Ingenta (LSE:ING) — Interim results for the six months ended 30 June 2022

0:02 Good afternoon, and welcome to the INGENTA PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to

0:32 Scott Winner, CEO. Good afternoon to you, sir. Hi. Good afternoon, everyone. Thank you for joining us, and thank you for coming to, learn a little bit more about INGENTA. So let's I think introductions probably are in order to start with. So I'm Scott Winter. I'm the CEO of INGENTA. I have been CEO since about 2018, since mid twenty eighteen. And I have a long background working in both technology and the publishing industries and have worked in and around technology my whole career,

1:03 but really found my sweet spot is to leverage technology in industries. And that's why, sort of I came to INGENTA to help leverage it in the industry I care a lot about, which is publishing, and I've spent a lot of time in both of those. So, John, do you wanna introduce yourself? Yep. Thanks, Scott. Hi, everyone. My name is John Sheffield. I've been CFO since 2017. My background's in audit insurance, and I've had similar jobs in, other retail and software businesses. And my remit at INGENTA is obviously the finance, but also HR, internal IT, and, and premises and locations.

1:45 So with that, let me tell you a little bit about INGENTA. So INGENTA has been around for about forty five years. We provide technology solutions to information and content providers. In the past, we would have just said publishers, but the term has become a little outdated, and people don't think of themselves as publishers so much as they provide information and content. And not only that, we work with multiple industries now. Whereas at one point, we work primarily with people doing scholarly papers and books, we now cut across into other industries as well, which you'll see as we go through this. And what we do is we provide mission critical software to solve industry specific problems. So rather than someone who's looking to provide generic solutions across, the world, we're looking to solve the problems that are hitting specific elements of the industries that we care about. And we have been focused on the publishing industry as you can see, and we solve those unique problems. And we have solutions that cut across,

2:48 the whole ecosystem of publishing, but specifically in areas where publishing may differ from other types of industries and other verticals. And so we have the products that we provide are actually always embedded as part of something critical to what our customers do. We focus on areas such as order processing, getting orders

3:14 distributed via websites, via platforms, interfacing with Amazon, etcetera. And we did this for some of the largest publishers in the world such as Sage Publishing, Elsevier, McGraw Hill. There's quite a few. We actually have all of their business really runs through our systems to get out there to the world. So we we have software that really provides those solutions for them. And then we also help them manage their intellectual property as part of that. And so that's really the products. Another critical part of our business is the services we provide. So we've write services around in and around our products, although we've been asked to do more and more, and we do branch out as we go because we're seen as industry experts, and they value what we bring to the table. And so they've involved us in quite a bit of what they do as a business.

4:03 Plus, it allows them to really focus on what they wanna do. Most publishers of content, regardless of the type of content, be it music or books or magazines or video games, really care mostly about their content. And so from that perspective, we allow them to do that. And that's really weird why we take over more and more services so that they can focus on what they do well and we can focus on what we do well. So let me from a high level perspective, you can see our top five customers our top 15 customers have been with us an average of fourteen years. I can say some of those customers have been with us thirty years and continue to be with us. In fact, some of those relationships have grown even larger in the last couple of years. And because of that, we have a large recurring revenue stream.

4:51 So of our overall revenues, you can see 88% are is recurring. And that's been going up over time because we focused on these ongoing services as well as really shifting our business a bit to be from what it traditionally was where you would buy a license and then pay maintenance fees. We actually have shifted more and more of our business to software as a service. It's software as a service platform as a service. There's a couple of terms there, but it's really allowing us to provide, you know, ongoing value and allow people to really get what they need out of the system in an ongoing way, and it helps us level our revenues and keep them far more recurring. And you can see our balance sheet is quite strong with net cash of 4,400,000. That's been growing over time, and it continues to grow. And then you can see we have a 20% EBITDA margin target, which we're getting closer to all the time, and you can see from the interims very, very close.

5:43 And that is really about our target for the current state of the business. Naturally, some of the newer business has different margins they would have, but due to the bulk of the business and having a lot of services, that's a really good target for us, and we continue to be able to deliver close to that right now.

6:01 So, John, do you wanna talk through a little more detail of the numbers? Sure. Yeah. Right. So this slide, we really used to show our recent progress about but I think it's briefly worth recapping on where INGENTA was a few years back and the changes that have taken place to give everyone a bit more understanding. So it's probably fair to say INGENTA was a a fairly loose collection of software businesses, each one with their own practices and processes. And this was identified when Scott came on board as not being a particularly efficient setup for strategic growth and profitability. So over the last few years, we've been making some structural changes, and they can be split into three main areas, really. So number one was a, basically, a refocus and stabilization of revenue, and that was setting the groundwork for for some top line growth, and we'll we'll come on to that later.

