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Final Results

12th Dec 2005 07:00

IDOX PLC12 December 2005 IDOX plcFINAL RESULTS FOR IMMEDIATE RELEASE 12 December 2005 IDOX plc ("IDOX"), the information and knowledge management company, todayannounced its final results for the year ended 31 October 2005. Highlights: • Turnover up 48% to £14.16m (2004: £9.56m) • Profit before tax up 878% to £0.88m (2004: profit £0.09m) • Cash up 69% to £4.72m (2004: £2.80m) • Earnings per share up 270% to 0.85p (2004: 0.23p) • Completion of core development of new Electronic Document and Records Management System and accreditation by The National Archive • The Board is confident of the Company's cash generation and will take steps to facilitate payment of a regular dividend in calendar 2005/2006. Andrew Fraser, Chief Executive of IDOX, said: "I am pleased to report that IDOX is moving towards healthy profits and strongcash generation. Developments in the period under review have furtherstrengthened the Company's position in the local authority and wider publicsector market. The recruitment aspect to our business continues to perform well.Enhancements to our software suite received critical government accreditationand we experienced growing demand for our information solutions products thatare reflected in a number of significant contract wins over the last 12 months.IDOX is now in an excellent position to continue the growth of all threebusiness lines." - ENDS - For further information please contact: Martin Brooks, Chairman 0870 333 7101Andrew Fraser, CEO 0870 333 7101Richard Kellett-Clarke, CFO 0870 333 7101Nadja Vetter / Emma Consett, Cardew Group 020 7930 0777 Notes to editors IDOX plc is a fast-growing information and knowledge management company,specialising in the development and delivery of software products, informationsolutions and people for information management and knowledge sharing, primarilyfor the public sector enabling them to better manage their information. IDOX Software is one of the leading players in the local government market formanaging paper and electronic records. IDOX Software has several modulesdesigned to capture, manage, store, preserve and deliver information for usewithin an organisation, and for access externally - by the public or otherpartners. Its flagship UKPlanning Managed Services solution delivers the firsttrue end-to-end e-Planning solution to enable Local Authorities to provide theGovernment Planning process online The Information solutions unit consists of a specialist consultancy thatspecialises in advising and devising creative and innovative solutions toproblems associated with records, information, knowledge and content management.In-house and external training for clients using experienced facilitators andleading industry practitioners. A community for professionals; via subscription,providing them with a comprehensive database of bibliographic abstracts, and thelargest collection of information in the UK, on all aspects of best practice,governance in the public sector. Our Experts identify, summarise and manage avast resource of information to save member organisations time and money. The focus for the recruitment team is to find and place informationprofessionals to deliver knowledge management, information management andrecords management projects - this might be for interim management and projectteams, permanent or temporary posts. IDOX plcChairman's StatementFor the year ended 31 October 2005 I am delighted to announce a strong set of results for the year ended 31 October2005, during which significant and sustainable profits were achieved by IDOX plcat pre and post tax level, accompanied by excellent cash generation. Theseresults, together with a strong sales pipeline, give the Board sufficientconfidence in the business going forward to anticipate the declaration of adividend during 2006. This will require a reduction in the share capital forwhich shareholder and legal approval will be sought at the next Annual GeneralMeeting of the Group. As a result of the improvement in trading performance theGroup recognised the deferred tax asset which resulted in a one off gain to theprofit and loss account. The Group's three business lines, Software, Information Solutions andRecruitment, have all made considerable progress during the period under review.The local authority market remains the Group's primary focus whilst it continuesto develop its presence in the wider public sector with relationships gainedthrough the companies the Group has acquired. The strength of IDOX's informationand knowledge management capability, combined with its technical expertise,provides IDOX with a solid platform from which to further extend its innovativeinformation solutions in the public and, where appropriate, the private sector. During the year, significant steps have been taken in an ongoing process tostrengthen the business ready for the next stage of IDOX's development. Theseinclude: • A strategy review testing our assumptions; we have confirmed our belief in the public sector and our information solutions approach and we will continue to look to identify strategic opportunities to accelerate IDOX's growth strategy • A focus on organic growth, profitability, efficiency and cost control; some benefit has been recognised during this reporting period and there will be continued focus