounting policies).

Share options
Please refer to the Group accounting policies note for full details. Within the parent company accounts, share based payments are recorded as an
increase to investments and credited to the share option reserve within equity.

Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the statement of financial position
date.

Transactions in foreign currencies during the year are recorded at a monthly estimated rate set at the beginning of each month. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates are
recognised in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction
and not subsequently retranslated.

Deferred taxation
Provision is made for deferred taxation, using the full provision method, on all taxable temporary differences. Deferred taxation has been recognised
as a liability or asset if transactions have occurred at the balance sheet date that give rise to an obligation to pay more taxation in the future, or a
right to pay less taxation in the future. An asset is not recognised to the extent that the transfer of economic benefits in the future is uncertain.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.

Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial
instruments are classed as financial liabilities. Financial liabilities are presented as such in the statement of financial position. Finance costs and gains
or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of
return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity
instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

Loss for the financial year

2.
The parent Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own income statement in these
financial statements. The parent Company’s loss for the year was £540K (2018: £1,255K), impairment for intercompany debtors was £394K (2018:
£1,144K) and impairment of investments was £824K (2018: £Nil). An audit fee of £20K was paid in respect of the parent Company audit (2018: £20K).

Tax fees for the Group of £85K (2018: £53K) have been borne by the subsidiary companies.

The Company employed two Executive Directors (2018: two), four Non-Executive Directors (2018: four) and the Non-Executive Chairman. The costs
of these employees and the fees for the other Non-Executive Directors were borne by the subsidiaries.

Staff Numbers and Costs

Staff numbers:

Operations

Their aggregate remuneration comprised:

Wages and salaries

Other staff costs

Total staff costs

Investments

Cost

At 1 January

Impairment of China JV investment

Impairment of 5 Fifteen Limited investment

Share options issued / (lapsed) to employees of subsidiaries

At 31 December

Investments are investments in subsidiary and Joint Venture undertakings.

Year ended
31 Dec 19
Average number

Year ended
31 Dec 18
Average number

Year ended
31 Dec 19
£’000

Year ended
31 Dec 18
£’000

204

211

247

257

As at
31 Dec 19
£’000

As at
31 Dec 18
£’000

4,075

(824)

3,258

4,310

(200)

(35)

4,075

Annual Report
For the year ended 31 December 2019

Details of subsidiary undertakings, in which the Company holds majority shareholdings and investments in which the Company holds significant
interest and which have been consolidated and disclosed respectively in the Group financial statements, are as follows:

Company

Catchword Limited

Ingenta Holdings Limited

Ingenta US Holdings Inc.

Publishers Communication Group Inc

Ingenta UK Limited

Ingenta Inc

Publishing Technology do Brasil LTDA

Country of
registration

Holding

Proportion
held

England

Ordinary shares

Preference shares

England

Ordinary shares

USA

Ordinary shares

England

Ordinary shares

USA

Brazil

Ordinary shares

100%

49%

100%

Nature of the business

Dormant

Holding Company

Marketing and Sales Consultancy

Publishing Software and Services

Dormant

Holding Company

Non-Trading Holding Company

Dormant

Publishing Software and Services

Digital Advertising Solutions

As at
31 Dec 19
£’000

21,684

(15,667)

6,017

As at
31 Dec 18
£’000

21,305

(15,273)

6,032

As at
31 Dec 19
£’000

As at
31 Dec 18
£’000

1,098

149

1,247

1,098

149

1,247

Publishing Technology Australia Pty Ltd

Australia

Ordinary shares

Vista Computer Services Limited

England

Ordinary shares

Vista Computer Services LLC

Vista Holdings Limited

Vista International Limited

Vista North America Holdings Limited

Uncover Inc

USA

England

USA

Ordinary shares

Beijing Ingenta Digital Publishing Technology Limited

China

Ordinary shares

5 Fifteen Limited

5 Fifteen Inc.

England

Ordinary shares

USA

Ordinary shares

5. Trade and other receivables

Amounts falling due within one year

Other debtors:

Amounts due from subsidiary undertakings

Provision for intercompany debtors

6. Trade and other payables

Amounts falling due within one year

Other creditors:

Amounts due to subsidiary undertakings

Accruals

Share Capital

Issued and fully paid:

As at
31 Dec 19
£’000

As at
31 Dec 18
£’000

16,919,609 (2018: 16,919,609) ordinary shares of 10p each

1,692

Share issues

During the year 66,104 shares were purchased for £50,501 by the company and retained as treasury shares. There were no shares issued during the
year (2018: None).

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the
Company.

8. Borrowings

Bank overdrafts

Year ended
31 Dec 19

Year ended
31 Dec 18

£250K facility in place

The Company bank accounts form part of the wider Group facility with HSBC Bank plc. These accounts are linked and any facility limit is based on
the net balance of all Group accounts taken together. There was a Group overdraft facility in place during 2019 of £250K (2018: £250K).

9. Related party transactions

Other related party transactions
Please refer to note 25 of the Group financial statements.

A summary of related party transactions and balances is shown herein:

Ingenta UK Limited

Ingenta Inc

Publishers Communication Group Inc.

Catchword Limited

Ingenta US Holdings Inc.

As at
31 Dec 18
£’000

5,386

646

(429)

(669)

4,934

Recharges
£’000

Impairment
£’000

(81)

459

(305)

(89)

379

(394)

As at
31 Dec 19
£’000

5,000

1,016

(429)

(669)

4,919

Annual Report
For the year ended 31 December 2019

10. Financial assets and liabilities

An analysis of the company’s assets is set out below:

Other receivables

Cash and cash equivalents

Other payables

Accruals

As at 31 December 2019

As at 31 December 2018

Loans and
receivables
£’000

Total for financial
position heading
£’000

Loans and
receivables
£’000

Total for financial
position heading
£’000

6,017

6,020

6,017

6,020

6,032

6,041

6,032

6,041

As at 31 December 2019

As at 31 December 2018

Financial liabilities at
amortised cost
£’000

Total for financial
position heading
£’000

Financial liabilities at
amortised cost
£’000

Total for financial
position heading
£’000

1,098

149

1,247

1,098

149

1,247

1,098

149

1,247

1,098

149

1,247

Annual Report
For the year ended 31 December 2019

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