Final Results
IDOX PLC
10 December 2007
IDOX plc
10 December 2007
IDOX plc
Final Results
IDOX plc ('IDOX' or the 'Company' or the 'Group'), the supplier of software
solutions and services to the UK public sector, today announces its final
results for the year ended 31 October 2007.
Highlights:
• Turnover up 58% to £20.6m (2006: £13.0m)
• Cash balances up 85% to £8.9m (2006: £4.8m)
• Profit before tax of £1.1m (2006: loss £0.5m)
• Acquisition of CAPS Solutions for £21.1m
• Annualised recurring cost savings in excess of £2.5m
• Significant new contract wins and strong sales outlook
- ENDS -
For further information please contact:
Martin Brooks, Chairman 0870 333 7101
Richard Kellett-Clarke, CEO 0870 333 7101
Notes to editors
IDOX plc is a supplier of software solutions and services principally to the UK
public sector and the leading applications provider to local government for core
functions relating to land, people and property through its UNI-form and IDOX
product range. Some 70% of UK local authorities are customers.
The Company gives public-sector organisations the tools to manage information
and knowledge, documents and content, business processes and workflow as well as
connecting directly with the citizen via the web.
It also supplies decision support content and additional specialist services via
the IDOX Information Service.
Under the TFPL brand the company is transforming approaches to knowledge and
content management via consultancy and training as well as providing these
specialist skills to customers through its recruitment division.
IDOX plc
Chairman's Statement
For the year ended 31 October 2007
I am very pleased to report that the Group has been revitalised in the last year
in refocusing the business on our core software market which has generated a
strong improvement in our underlying trading performance and strengthening of
our balance sheet.
This trading improvement has been reinforced by the pivotal acquisition of CAPS
Solutions Ltd (CAPS) in June 2007 which has already been integrated ahead of
schedule, and with greater than anticipated recurring cost savings. The recent
combined sales pipeline has grown healthily and the immediate new business
outlook is encouraging.
Looking to the future: we continue to believe that there are significant
opportunities to grow our business both organically and through further
acquisitions in our chosen markets of government and local authorities. We like
the combination of long-term customer relationships which yield high recurring
revenues with the related opportunities to achieve additional sales.
The Group now has over 300 local authority customers and we are well positioned
to build on this. We have recently secured large complex contracts as the key
sub-contractor under the lead supplier to the Scottish Government and directly
to Cambridge City Council and Bromsgrove Council.
The local authority software and services supplier market is already in the
process of consolidating, and we are actively looking for targets that would
bring us additional scale, capabilities and synergies. We are also closely
monitoring certain opportunities internationally.
We are well positioned to take advantage of future opportunities presenting
themselves within the local authority software and services market, despite the
wider economic uncertainties of the moment. We are determined to make this a
sustainable improvement and further work on emphasising customer service is
currently being undertaken with additional resources now dedicated to underpin
this.
Richard Kellett-Clarke has now been appointed to the role of Chief Executive
Officer after working as Group Finance Director and also Chief Operating Officer
during the essential recovery and reorganisation phase of IDOX last year. We
will be seeking candidates for the position of Group Finance Director. I would
also like to thank Steve Ainsworth who stood down as Chief Executive Officer on
completion of the rapid integration of CAPS.
It is our vision to become a significantly sized group recognised as a leading
high quality supplier of government related software and services in the UK and
thereafter internationally. It goes without saying, particularly after such a
successful and transforming year, that none of this would have been achieved
without our loyal customers who are always happy to engage with us, responsive
suppliers, wise advisors and a dedicated team of colleagues at IDOX.
We are looking forward to further opportunities in 2008.
Martin Brooks
Chairman
10 December 2007
IDOX plc
Chief Executive Officer's Report
For the year ended 31 October 2007
Financial Review
Consolidated revenues grew 58% year-on-year with the inclusion of the first five
months trading of CAPS. As a result of this acquisition the mix of revenues
moved decisively towards the provision of software and services to the local
authority market which accounted for 64% of total revenue.
Across the Group, the combined gross margin improved to 74% compared with 66%
last year. Earnings before Interest Tax Depreciation and Amortisation (EBITDA)
grew to £2.9m compared to £0.2m in the previous year. The consolidated EBITDA
margin was 14% this year against 1% last year.