on this next year • Strengthening the depth of the executive team through the appointment of Richard Kellett-Clarke as Chief Financial Officer and Richard Pinder as Group Sales and Marketing Director • A comprehensive review of remuneration benefits and incentives undertaken by independent remuneration consultants, with a view to helping the Board achieve the optimum alignment between shareholder and employee interests • The enhancement of a more formalised risk management process in line with recognised good practice • The move to modern London offices, on expiry of the existing lease, which will aid efficiency, working of multi-disciplined teams and provide better facilities for customers and staff alike. Looking to the coming year, it is the Group's intention to continue to build onthe success of the past year and continue to pursue organic growth and resultantprofits while seeking suitable acquisitions that fit its strategic business andstringent integration criteria. It remains for me to thank our customers, suppliers and dedicated colleagues inthe Company for helping IDOX to achieve such a successful and transforming year. Martin BrooksChairman9 December 2005 IDOX plcChief Executive's ReportFor the year ended 31 October 2005 Financial ReviewIDOX revenues increased from £9.56 million to £14.16 million, an increase of 48%overall, for the twelve months ended 31 October 2005. Profit before tax amountedto £0.88 million (2004: profit of £0.09 million). Earnings per share was 0.85pence (2004: 0.23 pence). Net cash at 31 October 2005 amounted to £4.72 million(2004: £2.80 million). IDOX Software and Information Services increased itsannualised recurring revenue from £2.56 million at the end of October 2004 to£2.92 million at 31 October 2005. Market DynamicsThe Group has continued to expand within the local authority market and now hasa presence in over 45% of the 468 local authorities in the UK, with considerablescope to increase revenues per client. We have broadened and deepened ouroffering in this market, strengthening our position as a provider ofcorporate-wide information management solutions. In the last 12 months the Grouphas provided various software, information and knowledge management services toover 172 central government departments and agencies. The opportunity pipelinefor our products and services continues to grow and the expected cross-sellingopportunities among our business divisions have begun to materialise. The drive for efficiency and effectiveness, the Freedom of Information Act, theChildren's Bill, Priority Service Outcomes, the e-Government deadlines and othersimilar initiatives continue to create opportunities for the Group within localauthorities and the wider public sector. The approval this year of our RecordsManagement Software product by The National Archives has further strengthenedour position in local authorities and will open new opportunities in othergovernment departments and agencies. The unique combination of services built through acquisition and organically hascontinued to add revenues with growing interest in information architecture andour content auditing skills. The blend of our technical consultancy skills andour information consulting capability in this area is beginning to develop newofferings such as a content audit tool which semi-automates the content auditingprocess, reducing the cost and improving the results. As the volume of contentaccumulates within organisations the ability to manage, track and control thisbecomes a significant problem and we believe the skills base, products andservices IDOX has built represent a significant opportunity. Product and Service OfferingsThe Group's respective business lines have made considerable progress during theperiod. The local authority market remained the primary sector with 46% of theGroup's revenue. IDOX continued to strengthen its presence in the wider publicsector as a result of relationships gained through the companies the Groupacquired. This part of the business now represents 27% of the Group's revenues.IDOX drives 27% of its business from the private sector which will continue todevelop in specific areas, such as professional services, which have provensuccessful. SoftwareThe Software line of our business develops document and records managementsoftware, electronic forms and web publishing solutions to capture and deliverinformation via the web. Workflow is used to distribute information around anorganisation, be it an e-form filled in by a member of the public or a scanneddocument. In addition to selling our software, the IDOX approach has been to usethese technology platforms to build solutions to meet specific verticalrequirements, such as the UKPlanning Managed Service. This 'software as aservice' model enables IDOX to manage the delivery of the product and serviceson behalf of the client. To date, 21 local authorities outsource to us theadministration and presentation of their planning applications on the web. We are particularly pleased with The National Archives accreditation of IDOX'sRecords Management Software product. This product will provide IDOX's customerswith the tools to manage their information assets better and hence comply withrelevant legislation. To date there are only 11 companies with this UKaccreditation. This state of the art J2EE application, designed using the verylatest software