20th Jun 2005 07:00
IDOX PLC20 June 2005 IDOX plc ANNOUNCEMENT OF INTERIM RESULTS FOR IMMEDIATE RELEASE 20 June 2005 IDOX plc ("IDOX"), the information and knowledge management company, todayannounced its interim results for the half year ended 30 April 2005. Highlights: • Turnover up 114% to £7.02m (2004: £3.28m)• A £0.4m turnaround in profit before tax to £0.21m (2004: loss £0.19m)• Cash up 54% to £3.72m (2004: £2.41m)• Earnings per share rose to 0.12p (2004: 0.03p)• Continued new client wins and successful expansion of services amongst existing client base• We expect the Group's performance in the second half of the year to be in line with market expectations. Andrew Fraser, Chief Executive of IDOX, said: "IDOX has continued to build upon its achievements and we are pleased with theprogress that the Company has delivered in this half year. Our strategy ofenhancing our offering through the unique combination of software and contentalong with advisory and recruitment services is beginning to pay off. Our trackrecord of delivering value added services to local government and our recentsuccessful expansion into other public sector markets, ideally equips us tobenefit from the exciting developments in this area." ENDS For further information please contact: Andrew Fraser, CEO, IDOX plc T: 020 7954 3800Martin Brooks, Chairman, IDOX plc T: 020 7954 3800Nadja Vetter / Sofia Rehman, Cardew Group T: 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, services andpeople for information management and knowledge sharing for both the public andprivate sectors. The Group's focus is on managing the world of structured andunstructured information for, and on behalf of, its clients. The TFPL Advisory team specialises in devising creative and innovative solutionsto problems associated with records, information, knowledge and contentmanagement. Where a skills gap is identified, the Recruitment teams placecandidates of all levels into permanent, contract, and interim managementpositions. Training is also a core offering and is delivered in a variety offormats using experienced facilitators and leading industry practitioners. 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. The Group maintains a comprehensive database of bibliographic abstracts,supported by the largest collection of information in the UK, on all aspects ofbest practice and governance in the public sector. Expert informationprofessionals identify, summarise and manage a vast resource of information fromall sectors to save member organisations time and money. This outsourced libraryservice is available via annual subscription. The Group has a leading position in putting the Local Government Planningprocess online (its flagship Managed Services solution) and has developed thefirst true end-to-end e-Planning solution for Local Authorities and theircitizens - UKPlanning. Chairman's Statement I am pleased to report good progress for the first six months of the financialyear, which puts us in a strong position for the remainder of this year to meetmarket expectations. Our efforts in the first half of the year have focused on improving the Group'scash generation through ensuring that top line improvements flow to the bottomline. Our success in this area has been encouraging, as shown by the goodprogress achieved in the Group's earnings per share and strong cash generation.Our achievements in this domain will allow IDOX to enhance value to shareholdersin the short term and extend its strategic options thereafter. IDOX has continued to extend its presence in the public sector through offeringadditional products and services that have a solid record of capability anddependability. We have concluded, in revisiting our strategy, that localgovernment continues to be the Group's core market with further considerableopportunities. With nearly 200 clients, this sector provides IDOX with a solidplatform on which to display its increasingly resource-efficient information andknowledge management solutions. As a consequence, IDOX is becoming recognisedfor its complete portfolio of services and the value enhancing benefits that itdelivers across the length and breadth of the sector. We are also excited byopportunities now becoming available in the wider government marketplace,particularly for IDOX's advisory, recruitment and training services. In addition to underlining our presence in the public sector, the Group's skillsand capabilities are also increasingly applicable to some of the key privatesector industries such as professional services and finance, as well as the notfor profit sector, where opportunities are emerging. Apart from sharpening its strategic focus, IDOX is also working on strengtheningits senior management, in preparation for the next phase of the Group'sdevelopment. In relation to this we will be updating our remuneration policiesto align the interests of