A continued strong focus on the control of cash and working capital resulted in
the Group delivering a net cash position of £0.9m compared to a forecast net
debt position at the time of the CAPS acquisition of £3.9m.
The combined business ended the year with a headcount of 256.
Markets
The focus of the Group is now firmly directed towards the delivery of solutions
and services to enable local authorities to improve productivity and provide a
better citizen facing experience. This is being achieved by delivering improved
web based access and interactivity thereby delivering information and services
to the public.
The government and local authorities remain committed to investing in solutions
and the Group sees continued steady demand for its products and services in the
year ahead.
Operational Review
Software
The software division has undergone significant change this year in large part
as a result of the CAPS acquisition and the refocus by IDOX onto its product and
service offerings. Excluding the impact of the CAPS merger, the software
business had returned to growth and improved profitability with revenues growing
15% over the same period last year. This growth in revenue has been sustained at
the same level in the second half, in spite of the inevitable disruption caused
by the integration of CAPS. It achieved its forecast revenue numbers for the
five months to October 2007.
The combined software business returned a gross margin of 85% in line with last
year and management's expectations.
The software business ended the year on a high note closing its largest order
month in the history of the business and started the new year working on a
number of signature contracts such as
• Cambridge City Council - a Corporate and Revenues & Benefits solution,
£0.5m;
• Bromsgrove City Council - a Corporate solution, £1.1m; and
• The Scottish Government as a sub contractor to Phase 1 of the upgrade
to Scotland's planning system, £0.6m.
The Group's Revenues and Benefits product, launched in 2005 and with two live
customers in 2006, achieved its first significant milestone with ten client
contracts. The product has demonstrated to early adopters the benefits of its
browser based design, its speedy deployment, easily adaptable workflow
capability and ability to deliver productivity and service delivery benefits.
Following the CAPS acquisition, the business has been able to fit together the
complementary strands of both IDOX and CAPS technology and has developed an
integrated roadmap for future development. This will deliver benefits to our
customers by providing them with a more integrated, open and adaptable system
capable of further enhancement and delivering further gains on the investment
they have already made.
2007 saw the continued extension of our managed service offering with the
introduction of a managed service capability for the CAPS Uniform platform. The
combined business in 2008 will be able to deliver a fully resilient, integrated
managed services solution for those local authorities wanting to offer shared
services and public private partnerships that deliver operational efficiencies.
The combined entity successfully completed its integration ahead of schedule and
is on track over a full financial year to deliver cost savings in excess of
£2.5m. The focus to date has been on back office costs with the intention to
improve the sales management and invest in customer support and improvements in
delivery and consulting services.
Information Solutions
Divisional revenues were flat during the year despite improvements in the
consulting business. This was largely due to the cancellation of the 2007 EBIC
conference. Excluding this, the remaining revenues grew 5% on last year mainly
in the consulting and training area.
The EBIC conference was cancelled this year whilst the format and focus was
re-engineered. It will be relaunched in 2008 with a new format and a programme
that ensures it continues to be the conference that demonstrates thought
leadership in the changing world of knowledge and information management in
corporates and government.
The overall attributable margin increased compared to the previous year due to
an improved mix in the quality of consultancy contracts.
The consultancy business has started to do more work in the local government
arena with the growing interest in Electronic Records Management Systems. We are
beginning to develop relationships with larger integrators to deliver specialist
design services, training and service packages to meet current demand.
Recruitment
The recruitment division had a poor year with revenues declining by 9% over the
previous year although margins were maintained. This was particularly
disappointing given the relative buoyancy of the recruitment market in 2007, but
was partly due to the business being under announcement of sale. Also our
investment in IT recruitment and related advertising did not deliver the
expected growth in sales.
Second half divisional revenues have shown a period of recovery and ended the
year 3% up when compared to the second half last year. This compares to the
first half of the year when recruitment revenues were 29% of the first half of
the previous year.
Permanent recruitment revenues year-on-year were down by 12% due to the timing
of the conclusion of year end assignments and a softening in the market. This
may indicate the start of a trend back to greater emphasis on non permanent
contract revenues in the business.
Outlook
Whilst the general economic outlook may be uncertain, IDOX's core software
division continues to invest and develop its technology with government
continuing to encourage this. The Group ended the financial year with a strong
pipeline of closed business and is continuing to develop integrated solutions
and consultancy services which will deliver productivity and efficiency saving
to local authorities. This should ensure continued demand and opportunity for
growth for the foreseeable future.