6:52 So within that refocus of the of the business, we've also been trying to build a solid recurring revenue base to to really generate some predictability to the business. And the last last strand was is efficiency. So bringing on board some standardized practices and and procedures, which give us a clearer view of where we're going and generate ultimate profitability. So we take each of those in turn. For revenue and refocus, you could you could probably read simplification and standardization. So prior to 2021, our revenue had been declining, although it doesn't show here. It was going back a few more years. And in part, that was planned. So we've we've made a conscious shift to more of a SaaS based business, which meant giving up perpetual licenses, which were great for one year, but then it was you know, you you had to wait for your next big sale.

7:44 But we've also been consciously stepping back from large bespoke projects and implementations, which, again, although they could look good on the top line, they often proved vastly complicated and and not and not good for the business as a on a profitability level. So during that refocus, we identified our commercial and content businesses as the main drivers for future growth. So in a nutshell, the commercial part of the business is is the back end software engines that deal with IP and the management of associated concepts within publishing mainly. And the content business is, in essence, is is the website business. So to give these businesses the best chance of success, we've gone through a process and thoroughly defined the functionality of the products and the implementation plan.

8:36 And I think this is quite key because in certainly within IP, the complexity is the vast and same within content and and management of that. So getting that functionality, getting that that core definition of the products has been crucial because it means we we know what we're doing, what we're gonna achieve, and we don't have overruns like we did in the past. So this product definition also means we've been able to introduce a much clearer upgrade path for customers. Again, another way to to make to generate profitability from the business. So a good example here I've used in the past is so in our content on the websites, we start off at the bottom rung of the ladder almost is is INGENTA Connect. So it's our multi tenancy platform.

9:21 Small publishers can come on. They can get their content up there. Does fantastic job for them, but you are sitting within the INGENTA Connect framework, which is basically our branding. So as you grow up through that, you may want to go to what we call a unity model, which is you can add a little bit of branding to to bring all your titles together, and it looks a bit more like your your site. But in essence, it's still in NGENTA Connect. So what we hope is, you know, our our customers will continue to grow beyond this, and that's where they move up to to what we call Edify. And that's our our your own website. You can bespoke it as far as you like, and we've got a menu of options. So, yeah, you you can see from that that example there, can go from a one man band all the way up to a multinational NGO, whatever, with vast amounts of content. We can cater for you all the way through your growth cycle.

10:11 And the same is true in commercial. We can do the similar similar kind of steps. So these changes have been really positive for us. And, encouragingly, in in this set of results that we're we're talking about today, we've shown the first period of revenue growth. So 5.1 to 5.3. That's good. That's and that and that also from the the same cost note that's going out at the moment, that's predicted to continue to the end of the year. So it it's it's a good starting position and, you know, indication of of what Scott's been doing with the business. The second part of the strategy was building out the recurring revenue base. I think the second line of the table there shows the kind of the splits, and that's that's at 88% now. That's that's quite high, but I think in the eighties is is where we want to be. We'll be encouraging control change request work, and especially when we've got a a menu card to to select from. We know exactly what it is. We know how to do it. It's it's good business for us.

11:10 And and like I said before, these changes in turn promote larger upgrade discussions, which, again, are another good bit of business for us. So other important factors driving recurring revenue is avoiding perpetual licenses. So certainly in commercial, that was a tendency of the past, you know, million pound licenses, but they were gone after after the implementation was complete. And probably the the the most encouraging part of the business is is in our expanding expansion of recurring services to include sort of back end routines and technology management. And Vistra as a service is is one we've we've often announced in in recent in recent weeks and months. So Vistra as a service is really taking off a publisher's back ends hosting management, day to day routines, taking them off their hands because what we've what we know is publishers don't want to be involved in that.

12:06 They want to concentrate on what they do best, content, creativity, not technology and keeping the machine running. So so this has had a great uptake. You know, people really are interested in it. It's it's good. And, ultimately, it extends the life of older products. If we can take the technology away from them, they don't need to worry about it, and it makes the business a lot more sticky. So the third part of the strategy was was optimization and and efficiency. And I think the the next few lines kind of show you where where that's taken us. So EBITDA and cash are all ticking up positively in here. So the reason for that is, I think, simplification is a big big help here. So we've removed product silos and duplicated management tiers from that loose collection of businesses.