senior managers and all other employees with those ofour shareholders. Furthermore, we will be paying particular attention toimproving our risk management and resilience as a consequence of our becoming alarger and more complex organisation with a considerable pool of valuableintellectual property to protect. We will report further progress on all thesematters by the financial year end. Finally, I would like to express my excitement in assuming the role as the newchairman and look forward to closely working with the Board, our customers andvery talented staff. Martin BrooksChairman17 June 2005 Chief Executive's Report Financial ReviewIDOX revenues increased from £3.28 million to £7.02 million, an increase of114%, for the six months ended 30 April 2005. Profit before tax amounted to£0.21 million (2004: loss of £0.19 million). Earnings per share was 0.12 pence(2004: 0.03 pence). The gross margin for the period was 63%, down from 85% in2004, as anticipated after the TFPL acquisition. Net cash at 30 April 2005 amounted to £3.72 million (2004: £2.41 million). Weare pleased to report that the Group traded profitably for 4 out of the 6 monthsunder review (2004: 3 out of 6 months). IDOX Software and Information Servicesincreased its annualised recurring revenue from £2.4 million at the end of April2004 to £2.7 million at 30 April 2005. Client Wins and Market DynamicsThe Group continued to increase its market share within local government and,through its acquisitions, is developing relationships within central governmentdepartments, other public agencies and some private sector organisations. In the local authority market we have contracted 12 new software clients sinceOctober 2004 and provided information, advisory, training and recruitmentservices to many others. The Group has extended its penetration within existingclients and now has 190 local authority clients out of a possible 468 in the UK. In the six month period the Group has provided knowledge and informationmanagement advisory, training and interim management services to over 60 centralgovernment departments and agencies. As a result of our acquisition strategy, 80% of IDOX's revenue has been derivedfrom the public sector (including local authorities). The Group believes that ithas the potential to continue to expand its offering in the local authoritymarket. This expansion will be through both our existing customer base and intonew clients where there are large numbers of information projects and systemsstill to be procured. Our strong presence in this market will enable us tocontinue to win work. The drive for efficiency and effectiveness, the Freedom of Information Act, theChildren's Bill, Priority Service Outcomes, the e-Government deadlines and othersimilar initiatives will all continue to create opportunities for the Group inlocal authorities and the wider public sector. The recent approval of ourRecords Management Software product by The National Archives will furtherstrengthen our position in local authorities and open new opportunities in othergovernment departments and agencies. We believe that the strength of our knowledge and information managementcapability, combined with our technical expertise, will provide IDOX with asolid platform from which to further extend its innovative solutions in thepublic and, where appropriate, the private sector. Product and Service OfferingsThe Group's respective divisions have made considerable progress during theperiod. We are particularly pleased with The National Archives approval ofIDOX's Records Management Software product. In addition, our recent acquisitionshave allowed us to benefit from the development of a new content management andaudit service. The Group's capability now includes advisory services, specialist informationrecruitment and training, content provision, information and records managementsoftware and managed services. This unique blend has earned the Grouprecognition as a major information and knowledge management specialist withinlocal government departments and public sector agencies. Product and Services DevelopmentIDOX believes that its new Records Management Software will open new marketsegments such as central government. This product will provide IDOX's customerswith the capability of meeting the Public Records Offices' 2002 specificationconcerning compliance with the Freedom of Information Act and other relatedlegislation. To date there are less than 10 companies in the country with thisaccreditation. This state of the art J2EE application, designed using the verylatest software development techniques, provides significant technical andoperational benefits to our clients. Our outsourced library service is now enabling us to create and managespecialist web-based libraries for a range of public sector clients. To date, 17local authorities now outsource to us the processing and presentation of theirplanning applications on the web. 