Dividend
We propose to increase the dividend to 0.1p (2006 0.05p) per share. This will be
proposed at the Annual General Meeting scheduled to take place on the 28
February 2008 and, subject to shareholders' approval, paid on the 6 April 2008.
Conclusion
The acquisition of CAPS in the summer significantly changed the face of IDOX and
coincided with a strong improvement in the performance of IDOX's core public
sector software business. The executive team would like to thank the staff for
their hard work overall and dedication to the swift integration of CAPS. With
our renewed focus on the continued delivery of quality services we look forward
to assisting our customers in further improving the way they work and deliver
essential services to the public.
Richard Kellett-Clarke
Chief Executive Officer
10 December 2007
IDOX plc
Consolidated Profit and Loss Account
For the year ended 31 October 2007
Note 2007 2007 2006 2006
£000 £000 £000 £000
Turnover
- Existing operations 13,360 13,031
- Acquisitions 7,265 -
2 20,625 13,031
External charges
- Existing operations (4,600) (4,473)
- Acquisitions (835) -
(5,435) (4,473)
Gross profit
- Existing operations 8,760 8,558
- Acquisitions 6,430 -
15,190 8,558
Staff costs
- Existing operations (5,819) (5,931)
- Acquisitions (2,820) -
(8,639) (5,931)
Exceptional staff costs 3 - (299)
Other operating charges
- Existing operations (2,433) (2,992)
- Acquisitions (3,017) -
(5,450) (2,992)
Operating profit/(loss)
- Existing operations 508 (664)
- Acquisitions 593 -
1,101 (664)
Net interest 18 149
Profit/(loss) on ordinary activities 1,119 (515)
before taxation
Tax on profit/(loss) on ordinary 4 (218) (472)
activities
Profit/(loss) for the period transferred 901 (987)
to/(from) reserves
Basic and diluted profit/(loss) per 5 0.34p (0.51p)
share (pence)
All operations are attributable to continuing operations. There are no
recognised gains or losses other than those set out above.
IDOX plc
Consolidated Balance Sheet
At 31 October 2007
2007 2006
£000 £000
Fixed assets
Intangible assets 23,248 4,024
Tangible assets 513 433
23,761 4,457
Current assets
Debtors 7,614 3,019
Cash at bank and in hand 8,927 4,830
16,541 7,849
Creditors: amounts falling due within one year (13,787) (3,899)
Net current assets 2,754 3,950
Total assets less current liabilities 26,515 8,407
Creditors: amounts falling due after more than one year (6,611) -
Net assets 19,904 8,407
Capital and reserves
Called up share capital 3,420 1,953
Capital redemption reserve 1,112 1,112
Share premium account 9,706 820
Other reserves 1,294 1,294
Share option reserve 359 -
ESOP trust (104) (96)
Profit and loss account 4,117 3,324
Shareholders' funds 19,904 8,407
IDOX plc
Consolidated Cash Flow Statement
For the year ended 31 October 2007
2007 2006
Note £000 £000
Net cash (outflow)/inflow from operating activities 6 (108) 554
Returns on investments and servicing of finance
Interest received 336 149
Interest paid (318) -
Debt issue costs (425) -
Net cash (outflow)/inflow from returns on investments and (407) 149
servicing of finance
Capital expenditure and financial investment
Purchase of tangible fixed assets (320) (378)
Net cash outflow from capital expenditure and financial (320) (378)
investment
Acquisitions
Cash consideration paid 8 (21,969) -
Cash acquired with business 8 8,874 -
Deferred consideration paid (210) (200)
Net cash outflow from acquisitions (13,305) (200)
Equity dividends paid (108) -
Net cash outflow before financing (14,248) (125)
Financing
New bank loans 8,000 -
Issue of shares 11,000 -
Share issue costs paid (647) -
ESOP shares acquired (8) (17)
Net cash inflow/(outflow) from financing 18,345 (17)
Increase in cash 7 4,097 108
IDOX plc
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 October 2007
2007 2006
£000 £000
Profit/(loss) for the financial year 901 (987)
Dividends paid (108) -
Additions to ESOP trust (8) (17)
Shares issued 11,000 900
Share issue costs (647) -
Share option reserve 359 -
Net increase/(decrease) in shareholders' funds 11,497 (104)
Shareholders' funds at 1 November 2006 8,407 8,511
Shareholders' funds at 31 October 2007 19,904 8,407
IDOX plc
Notes to the announcement
For the year ended 31 October 2007
1 BASIS OF PREPARATION
The preliminary announcement has been prepared in accordance with applicable
United Kingdom accounting standards and under the historical cost convention.