12:53 We've now got product diagnostic service center. So, you know, if you want support, there's one support team. And development, again, we've got one development team not duplicated across lots of different technology stacks. And another part I've been a bit more heavily involved with is is our is our infrastructure plan. So physical premises, we've we've taken a conscious move to to give our staff, you know, a a lot more flexibility in where they work. So we've cut down office size. We've also looked at our IT and data strategy. So let's really ramp up with with cloud and and data center where there's a lot more flexibility. We can ramp up and down much quick more quickly than we could when we had to to buy kit and put it in our own premises. So that's been another conscious effort, and those benefits only really took off in in this first half results that you've seen published just today.

13:48 Right. And and because these operations have made us a lot more cleaner and efficient, you can see that the basically, the profit transfer through into cash. We've got closing cash balances of 4,400,000, which is a is a real high point for us. And, you know, I've always said we're we're we're mission critical to to our to our customers. So they need us, you know, that they they appreciate what we do. We don't get bad debts, and cash is is always the ultimate outcome. So I'll hand over onto the next slide to you, Scott. Yeah. So what what John's been talking about, and I will say when we're we're kinda proud of the fact that we are largely a virtual organization now. And, you know, it's not only good for the environment, it's good for us financially. It's good for our employees.

14:34 And when we look to hire, we have more options now than we ever did because we're not asking people to go into an office, which actually is the trend with most people that they don't wanna be in an office all day every day. So from that perspective, it actually allows us to position people sort of globally and close to our customers, as close as they can be. So let me talk a little bit more about our solutions. So John mentioned some of these, but sorry. Let me talk a little more in-depth. So when we say mission critical solutions, again, I just wanna reiterate that those are solutions without which a company cannot operate. And without our systems in place, some of the largest publishers in the world really couldn't put orders out the door. And we saw this with a large customer that actually had a problem in their whole infrastructure.

15:21 We were able to step in and get our system back up and running in a in a new setup for them so that they could actually process orders because they had no way to do it without it. And so it's just that's the type of reliance they have on us as a company. And it's so if if you see on the left, I was talking about orders. So we have primarily our commercial systems which allow they're more like a mini ERP, but focused really on the products and orders in our space. As you can imagine, publishing has complex structures in how the products get created and how they all interrelate into series and to, you know, multiple versions and revisions and how those all interrelate. And our system manages that very well. It also allows us to feed out to other systems in the world and allow us to process orders through the system and get money in the door. We often call it order to cash or accounts receivables, but it's really the whole system that allows the company to process orders.

16:16 And so that's really the two bubbles on the left that managing orders and and the payment systems. And then both of those interface directly with product distribution systems. And, again, some of them are external to us, and we interface with quite a few systems. Some of our systems interface with hundreds of systems depending on what we're doing. And in different industries and different verticals, there's more different solutions interface with and more standards, and so we do that. But we also can interface with our own system, which is our our Edify product that John's talking about, which really allows customers to do digital distribution, whether that be paid for, whether that be free, whether that be specific to an NGO, or if they wanna do a collection across multiple publishers for like, Research for Life is one of the other entities we work with that work with multiple multiple entities to bring together medical information to distribute to the world. And they're they're live with us, and they they've been with us for a little while now. And it's what we do with our digital distribution platforms. So it's really that way do you take what you do locally and give it a global presence. And we do that through a multitude of our products, but INGENTA Connect, INGENTA Connect Unity, Edify, and then the interfaces with other systems out there in the world.

17:33 And then on the right hand side, those bubbles about sublicensing media assets and royalty payments. So with the way the world works today, our publishers can't do anything without figuring out how people are gonna get paid, whether that be an author, whether that be an artist, whether that be a musician, somebody who does the you know, just even some aspects in other industries that you might not think of as being royalty driven, like some of the the companies we've talked to have been in pharmaceuticals. Now we don't have business with them, but they actually license their formulas, and they wanna know how they would get paid based off it. And they've looked at our system to perhaps enable them, and so we'll let you know if that comes to be. But there's if you those things are are critical to companies, and what you find is there's two things going on. So the so as a company, I have a contract with someone where I had to pay royalty payments, and I either do that well or I can do that not so well. If I do it not so well, I'm probably looking at lawsuits.

18:29 And if I even if I do it well, it's a a labor intensive process nowadays because of the way the world's changed. So as we've introduced as the world has introduced streaming revenues into all sorts of industries, including books, including audio tape, books on tape, including music, including those things, you have a lot of micro transactions that now need to be processed. And those microtransactions need to determine how those contribute to the royalty payments back to, like I said, the artist, the author, the musicians, whoever's been involved in that. The other thing that you'll see is as a rights holder, you have the option to sublicense those rights. So it's entirely possible, and our system enables you to see that very clearly where you have rights that you could sell. Like, perhaps you have a music that you don't sell, don't distribute in Asia. Well, you could sublicense that to somebody else to do that for you. And then they go do the work, you can sublicense it out and get your own royalty payments and then pay your royalties off of those. And our system allows you to do that.