development techniques, provides significant technical andoperational benefits to our clients in managing their information assets. This year the Software teams have also expanded the way in which our technologyis used within a Revenues and Benefits department, working in partnership withTonbridge and Malling Borough Council to build the next generation of productsto meet the specific needs of this complex, process-orientated environment.Together with our work to extend the product in partnership with existingcustomers for Housing and Social Services departments, the team have undoubtedlycompleted the suite of products needed to deliver corporate solutions to localgovernment. This achievement provides the Group with the ability to deliverlarger contracts and the potential to address more information management needsof its existing customers, creating bigger opportunities from its growingcustomer base. Further new business opportunities in the wider public sector continue tomatierialise, such as the recent e-forms implementations in the MetropolitanPolice and the Kent Police. The British Transport Police have recentlysubscribed to the IDOX Information Service, demonstrating the potential widerappeal of our solutions outside the local authority market. As we grow anddevelop relationships in the wider public sector we will continue to find newcross-selling opportunities for all of our business lines. Information SolutionsIDOX's Information Solutions capability includes advisory and training servicesfocused on information and knowledge management, content provision for thepublic sector arena and information orientated projects. These informationprojects typically combine the Group's products and services to deliver aparticular outcome for a client. We continue to expand our electronic library content to meet the needs of newcustomers. For example, NHS Scotland has commissioned us to source, abstract andadd full text material on health inequalities and, as a consequence of fourpolice forces joining the service, we now source additional content to suittheir needs. Such developments benefit all of our subscribers with new contentas well as bringing in specific new revenue. We continue to develop our particular expertise in planning, development andregeneration through several information orientated projects for the Office ofthe Deputy Prime Minister, English Partnerships, Communities Scotland and thenew Academy for Sustainable Communities. Our outsourced library service is nowenabling us to create and manage specialist web-based libraries for a range ofpublic sector clients. In response to client demand we have combined our consultancy expertise incontent management and information architecture with our technical capability todevelop a new web and content management audit service. Our team has developedspecialist tools and techniques to identify and collect large quantities ofcontent across many different platforms, clean it, structure it and migrate itto new platforms, making it easier to access and manage. This unique blend of advice, content and technology has earned the Grouprecognition as a major information and knowledge management specialist withinlocal and central government and their agencies. RecruitmentThe focus for the Recruitment team is to find and place informationprofessionals to deliver knowledge management, information management andrecords management projects - this might be for interim management and projectteams, permanent or temporary posts. Contract recruitment revenues, from placing interim managers, temporary staffand project teams, was the area of strongest growth on the previous year. IDOX'srecruitment strength is its horizontal approach, helping clients in all sectorsrecruit knowledge, information, content and records management staff. In thelast year the division has seen considerable movement of people with privatesector experience into the public and not-for-profit sectors where the demandfor information and records skills has been high. We anticipate continued strong demand from all sectors in the coming year andwere particularly encouraged by the increase in the number of registeredvacancies from the private sector in the last three months of our financialyear. The recruitment teams will be working with other parts of the Group to furtherextend revenues in the areas of web and content management and informationarchitecture; areas where roles require strong technical capability combinedwith traditional information management skills. During the last 12 months wehave seen a growing interest in the value-added services that we provide,including career counselling, career management and career workshops to supportemployees experiencing change in the workplace. Strategic AlliancesThe Group will continue to develop strategic partnerships, where appropriate, inorder to widen its offering to the public sector and other markets. Discussionsare regularly held with other potential partners and we do expect to announcecontracts with new partner organisations in coming months. PersonnelThe Group's employees totalled 139 at 31 October 2005, virtually unchangedcompared with 140 at 31 October 2004. This is the result of completing coredevelopment projects and the redeployment of resources to customer facing roles.The Group possesses a team and infrastructure capable of delivering and managingcontinued