The principal accounting policies have remained unchanged from those set out in
the Group's 2006 annual report and accounts with the exception of the adoption
of FRS 20 'Share Based Payments'. This has resulted in a charge to the current
period results of £359,000. There was no impact on the results for prior
periods as a result of adopting FRS 20.
The financial information set out in this announcement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
consolidated balance sheet at 31 October 2007 and the consolidated profit and
loss account, consolidated cash flow statement and associated notes for the year
ended 31 October 2007 have been extracted from the statutory accounts upon which
the auditors opinion is unqualified and does not include any statement under
section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the Registrar of
Companies.
2 SEGMENTAL ANALYSIS
Turnover, operating profit and net assets by class of business are set out
below:
2007 2006
£000 £000
Turnover
Software 13,222 5,204
Information Solutions 3,269 3,271
Recruitment 4,134 4,556
20,625 13,031
Operating profit/(loss)
Software 2,359 286
Information Solutions 190 (436)
Recruitment (9) 64
2,540 (86)
Goodwill amortisation (1,439) (578)
1,101 (664)
Net assets
Software 18,358 2,478
Information Solutions 933 2,952
Recruitment 613 2,977
19,904 8,407
3 EXCEPTIONAL STAFF COSTS
Exceptional staff costs of £Nil (2006: £299,000) were incurred in the year and
relate to the implementation of the Group's announced policy of restructuring
and refocusing the business.
4 TAX ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES
The tax charge is made up as follows:
2007 2006
£000 £000
Corporation tax
Charge in respect of current year 523 43
Adjustments in respect of prior period 58 -
581 43
Deferred tax
Origination and reversal of timing differences - current year 103 429
Adjustments in respect of prior year (466) -
(363) 429
Tax on profit on ordinary activities 218 472
Unrelieved trading losses of £796,250 (2006: £616,000) which, when calculated at
the standard rate of corporation tax in the United Kingdom of 28% (2006: 30%),
amounts to £222,950 (2006: £185,000). These remain available to offset against
future taxable trading profits. During the year ended 31 October 2007 £624,000
of tax losses surrendered in exchange for the research and development tax
credits in respect of the year ended 31 October 2003 were reinstated.
Factors affecting the tax charge in the period:
2007 2006
£000 £000
Profit/(loss) on ordinary activities before taxation 1,119 (515)
Profit/(loss) on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 30% (2006: 30%) 336 (155)
Effects of:
Prior year adjustment 59 43
Expenses not deductible for tax purposes 301 164
Capital allowances in excess of depreciation 43 (9)
Other timing differences 190 9
Differences in tax rate (7) -
Marginal relief (5) -
Group relief of current year losses - (42)
(Decrease)/Increase in tax losses (336) 33
581 43
5 EARNINGS/(LOSS) PER SHARE
The earnings/(loss) per ordinary share is calculated by reference to the
earnings/(loss) attributable to ordinary shareholders divided by the weighted
average number of shares in issue during each period, as follows:
2007 2006
£000 £000
Profit/(loss) for the year 901 (987)
Basic earnings per share
Weighted average number of shares in issue 267,538,092 192,517,399
Basic earnings/(loss) per share 0.34p (0.51p)
Diluted earnings per share
Weighted average number of shares in issue used in
basic earnings per share calculation
267,538,092 192,517,399
Dilutive share options 564,869 -
Weighted average number of shares in issue used in 268,102,961 192,517,399
dilutive earnings per share calculation
Diluted earnings/(loss) per share 0.34p (0.51p)
Share options that would potentially dilute basic earnings per share but which
were not included in either the current or prior year calculation because they
were anti-dilutive.