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 in many different platforms, clean it, structure it and migrate it tonew platforms, making it easier to access. Strategic AlliancesThe Group will continue to develop strategic partnerships, where appropriate, inorder to widen its offering to other markets. IDOX has entered into such apartnership with CAPS Solutions Ltd (a subsidiary of ESRI (UK) Ltd). Discussionsare regularly held with other potential partners. PersonnelThe Group's employees totalled 140 at 30 April 2005, compared with 93 at 30April 2004. The Group possesses a team and infrastructure capable of deliveringand managing rapid business growth. A number of small cost efficiencies have been implemented in the last fewmonths. An example of this is the rationalisation of the software developmentteam from three offices down to two. The Manchester office will continue tofocus on electronic forms development, while all other software development willbe carried out in our Glasgow office. This provides a more cost-effective andefficient software development team for the future. We would also like to welcome Martin Brooks, our new chairman to the Board, whojoined during the period. Strategy and OutlookThe acquisition strategy has helped to strengthen our sales proposition withinthe local authority sector and we have a growing presence in the wider publicsector. We will continue to focus and develop our strengths in these strategicmarkets. The diversification of revenue and revenue opportunities from theseacquisitions helps mitigate against the risks associated with our reliance onthe local authority market and a single product line. We will continue to strengthen our partnership arrangements, and seekopportunities that will allow us to gain further market penetration in areaswhere the Group has limited skill and reference ability. As a Group we now have the capability to deliver an integrated range ofsophisticated information and knowledge management products and services to thepublic and private sectors. The organic business has continued to grow as IDOX gains market share throughwinning new business. The Group will endeavour to further expand its marketshare, revenue and profitability through organic growth and appropriateaccretive acquisitions. We believe that IDOX is strongly positioned with a clearstrategy to continue its success and we remain optimistic about future growthplans. Andrew FraserChief Executive17 June 2005 The Interim Report was approved by the Board of Directors on 17 June 2005. IDOX plcConsolidated Profit and Loss AccountFor the six months ended 30 April 2005 Note 6 months to 6 months to 12 months -------- 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- ---------Turnover 7,024 3,284 9,555-------------------- -------- --------- --------- ---------External charges (2,613) (505) (2,636)-------------------- -------- --------- --------- --------- 4,411 2,779 6,919 -------- --------- --------- ---------Staff costs (2,874) (2,068) (4,778)-------------------- -------- --------- --------- ---------Other operatingcharges (1,371) (937) (2,134)-------------------- -------- --------- --------- --------- Operating profit/(loss) 166 (226) 7-------------------- -------- --------- --------- ---------Net interest 48 33 82-------------------- -------- --------- --------- --------- Profit/(loss) on ordinaryactivities beforetaxation 214 (193) 89-------------------- -------- --------- --------- ---------Tax on profit/(loss)on ordinary activities (3) - 244 292-------------------- -------- --------- --------- --------- Profit for the periodtransferred to reserves 214 51 381-------------------- -------- --------- --------- --------- Earnings per share-------------------- -------- --------- --------- ---------Basic and diluted (4) 0.12p 0.03p 0.23p-------------------- -------- --------- --------- --------- IDOX plcConsolidated Balance SheetAt 30 April 2005 At At At 30 April 30 April 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- ---------Fixed assets------------------------------ --------- --------- ---------Intangible fixed assets 4,976 1,590 5,265------------------------------ --------- --------- ---------Tangible assets 246 279 247------------------------------ --------- --------- --------- 5,222 1,869 5,512 --------- --------- ---------Current assets------------------------------ --------- --------- ---------Debtors 3,804 2,172 3,312------------------------------ --------- --------- ---------Cash at bank and in hand 3,724 2,414 2,797------------------------------ --------- --------- --------- 7,528 4,586 6,109 --------- --------- --------- Creditors:amounts falling duewithin one year (4,182) (3,159) (3,266)------------------------------ --------- --------- --------- Net current assets 3,346 1,427 2,843------------------------------ --------- --------- --------- Total assets less currentliabilities 8,568 3,296 8,355------------------------------ --------- --------- --------- Creditors:amounts falling due after more than one year (20) (30) (20)------------------------------ --------- --------- --------- Net assets 8,548 3,266 8,335------------------------------ --------- --------- --------- Capital and reserves------------------------------ --------- --------- ---------Called up share capital 1,872 1,537 1,821------------------------------ --------- --------- ---------Capital redemption reserve 1,112 1,112 1,112------------------------------ --------- --------- ---------Share premium account 8,162 5,159 7,614------------------------------ --------- --------- ---------Shares to be issued 1,400 - 2,000------------------------------ --------- --------- ---------Other reserves 1,294 1,294 1,294------------------------------ --------- --------- ---------ESOP trust (79) (79) (79)------------------------------ --------- --------- ---------Profit and loss account (5,213) (5,757) (5,427)------------------------------ --------- --------- ---------Shareholders' funds 8,548 3,266 8,335------------------------------ --------- --------- --------- IDOX plcConsolidated Cash Flow StatementFor the six months ended 30 April 2005 Note 6 months to 6 months to 12 months ----- 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- --------- Net cash inflow/(outflow) fromoperating activities (5) 1,000 (185) (801)--------------------------- ----- --------- --------- --------- Returns on investments and servicing of finance --------------------------- ----- --------- --------- ---------Interest received 48 35 82--------------------------- ----- --------- --------- --------- Net cash inflow fromreturns on investmentsand servicing of finance 48 35 82--------------------------- ----- --------- --------- --------- Taxation - 244 244--------------------------- ----- --------- --------- --------- Capital expenditure and financialinvestment --------------------------- ----- --------- --------- ---------Purchase of tangible fixedassets (121) (149) (240)--------------------------- ----- --------- --------- ---------Sale of tangible fixedassets - - 12--------------------------- ----- --------- --------- ---------Purchase of investment - (51) (51)--------------------------- ----- --------- --------- --------- Net cash outflow from capital expenditure and financialinvestment (121) (200) (279)--------------------------- ----- --------- --------- --------- Acquisitions--------------------------- ----- --------- --------- ---------Purchase of companies - - (1,668)--------------------------- ----- --------- --------- ---------Net cash balances acquired withcompanies - - 380--------------------------- ----- --------- --------- ---------Deferred considerationpaid for previous acquisition - (127) (10)--------------------------- ----- --------- --------- ---------Net cash outflow fromacquisitions - (127) (1,298)--------------------------- ----- --------- --------- --------- Financing--------------------------- ----- --------- --------- ---------Issue of shares - - 2,202--------------------------- ----- --------- --------- ---------Net cash inflow fromfinancing - - 2,202--------------------------- ----- --------- --------- ---------Increase/(decrease) in cash 927 (233) 150--------------------------- ----- --------- --------- --------- IDOX plcNotes on the Interim ReportFor the six months ended 30 April 2005 1 BASIS OF PREPARATION The interim financial information has been prepared in accordance withapplicable United Kingdom accounting standards and under the historical costconvention. The principal accounting policies of the Group are set out in theGroup's 2004 annual report and financial statements. The policies remain asstated in the annual report for the year ended 31 October 2004. The financialinformation set out in this report does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. The figures for the year ended31 October 2004 have been extracted from the statutory accounts, which have beenfiled with the Registrar of Companies. The auditors' report on those financialstatements was unqualified and did not contain a statement under section 237(2)of the Companies Act 1985. The interim financial statements have been reviewedby the Company's auditors. A copy of the auditors' review report is attached tothe Interim Report. 