19:34 And so you can think of everything we do as really allowing our customers to maximize the value of their intellectual property. And so it's really everything that we do sort of leads to them making the most of their content. Again, we're not the producers of content. We're the ones who let companies that wanna produce content make the most of it. And that's what you see there, and all of those aspects are critical to that. So let me go ahead and jump to the next slide here.

20:05 And I I think we'd be remiss if we didn't talk about why people come to us, and it really is we we call it decades of making the complex symbol. So the customers that we've worked with for decades, four decades, and continue to set up new relationships with new entities all the time on, they really are struggling with the complexity of the world and the complexity of maximizing the value of what they do. Sometimes they're very, very small. They're basically an author who wants to self publish, they've written a book, but they don't have any idea how to do it. How do I get it out there in the world? How do I do those things? And some of our systems help them, and we don't we're not the end to end for them. There are other people who do different aspects of it, but we can help them get there and take these complex things like, okay. Transactions come in and have to pay taxes across global waters. How do I do it? We can help them with that. And so it's really taking them these things that are relatively complicated in the modern world and making it more simple and allowing them to focus on what they wanna do.

21:03 We are viewed as experts within the industry and not only within publishing, but we're becoming more and more known as an expert in intellectual property across multiple industries because our solutions are so well built to handle not only the old world of intellectual property, but the new world with all the digital rights and things because we've evolved over that time. We always say we're anything but a generic solution. Our goal is not to be generic, and you can take it in and do lots of work to it. I mean, that's where other competitors are. Quite often, they have a foundation, and then you have to run a huge project to cater it to what you wanna do with it. That's not what we're trying to do. We try to make it so that it helps you very, very quickly and can work from the very smallest customers to the very largest customers, which is some of what we've been able to do over the last couple of years and really have everything from a multitenancy solution, which you can sign up for us and start working in in a few days to a large, organization global organization who wants to run a year long project with us to get up and running.

22:06 And so our solutions have been able to be modified in in such a way as to allow the configuration necessary to go from the very small to the very large. So if you're a very small company, you don't have to deal with the complexity. If you're a very large company, it's available to you. And we really try to address, those unique business models that are coming up in our industries so that we know, so we keep an eye on what's going on in the from a legislative perspective and those types of things so that we can make sure to work with our customers so that they can address their whole business. And we partner with them quite often and have strategic conferences with our customers to try and really make sure that they are as aware of what's going on in the world. Like, we get a lot of conversations around, lately, NFTs and blockchain and how those things are affecting, intellectual property and how we foresee them as how they'll affect them in the future.

22:59 And, I mean, that's a whole probably presentation in and of itself, but they're interesting areas. They're interesting to us. They're interesting to our customers, and they we can engage with them on that level.

23:12 So let me talk about our markets a little bit. Now these statistics are the best we could come up with based off of a lot of data across a lot of different market research analysis. But, basically, the publishing market is growing. It's an interesting market, always has been an interesting market, has always been a slow growth market. It had goes through peaks and valleys. What you'll see in book publishing right now, it is a higher growth than we've seen in the past, probably largely due to shifts in the world around COVID and what's been going on there. It actually has taken a dip in some markets, like North American publishing took a dip last year, which is for the first time in a very long time. However, it's other areas of the world made up more than made up for that. And you can see as a whole, book publishing has sort of grown by 6%. And then digital publishing, which has grown faster in some areas like North America, has grown at about 12% of the overall, market base that was before.

24:07 Then some of the areas other areas that we're talking to, you know, are music and gaming. And you can see, you know, gaming is such a large industry and encompasses so many things. We try to focus on an element of gaming that's more close to what we're doing with intellectual property and how we can serve that market. And we we put that at about 12%. And then for music, it's been globally, music has grown about 19%, and music is very much everything's about intellectual property management in general. And you can see from the shift in what we've done and sort of the markets we're talking about, we really have shifted our focus to be on, you know, growth sectors and make sure we keep focused on growth sectors as a company and maximize our value to those sectors.