6 NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
2007 2006
£000 £000
Operating profit/(loss) 1,101 (664)
Depreciation 342 270
Goodwill amortisation 1,439 578
Debt issue costs amortisation 36 -
(Decrease)/increase in debtors (160) 642
(Decrease) in creditors (3,225) (272)
FRS 20 non-cash flow charge 359 -
Net cash (outflow)/inflow from operating activities (108) 554
7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2007 2006
£000 £000
Increase in cash in the year 4,097 108
Cash inflow from increase in debt (8,000) -
Change in net debt resulting from cash flows (3,903) -
Net funds at 1 November 2006 4,830 4,722
Net funds at 31 October 2007 927 4,830
8 ACQUISITIONS
On 7 June 2007 the group acquired the entire share capital of CAPS Solutions
Limited for a consideration of £21.14m, satisfied in cash. Goodwill arising on
the acquisition of CAPS Solutions Limited has been capitalised. The purchase of
CAPS Solutions Limited has been accounted for by the acquisition method of
accounting.
The assets and liabilities of CAPS Solutions Limited acquired were as follows:
Book value Fair value and Fair value
other
adjustments
(provisional)
£000 £000 £000
Fixed assets
Tangible 235 (133) 102
Current assets
Debtors 4,072 - 4,072
Bank and cash 8,874 - 8,874
Total assets 13,181 (133) 13,048
Creditors
Trade creditors (878) - (878)
Other creditors (522) - (522)
Accruals (10,242) (100) (10,342)
Preference shares debt (500) 500 -
Total liabilities (12,142) 400 (11,742)
Net assets 1,039 267 1,306
Purchased goodwill capitalised 20,663
21,969
£000
Satisfied by:
Cash to vendor 21,140
Costs of acquisition 829
Total cash paid 21,969
Fair value adjustments were made in relation to accounting policy adjustments to
bring the depreciation policy for computer equipment and fixtures and fittings
in line with the group policy. A further adjustment was made to reflect
additional accruals identified as relating to the pre acquisition period. In
respect of the preference shares debt, the Group acquired all of the share
capital of CAPS Solutions Limited, including the preference shares. As such,
the adjustment removes this inter-company balance as part of the consolidation
process.
The profit after taxation of CAPS Solutions Limited for the period from 1
January 2007, the beginning of the subsidiary's financial year, to the date of
acquisition was £151,000. The profit after taxation for the year ended 31
December 2006 was £943,000.
The provisional status of the fair value adjustments is in relation to debtors
and creditors. Given that the acquisition took place in June 2007, the Group is
still establishing the appropriateness of the fair values of these balances.
Further details on the profit of CAPS Solutions Limited are provided below:
Period from
1 January
to 7 June
2007
£000
Turnover 6,510
Operating profit 209
Profit before taxation 209
Taxation 58
Profit for the period 151
There were no material recognised gains and losses in the period to the date of
acquisition other than the profit for the period.
The subsidiary undertaking acquired during the year made the following
contribution to, and utilisation of, group cash flow.
2007
£000
Net cash (outflow) from operating activities (1,308)
(Decrease) in cash (1,308)
Analysis of net outflow of cash in respect of the purchase of the subsidiary
undertaking(s):
2007
£000
Cash at bank and in hand acquired 8,874
Cash consideration paid (21,969)
(13,095)
9 POST BALANCE SHEET EVENTS
On 16 November 2007, Steve Ainsworth stepped down as Chief Executive Officer of
the Group. Richard Kellett-Clarke Group Finance Director and Chief Operating
Officer took over as Chief Executive Officer with immediate effect and Martin
Brooks continues as Chairman. The Company will be seeking candidates to succeed
Richard Kellett-Clarke as Group Finance Director.
As part of the resignation, Steve Ainsworth received compensation for loss of
office of £120,000.
10 FURTHER COPIES
Copies of this announcement and the full annual report and accounts are
available, free of charge, for a period of one month from the Company's
Nominated Adviser and Broker Noble & Company Limited, 120 Old Broad Street,
London, EC2N 1AR, Tel: 020 7763 2200 or from IDOX plc, 2nd floor, 160 Queen
Victoria Street, London, EC4V 4 BF, Tel: 0870 333 7101. Copies of the full
financial statements will be posted to shareholders in the week commencing 17
December 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 4 minutes ago ADVFN
- 9 minutes ago Flutter Entertainment (CDI)
- 24 minutes ago Legal & General Group
- 1 hour ago Auction Technology Group
- 1 hour ago Wise Class A