2 SEGMENTAL ANALYSIS Turnover, operating profit and net assets by class of business are set outbelow: 6 months to 6 months to 12 months 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- --------- Turnover---------------------------- Information ManagementSolutions 4,464 3,284 7,142---------------------------- --------- --------- ---------Information ManagementRecruitment 2,560 - 2,413---------------------------- --------- --------- --------- 7,024 3,284 9,555 --------- --------- --------- Operating profit/(loss)---------------------------- --------- --------- ---------Information ManagementSolutions 318 (137) 111---------------------------- --------- --------- ---------Information ManagementRecruitment 137 - 275---------------------------- --------- --------- --------- 455 (137) 386 --------- --------- ---------Goodwill amortisation (289) (89) (379)---------------------------- --------- --------- --------- 166 (226) 7 --------- --------- --------- Net assets---------------------------- --------- --------- ---------Information ManagementSolutions 3,014 1,676 2,416---------------------------- --------- --------- ---------Information ManagementRecruitment 558 - 654---------------------------- --------- --------- --------- 3,572 1,676 3,070 --------- --------- ---------Goodwill 4,976 1,590 5,265---------- --------- --------- --------- 8,548 3,266 8,335 --------- --------- --------- 3 TAX ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES The tax credit is made up as follows: 6 months to 6 months to 12 months 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- --------- Current tax---------------------------- --------- --------- ---------UK corporation tax - - (27)---------------------------- --------- --------- ---------Research and developmenttax credits - (244) (244)---------------------------- --------- --------- ---------Total current tax - (244) (271)---------------------------- --------- --------- --------- Deferred tax - originationand reversal of timingdifferences - - (21)---------------------------- --------- --------- ---------Tax on profit/(loss)on ordinary activities - (244) (292)---------------------------- --------- --------- --------- During the year ended 31 October 2004, £1,514,000 of tax losses relating toprior periods (years ended 31 October 2001 and 31 October 2002) were surrenderedin exchange for the research and development tax credit. The tax credits inrelation to the year ended 31 October 2002 may be subject to claw back by theInland Revenue but if this occurred 2/3 of the tax losses surrendered in respectof that year would be reinstated. 4 EARNINGS PER SHARE The earnings per share is calculated by reference to the earnings attributableto ordinary shareholders divided by the weighted average number of shares inissue during each period, as follows: 6 months to 6 months to 12 months to 30 April 2005 30 April 2004 31 October 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- --------- Profit for the period 214 51 381---------------------------- --------- --------- ---------Weighted average numberof shares in issue 182,949,266 153,324,507 166,384,328---------------------------- --------- --------- ---------Basic and dilutedearnings per share 0.12p 0.03p 0.23p---------------------------- --------- --------- --------- The share options are anti dilutive under FRS 14. 5 NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 6 months to 6 months to 12 months 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- ---------Operating profit/(loss) 166 (226) 7---------------------------- --------- --------- ---------Depreciation 122 124 256---------------------------- --------- --------- ---------Goodwill amortisation 289 89 379---------------------------- --------- --------- ---------Goodwill adjustment - - 34---------------------------- --------- --------- ---------Loss on sale of fixed assets - 1 1---------------------------- --------- --------- ---------Increase in debtors (492) (643) (739)---------------------------- --------- --------- ---------Increase/(decrease) increditors 915 470 (739)---------------------------- --------- --------- ---------Net cash inflow/(outflow) fromoperating activities 1,000 (185) (801)---------------------------- --------- --------- --------- 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months to 6 months to 12 months 30 April 30 April to 31 October 2005 2004 2004 (unaudited) (unaudited) (audited) £000 £000 £000 --------- --------- ---------Increase/(decrease) in cashin the period, being movementin net funds in the period 927 (233) 150---------------------------- --------- --------- ---------Net funds at 1 November 2004 2,797 2,647 2,647---------------------------- --------- --------- ---------Net funds at 30 April 2005 3,724 2,414 2,797---------------------------- --------- --------- --------- 7 FURTHER COPIES Copies of this announcement and the interim report and accounts are available,free of charge, for a period of one month from the Company's Nominated Adviserand Broker Noble & Company Limited, 120 Old Broad Street, London, EC2N 1AR, Tel:020 7763 2200 or from IDOX plc, 17-18 Britton Street, London EC1M 5TL, Tel: 0207954 3800. Copies of the interim report and accounts will be posted toshareholders on 20 June 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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