24:50 And we see what's going on, and there's couple things that are going on in these markets. One of the things I really like about these markets and the fact that we develop solutions for the very small to the very large is these markets tend to have an evergreen kind of cycle that goes on. And what I mean by that is there's this constant cycle of new small spin ups, new book publishing companies, new digital publishing companies, new gaming companies, new music companies, commonly referred to as the indies, the indie publishers across the board. They're constantly spinning up. They're constantly getting bigger, and then they're constantly being subsumed into large remedies. And while that's going on, new ones are spinning up. So part of the focus and shift I took was we shifted so that we could develop solutions for the very smallest end of the market.

25:36 We'd always been seen as the large end of the market player, and we've, you know, we have played with some of the large players in the world, but we wanted to be able to serve the smallest end and grow with them through to the largest end. And some of our new solutions have been deployed to smaller entities that likely will get subsumed at some point if they're successful, and they'll continue to grow and get subsumed in while user new people are spinning up. Not only is it good for us to constantly have a new customer base available, but you also see you get a entry into larger markets pretty quickly because your product is already available in something that's going into something else. And so that's this convergence that's a consolidation factor. The other thing that's happening is convergence. When I talk about all of these industries, and you can see it every day. If you take any major brand, if you will, like Game of Thrones, Harry Potter, anything you can name, it almost is touching all of these industries all of the time.

26:33 I use a lot of examples in this space, but, like, I I always use like, Fortnite is a good example. My son plays a lot of Fortnite. And with Fortnite, they're constantly introducing characters that cut across all of this. Characters from books, characters from music, even social influencers, different things like that. So they're constantly introducing the cycle, but all of that has to do with IP and IP management. And so you see all of this coming together. Books are now streamed even in written format. They're part of subscription services, and depending on how much you consume, somebody gets paid for that. Music is streamed books on tape. It they might back in the old days, but audiobooks are being streamed now, and they involve actors and musicians. And even some of the the books now have minor animations in them, so you get into much closer to a film industry. So you see this convergence between all of media, if you will, and that's really where we focused on our solution. And when I got looking through it, we actually had been doing bits and pieces of multimedia for years, probably decades really with audiobooks. And then it was just really taking that and refocusing it, making sure we can serve a larger need for that, which we had to do for our customers anyway. So that's really the consolidation convergence of naturally, you know, like I was saying before that that there seems to be a renewed interest in books, but there's obviously huge interest in all of the media sectors, music, gaming, film, etcetera.

27:59 And, obviously, you could go into a lot of them individually, but really focus on the ones that are closest to what we do today right now and really focusing on those and continuing to expand those.

28:13 So with that, let me talk through our development targets and beyond. So, naturally, I've been saying we're trying to get to 20% margins on it. Our revenue, I think we mentioned that a couple of times, so won't go into it again. Keeping our revenue growing now that we've hit growth after the transformation is a critical factor for us, and we're focused on a lot of different ways to do that and some of the new marketing channels and ways to reach out to the largest audiences available such as Google Ads and that kind of thing. So we've been been really leveraging that. You can see that I've talked a lot about having multi tenancy solutions from the very small to the very large. Now we've been focused on really having the right services across those and the right partnerships, and we've partnered with a few different firms to do areas that we don't really have such as content development. So we have some some firms that we partner with to do content transformation for people if they have, like, papers that are all on paper and they wanna or in PDFs and they wanna get them to true digital content. We have partners that we can work with and help them sign up with to get their content into a better digital format, those types of things. And so really providing the fullest services possible through either internal or the right partnerships helps our customers a lot. This is where you shift from that focus of the very large customer to the very small customer and being able to give them a network. So they're not just talking to us. They're talking to us and our network and really growing that out.

29:40 We continue to look at operational efficiency and the increased use of offshore as appropriate for various support functions. And I think John mentioned that I mean, this sort of ties in closely to infrastructure and really leveraging the technologies available in the world with, you know, migration of even our own operation to cloud based infrastructure has helped us a lot and given us a lot more business resilience and really being able to leverage what's out there in in that in other people are focused on, which isn't our core competence and really, you know, making sure that infrastructure is up twenty four seven, available across multiple continents, multiple entities, very difficult to have it disappear, if you will. And so from our perspective, we've been leveraging that for our own operation and then providing a means to do so for everyone else.

30:26 And then you see the expansion of recurring revenue models. We continue to sell not only in software as a service mode, but we actually are in selling in software as a service mode and in revenue sharing terms. So some of our newest contracts are signed up and bid to be a small element of the revenue share. Now that's that's important for us, but it's also important for them. So it's really is a partnership rather than have them view us as a burden or an operational expense. It is as a part of their growth cycle. And so far, that's going very well, with the customers that are using it, and we're able to, you know, calculate because all of their data is going through our systems. We can calculate it very specifically, what it is and how it affects us. I'm sure the percentages will shift customer to by customer depending on what they're doing and size and how that'll work. But it really allows us to not only have this very stable base, but also this tie into our customer success.

