Imaginatik slashes costs but losses persist

Losses widened at Imaginatik in a challenging half-year as new business slowed down in the wake of the innovation consultant's strategic review.

Losses before tax grew 4% to £595,000 as revenues slumped 18% to £1.42m during a period when Imaginatik secured four new customers but gross bookings fell 64.9% to £600,000 as a result of both the timing of the strategic review and of several renewals.

New chief executive Angus Forrest's cost-cutting campaign has helped lead to annual savings of £890,000 but cash and equivalents plummeted to £14,000 from the £326,000 reported a year earlier, despite two equity fundraisings during the half, namely a debt for equity swap and an exercise of warrants generating £0.60m gross of expenses, plus a loan facility of £0.50m was secured.

Post-period-end cash flows improved because of the closure of renewals, new sales and the net proceeds from a £0.5m equity placing.

Chairman Simon Charles, said: "It has been a very difficult period since the announcement of the strategic review at the beginning of 2018, as that created uncertainty in the market about the company's position."

Forrest for his part was continuing to "align costs to revenue", cutting roughly £1.2m of overhead, with a net annual cost saving of £0.89m when taking into account the replacement costs required.

Several new product developments were launched in the period, including a new mobile experience, with new product features being developed to take advantage of advances in artificial intelligence and machine learning, which Forrest hopes may lead to development of new revenue streams.

During the half-year, Imaginatik was approached by "several individuals and companies proposing a range of interesting product development initiatives, some of these are being progressed and could lead to interesting developments for the company", Forrest said, with possible joint ventures being eyed.

On the outlook, Forrest said the company was moving closer to a break-even position but added: "We must not be complacent as there remains a great deal more to be done to turn the business around, but we have confidence that this can be achieved."

As of 1040 GMT, Imaginatik shares had surged 20% to 1.50p.