1st Nov 2006 15:34
IDOX PLC01 November 2006 IDOX plc 1st November 2006 IDOX plc (the ''Company'' or ''IDOX'') Trading update IDOX plc, the information and knowledge management group, announces goodprogress in restructuring and refocusing the business, with substantial costsavings. In light of continued difficult trading conditions, the company nowexpects the year ended 31 October 2006 revenues to be down on the year ended 31October 2005 and to make a loss before reorganisation cost, with a small loss ona normalised basis before goodwill. Achievement of significant full year costsavings should underpin a much stronger profit performance in 2007. Trading • Software orders were low in the second half. Further delays in the closure of deals and clients' slow pace of implementation has resulted in revenues in the second half below the previous year. Gross margin percentage has been maintained. • Information solutions division has been reorganised and had a strong finish to the fourth quarter, closing large central government contracts totalling over £216,000, all of which will be recognised in the year ended 31 October 2006. Full-year revenue is expected to be level with the year ended 31 October 2005. Gross margin strongly improved in the second half but the full-year margin is still expected to be marginally down on the year ended 31 October 2005. • While contract recruitment is showing signs of recovery and permanent and direct recruitment revenues are well ahead of the year ended 31 October 2005, full-year turnover in the recruitment business is expected to be 12% down on the year ended 31 October 2005, due primarily to the change of mix of recruitment revenues from contract to permanent. However, this change in mix has substantially increased the gross margin against the year ended 31 October 2005, to 40% (year ended 31 October 2005 36%). • Overall, the directors believe that full-year revenues will be 9% below the year ended 31 October 2005, due in equal part to the drop in contract recruitment revenues and software sales. • Cash levels should be slightly below the first half due to delayed billing and one-off reorganisation costs which are detailed below. Reorganisation • A company-wide cost reduction programme has been implemented to create a much leaner management structure consisting of three profit centres. This will give much greater transparency and allows for the elimination of certain senior management positions. All development activities have been concentrated in Glasgow following the closure of the Manchester office in October. • We have identified potential annual cost savings of £1.0m and have already implemented £0.7m of these. These savings include a permanent reduction in headcount of 16. These reductions will, assuming our expected revenue mix, lead to a significant uplift in the underlying profitability and ensure that we will be well positioned to take advantage of anticipated revenue growth in the next financial year (year ended 31 October 2007). • One-off costs of this reorganisation as well as the costs associated with the agreed settlement with the outgoing chief executive are expected to amount to £300,000 and will all be recognised in the year ended 31 October 06. A more detailed disclosure of the terms of these costs will be set out in the annual report and accounts. Strategy The group is now re-focused on the following significant opportunities: • In software, in established channels selling direct and with partners to local authorities and the wider governmental markets exploiting our existing customer links with over 216 local authorities; and • In information solutions and recruitment, in the public and private sectors where we are able to leverage our core competences in information management skills and their application delivering value from investment in technologies, under the respected TFPL brand. We continue to look for consolidating acquisitions, with a focus on our softwarebusiness where we can leverage our significant local authority delivery channel,to strengthen our position and deliver synergies. Martin Brooks, Chairman and Interim CEO of IDOX plc, said: "The review we havecompleted has improved our efficiency and accountability. The focus ondivisional performance will result in a flatter and more effective managementstructure and an increased emphasis on quality and customer service. The costsavings implemented by the year ended 31 October 2006 will feed through todeliver profits in 2007. We are actively pursuing consolidating acquisitionopportunities currently in the government software and solutions market." For further information, please contact: IDOX plc Martin Brooks, Chairman and Interim CEO 0870 333 7101 Richard Kellett - Clarke, CFO 0870 333 7101 About IDOX IDOX plc is an information management company, specialising in the developmentand delivery of software products, services and people predominantly to thepublic sector where nearly half the UK local authorities are customers,representing a valuable channel to market for a widening range of products andservices. Many central government and wider public sector agencies are alsocustomers, as well as some private sector organisations. The software division is one of the leading players in the local governmentmarket for managing paper and electronic records. IDOX software has severalmodules designed to capture, manage, store, preserve and deliver information foruse within an organisation, and for access externally - by the public or otherpartners. The group has a leading position in putting the local governmentplanning process online and has developed the first true end-to-end e-planningsolution for local authorities and their citizens - UKPlanning. The information solutions division specialises in devising creative andinnovative solutions to problems associated with records, information, knowledgeand content management. Many government departments have benefited from itsadvisory skills. Training is also offered and it also maintains a comprehensivedatabase of bibliographic abstracts, on all aspects of best practice andgovernance in the public sector. The recruitment division is a specialist business for information professionalsand places candidates of all levels into permanent, contract, and interimmanagement positions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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