business growth. Strategy and OutlookThe Group concentrates on the delivery of Information and Knowledge managementsolutions in the local authority market while continuing to develop client basein the wider public sector. The focus of our work is on helping clients managetheir information assets more efficiently, particularly unstructured data. Asthe volume and diversity of information continues to grow, organisations havesignificant issues to overcome, be that legislation, compliance, efficiency ormaximising the use of the information assets held. A shortage of qualifiedexpertise in the market gives the Group confidence that we will be able tocontinue our growth in our chosen fields and market. It is anticipated that over the next few years, as both local and centralgovernment bodies continue to deliver their e-Government programmes thoseestablished suppliers, such as IDOX, will have to adapt to efficiency andcost-saving drivers. The new initiatives such as the Gershon Efficiency Reviewaim to reduce expenditure on administration. IDOX believes it is ideally suitedto continue assisting with improvements in efficiency, albeit under theTransformational Government Agenda. The Group has positioned itself to take advantage of the need to deliverefficient content management solutions by uniquely being able to supply not justthe software but the three key components needed: • 'fit for purpose' software products • the skills and know-how for content delivery • the people to deliver consistency in order to gain a return on investment. The Group is continuing to augment its product and service offering and gainmarket share, delivering increased revenues and profitability through organicgrowth and appropriate accretive acquisitions. Andrew FraserChief Executive9 December 2005 This announcement was approved by the Board of Directors on 9 December 2005. IDOX plcConsolidated Profit and Loss AccountFor the year ended 31 October 2005 2005 2004 Note £000 £000 _____________________________________________________________________________Turnover 2 14,155 9,555 External charges (5,048) (2,636) ________ ________ 9,107 6,919 Staff costs (5,665) (4,778) Other operating charges (2,685) (2,134) ________ ________Operating profit 757 7 Interest receivable 119 82 ________ ________Profit on ordinary activities before taxation 876 89 Tax on profit on ordinary activities 3 700 292 ________ ________Profit for the year transferred to reserves 1,576 381 Earnings per share - basic and diluted (pence) 4 0.85p 0.23p All operations are attributable to continuing operations. There are norecognised gains or losses other than those set out above. IDOX plcConsolidated Balance SheetAt 31 October 2005 2005 2004 £000 £000 ______________________________________________________________________________Fixed assets Intangible assets 4,602 5,265 Tangible assets 325 247 ________ ________ 4,927 5,512 ________ ________Current assets Debtors 4,132 3,312 Cash at bank and in hand 4,722 2,797 ________ ________ 8,854 6,109 Creditors: amounts falling due within one year (3,960) (3,266) ________ ________Net current assets 4,894 2,843 ________ ________ Total assets less current liabilities 9,821 8,355 Creditors: amounts falling due after more than one year (10) (20) ________ ________Net assets 9,811 8,335 ________ ________Capital and reserves Called up share capital 1,873 1,821 Capital redemption reserve 1,112 1,112 Share premium account 8,162 7,614 Shares to be issued 1,300 2,000 Other reserves 1,294 1,294 ESOP trust (79) (79) Profit and loss account (3,851) (5,427) ________ ________Shareholders' funds 9,811 8,335 ________ ________ IDOX plcConsolidated Cash Flow StatementFor the year ended 31 October 2005 2005 2004 Note £000 £000 __________________________________________________________________________________________________Net cash inflow/(outflow) from operating activities 5 2,126 (801) Returns on investments and servicing of finance Interest received 119 82 ______ ______Net cash inflow from returns on investments and servicing of finance 119 82 Tax credit received - 244 Capital expenditure and financial investment Purchase of tangible fixed assets (320) (240) Sale of tangible fixed assets - 12 Purchase of investment (ESOP trust) - (51) ______ ______Net cash outflow from capital expenditure and financial investment (320) (279) Acquisitions Purchase of companies during the year - (1,668) Deferred consideration - (10) Net cash balances acquired with the company - 380 ______ ______Net cash outflow from acquisitions - (1,298) Financing Issue of shares - 2,300 Costs for issue - (98) ______ ______Net cash inflow from returns on investments and servicing of finance - 2,202 ______ ______Increase in cash 1,925 150 ______ ______ IDOX plcReconciliation of Movements in Shareholders' FundsFor the year ended 31 October 2005 2005 2004 £000 £000 ________________________________________________________________Profit for the financial year 1,576 381 Additions to ESOP trust - (51) Shares issued 600 2,739 Shares to be issued (600) 2,000 Adjustment in estimate of shares to be issued (100) - _______ _______Net increase in shareholders' funds 1,476 5,069 Shareholders' funds at 1 November 2004 8,335 3,266 _______ _______Shareholders' funds at 31 October 2005 9,811 8,335 _______ _______ IDOX plc Notes to the announcementFor the year ended 31 October 2005 1 BASIS OF PREPARATION