31:19 And as the evergreen cycle, as I said, as customers grow and succeed, it's great because we've grown and succeed with them. We're not, you know, limited to an artificially low term that we happen to be when we set up with them in the the first place. We are part of their revenues on an ongoing basis, which we look to expand. I mean, we're continuing expanding our commercial offerings and, you know, getting into more and more areas on IP and rates management. And the same thing, we're continuing to expand our digital distribution platform with our success with some of the the world's largest NGOs and trade associations to continue to expand on that. There are billion or millions of NGOs in the world operating, and they all have some aspect of putting out papers, putting out materials that they would like to get widely distributed, and that's where we can come in to play for them.

32:10 And so we've been expanding on that, and there are also quite a few trade associations if you can think of any trade associations like nurses. There's many, many different nurse associations. There's many different medical associations. Some of them are some of the the ones we work with are the British Small Animal Veterinarians Association as an example. We work with an association for geological engineering. We work with IT, which is a large technology association. And those are the types of associations that that benefit from what we do. And not only that, you know, they they actually have a lot of connections to other associations, so we're building on that as well. So with that, let me let John get you into the detailed numbers, and then we'll come back and do some questions and answers.

33:04 Thanks, Scott. So I thought I might just continue on more of a financial kind of smart on in terms of the development targets. And I I think the key takeaways from there were we set a a 20% EBITDA target, and we're aiming to deliver that now by you know, we've done the first part of getting the the efficiencies in place, but we're now looking to to deliver revenue growth, which we can leverage through the the new business processes that processes that we've got in in place. So I think Scott mentioned a lot of where we've had successes in terms of NGOs and content and trade associations. So I guess the other question sometimes is asked is where where do we see other opportunities for growth? And this slide here kind of shows shows some of the some some of the answers to that. So the the traditional publishing market is is huge.

33:56 We we've got a very small percentage of it. And you can see here that we're we're heavily weighted in in The UK, and and The US is is such a vast market. We we were bigger there. We need to grow in that area. There's lots of opportunities in The US, and Scott's mentioned here lots of little start ups are kicking up. We we've just gotta tap in into that a bit more. New verticals here is another thing. So we haven't really got any revenues in in here at the moment from new verticals. It's it's the traditional base. But you do see the split and why we concentrated on the content website businesses and is the key driver. We've got a few other little bits around the side, but that's noncore now. It's profitable, but it but it's noncore. I'll swap on to the to the next slide. So so there are lots of themes that we've already covered through here. So I think I'll just pick out the main additional bits. So so I think you can see deferred deferred tax.

34:58 So this is really now showing that we're confident about our our future outlook. We've got £20,000,000 of tax losses predictions going out. We're we're gonna use those up, and that's why deferred taxes are now starting to come through,

35:12 and and it's a benefit because we see benefits in in the future. Another thing that we haven't touched upon is all of our research and development is all expensed through the p and l in the years that it was incurred. There's nothing in in the balance sheet. So I suppose that just the size of the change, the cost base of the business has come down by about 4,000,000 since 2017. So there's been some real significant changes in the business, but it it's delivering. You know, the the customers are getting what they want. We're generating profit, and, hopefully, the the shareholders are starting to get what they want in terms of dividends and and share buybacks that we're we're entering into. So balance sheet is the next slide up. So we've talked about the strong cash performance.

35:57 So we closed the half year at 4,400,000, so that was great performance. We've got no debt within the business at all. I've mentioned the the 20,000,000 of tax losses not showing on here, but they are another asset that we've got. And then the distributable reserves in the in the PLC parent company is 6,500,000. So that's underpinning the the dividends and the and the buybacks that we've been doing in the past. And the final number slide. So the the cash flow. So I think the interesting thing here is is the clean progression of of profit to cash. So we we've talked about being mission critical. Our customers need us. They value us, and they pay for for what we do. So the profit does generate itself into cash nice and cleanly.

36:42 We've as we've moved over towards more of a SaaS business, we we've taken out some of the seasonality that we may have had. It's still there a little bit, but we've we've smoothed it out a little bit. So cash flows are a lot smoother now. And I think the the other thing is just we're we're committed to to shareholder returns, be it by dividends or share buybacks. You can see that we've got recent history in there, and we'll be looking in the future to do similar things. I think that covers off the the finance financial element. I think we can move over to the the q and a after this. Scott, John, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab, which is situated in the top right hand corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via our investor dashboard.

37:39 As you can see, we've received a number of questions throughout today's presentation. If I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end. Okay. Sure. So thank you for submitting questions. I'd rather this be interactive. That's sort of the the what we're trying to do here is answer whatever questions you may have. It's hard to cover everything in a presentation, so please do submit questions. I'll read the first one. Congratulations on your interims. Thank you. It's been a lot of work getting here. We're glad we can see it in the numbers. And the the question part was to what extent do you compete with Aptitude's MPP offering who are our closest competitors? Well, as it relates to Aptitude's MPP offering, my understanding of that is it's really more around subscription management and managing subscriptions from an ERP perspective.

38:29 We could do some of that when we do probably tiny bits and pieces of that. But, really, what we're doing is is we're helping them more on the content and distributing to memberships and less on the management of the subscription side itself. And those subscriptions have all sorts of cycles. Now we do manage subscriptions quite heavily when you get into people subscribing to journals, but I believe it's different than that. We don't so probably my best answer to that is we very peripherally compete with them in some areas and not really very directly. We actually partner with another firm called Aptify that that does some of the subscription pieces in some of for some clients near near to us. And, you know, we we have some technology that interfaces with what they do to help that get get more value when necessary.

39:17 Who are our closest competitors? That's a that's a good question. I mean, to some degree, we compete with if you talk about from the commercial aspects, the order processing side, there'd be companies like Klopotech, K and K, who do similar things. They're more global solutions with different positives and negatives, and they compete in that space. We to some of what we do we do could compete even with, like, Oracle. Although we shifted our focus to be the components that matter most of our industries, and we interface with Oracle and SAP and some other technologies that other people have purchased. We've even had customers one of the customers years ago said they were decided they were gonna migrate from our software to SAP.

40:04 It only took them about a year to realize that they were gonna migrate to SAP for their core financials, but keep our software to run their core operations because we better address their business models, and we've been in that mode for quite some time with them. And they have no plans in leaving our core software. If you talk about our edify platform, some of the biggest competitors are probably things like Highwire and Silverchair that are more focused on the scholarly aspects of things, which we do a lot of scholarly publishing. But like I said, we shifted our focus a little more to folk to really broaden our reach there and and, you know, reach out to other areas. And then if you talk about what we do with IP, there are quite a few companies in the IP space. Some are very tiny, tiny startups. Some are growing. There's, like, Iptor. There's Real Software. There's a few that have bits and pieces of what we do.

40:58 Most of them don't have forty years of doing it, So our solutions tend to be more comprehensive, which has probably hurt us in the past because we were overly complex for some of the simpler things, which is why we created stripped down versions and multi tenancy versions so that they could buy our software very quickly. I'll say there are people spinning up in different areas around that space with investor dollars, and some of those investment dollars are then not bearing any fruit, if you know what I mean. And it we're more of a situation where we're taking what we do and have done well for a few decades and migrating it over to handle more and more of the newer needs and then now to address new markets. The IT management space itself is immense.

41:45 I doubt we would dominate it, but I don't think anyone's going to. And we're just trying to increase our share, and there's lots of room for us to grow and really leverage the value of our tools and really have them as the world gets focused more and more in this area. Really leverage our tools, really get into the the the earliest points we can and grow with our customers. The next question, which how are negotiations going for sales of your Concord product? We do have Concord. We do have Concord customer now who's using our product now and actually now looking at another product of ours. Our sales are going well. I get they're taking longer, so we're looking at ways to shorten the sales cycle there. Sales cycle as a whole seems to be about nine months. I you know, so we are actually introducing some ways that they can buy it cheaper, some try before you buy models.

42:35 We have some of those in place now. We have, you know, different discounting programs in place to try and get people using it and up and running because, obviously, we're breaking into a new market. So we're doing a multitude of things there. We've actually had quite a few larger customers ask us for bids. Those bids tend to be more comprehensive and go through a long cycle. And we're for most of the customers who are out there, there's quite a few in the pipeline there in the middle of their decision making cycle. The next one, the recurring revenue model is attractive. Would you look to make acquisitions to scale up the business inorganically? What are the driving forces to grow top and bottom line? So, absolutely, we look at acquisitions quite regularly. We review them on a regular basis. We have a plan, and we have a reach out to companies we feel would be good partnerships with us, and we could acquire and put them in our umbrella. You can see we have some cash to spend, and we would like to spend it on growing the business and returning value to shareholders.