The financial statements have been prepared in accordance with applicable UnitedKingdom accounting standards and under the historical cost convention. The principal accounting policies have remained unchanged from those set out inthe Group's 2004 annual report and accounts. The financial information set out in this announcement does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Theconsolidated balance sheet at 31 October 2005 and the consolidated profit andloss account, consolidated cash flow statement and associated notes for the yearended 31 October 2005 have been extracted from the statutory accounts upon whichthe auditors opinion is unqualified and does not include any a statement undersection 237 of the Companies Act 1985. Those financial statements have not yet been delivered to the Registrar ofCompanies. 2 SEGMENTAL ANALYSIS Turnover, operating profit and net assets by class of business are set outbelow: 2005 2004 £000 £000 ______________________________________________________Turnover Information management solutions 9,070 7,142 Information management recruitment 5,085 2,413 ________ _______ 14,155 9,555 ________ _______Operating profit Information management solutions 1,005 111 Information management recruitment 315 275 ________ _______ 1,320 386 Goodwill amortisation (563) (379) ________ _______ 757 7 ________ _______Net assets Information management solutions 4,717 2,416 Information management recruitment 492 654 ________ _______ 5,209 3,070 Goodwill 4,602 5,265 ________ _______ 9,811 8,335 ________ _______ 3 TAX ON profit ON ORDINARY ACTIVITIES The tax credit is made up as follows: 2005 2004 £000 £000 ________________________________________________________________________________Current tax UK corporation tax 2 (27) Research and development tax credit - (244) _______ _______Total current tax 2 (271) Deferred tax - origination and reversal of timing differences (702) (21) _______ _______Tax on profit on ordinary activities (700) (292) _______ _______ Unrelieved trading losses of £1,974,000 (2004: £3,337,000) which, whencalculated at the standard rate of corporation tax in the United Kingdom of 30%,amounts to £592,000 (2004: £1,001,000). These remain available to offset againstfuture taxable trading profits. During the year ended 31 October 2004 £1,514,000of tax losses relating to prior periods (years ended 31 October 2001 and 31October 2002) were surrendered in exchange for the research and development taxcredit. The tax credits may be subject to claw back by the HMRC but if thisoccurred 2/3 of the tax losses surrendered in respect of that year would bereinstated. During the year the Group recognised deferred tax asset of £702,000 (2004:£21,000). This was due to the improvement in the trading performance for thepast year and the strong sales pipeline for the forthcoming year. Factors affecting the tax charge/(credit) in the period: 2005 2004 £000 £000_________________________________________________________________________Profit on ordinary activities before taxation 876 89 ______ ______Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% 263 27 Effects of:Prior year adjustment 2 -Expenses not deductible for tax purposes 154 22Depreciation in excess of capital allowances 45 72Other timing differences (21) 19Difference in tax rates - (4)Research and development - (244)Decrease in tax losses (441) (163) ______ ______ 2 (271) ______ ______ 4 EARNINGS PER SHARE The earnings per ordinary share is calculated by reference to the profitattributable to ordinary shareholders divided by the weighted average number ofshares in issue during each period, as follows: 2005 2004 £000 £000_____________________________________________________________________________Profit for the year 1,576 381Weighted average number of shares in issue 185,229,865 166,384,328Dilutive effect of share options 357,474 - ___________ ___________Total 185,587,339 166,384,328 ___________ ___________Earnings per share - basic and diluted (pence) 0.85p 0.23p 5 NET CASH inflow/(OUTFLOW) FROM OPERATING ACTIVITIES 2005 2004 £000 £000____________________________________________________________________________Operating profit 757 7Depreciation 242 256Goodwill amortisation 563 379Goodwill adjustment - 34Loss on sale of fixed assets - 1Increase in debtors (118) (739)Increase/(decrease) in creditors 682 (739) ________ _______Net cash inflow/(outflow) from operating activities 2,126 (801) ________ _______ 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £000 £000_____________________________________________________________________________Increase in cash in the year, being movement in net funds in the year 1,925 150Net funds at 1 November 2004 2,797 2,647 _______ ________Net funds at 31 October 2005 4,722 2,797 _______ ________ 7 FURTHER COPIES Copies of this announcement and the full annual report and accounts areavailable, free of charge, for a period of one month from the Company'sNominated Adviser and Broker Noble & Company Limited, 120 Old Broad Street,London, EC2N 1AR, Tel: 020 7763 2200 or from IDOX plc, 2nd floor, Times Square,160 Queen Victoria Street, London, EC4V 4 BF, Tel: 0870 333 7101. Copies of thefull financial statements will be posted to shareholders on 12 December 2005. This information is provided by RNS The company news service from the London Stock Exchange

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