43:30 And so, you know, returning value in whatever way we can. And so we've been looking at multiple ways to do that. And then the the driving forces to grow organically is really getting us through that sales cycle, getting more of a reputation. There have been some market reports now, which places us as one of the IP providers in the world. And so it's good that our name is getting out there as we've expanded with some of our our current customers, you know, and really started signing up relatively small new customers, we are starting to make a better name for ourselves and really grow and really position ourselves where we wanna be. And so it's really that in getting our marketing and sales engine going fully now that we have the solutions for, like I said, very small to very large will help us grow more organically. Regarding your revenues, what's the contract length and who challenges you when these are up for renewal, I. The competitive environment?

44:23 So the contract length our typical contract length is three to five years. Most customers don't wanna go through a cycle of getting something ramped up to only have it be a year. So our typical contract length is three to five years. Many of our customers then renew on a three year basis. Our largest customers always wanna renew on a a longer term basis because they're dependent on our systems. And so we do that for some of our solutions, the Edify solution. People do tend to have shorter, agreement terms, more like a three year with an annual renewal cycle. And those challenges come up more based off of their needs than their platform. So some of the NGOs have to go through re go through an acquisition cycle, which we're positioned well on because we already set up and running, and we can just keep going down that line.

45:12 Who challenges you when these are up for renewal? Some of the customers do will take the opportunity to look out at other solutions, and normally, a cost benefit leads them to, let's just sign the renewal. And what we've been trying to do is take any burdens that they have, any operational burdens from our systems away from them and have them buy that as a service from us so that they don't have to worry about having staff in place to worry about our systems. And that has actually helped reduce any questions around renewal because it's just so easy for them to do it. Have you noticed any change in your customer's behavior in reaction to the deteriorating economic conditions? It's interesting to to watch what's been going on with the economies both in The UK and North America, which where we play mostly, our economies are not what what either country would like as we know.

46:02 Their behavior has only changed in that we've seen the larger companies seem to hold on tighter. Basically, they wanna make sure we're gonna be around. They're very happy that our financials are so stable and that we're gonna be around, and we're not gonna have any problems. We do see them questioning around those areas more, which I think will lead to problems for startups or people who are just burning through cash without a lot of revenues around them. So from that perspective, I think there'll be some questions around it. They are looking to streamline their organizations, which we're hoping is gonna help them select some of our particularly the IP management tools. If you don't have the right tools in place, it's a very labor intensive process, and our tools are far cheaper than an employee would be. And so from that perspective, they can actually do it more comprehensively through our tools, and they would be able to do it by even hiring. And so from that, we get into this state where, you know, not that we want to eliminate any jobs out there, but it's just a sad fact of the world that companies need to operate more streamlined, and our tools can help them do that.

47:04 You know? And the other thing that we're seeing is as people for some of our people who are publishing and associations, they are trying to expand their reach. And one of the things that we get questioned quite heavily on with our Edify solution is our global reach. That we have customers across the globe in Edify. Right now, we have customers in Qatar, multiple parts of Asia, Australia, and really across the globe. And so from that perspective, having hundreds of publishers that work on a global scale, all unified in our smallest platforms actually expands the reach of their content just through the nature of publishing through us. And so from that perspective, they're looking at more and more ways to bring in viewers to their content, and in some cases, revenues, and we have allowed them to introduce and manage pay per view models across the those areas.

48:01 So that is actually all the questions that have come in right now. I believe, you know, if you submit more questions, after this, we will get them, and we can respond in writing. Scott, thank you very much for addressing those questions from investors. And, of course, the company will review all the questions submitted today, and we'll publish those responses on the investment company platform. But just before redirecting best investors provide you with their feedback, which I know is very important to yourselves and the company, Scott, could I just ask you for a few closing comments? Yeah. So I think the best way to think of INGENTA is as a tried and true company that has been around for forty five years and has every financial indicator to be around for another forty five at the rate we're going.

48:50 And we've shown that we can have a highly stable company that's cash generative, profitable, continues to grow organically, and continue to be a safe bet for investor money. Plus, we have opportunities for more rapid expansion through both m and a and through some of our tools and the entry into new verticals. So, you know, from that perspective, I think I like to see us as this balance of both a safe bet with a lot of opportunity in the future. And I'm not sure you get that in every other company out there where you you've had some companies that are very risky, and you have some companies that are very, very safe, but no opportunity for growth. I think we're great. We're able to provide and bring this blend of both worlds to investors. So it's things for investors to think about when they're trying to decide where to put their money, but I know that's how I invest my own money is is in things where I can feel it's relatively safe, but I also could grow.

49:42 And that's what I think INGENTA is. Scott, John, thanks once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of INGENTA PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.