Acquisition & Placing

IDOX PLC
10 May 2007

IDOX plc

10 May 2007



                       IDOX plc ('IDOX' or the 'Company')



                     Acquisition of CAPS Solutions Limited





1.              Introduction



IDOX has conditionally agreed to acquire the entire issued share capital of CAPS
Solutions Limited ('CAPS'), a privately owned, profitable UK-based company
focused on the provision of software solutions, primarily to local authorities.
The consideration for the Acquisition is to be satisfied by a cash payment of
£21 million.



In order to finance in part the Acquisition and provide the Enlarged Group with
sufficient working capital, the Company proposes to raise £11.0 million (£9.6
million after expenses) by way of a Placing of 146,666,667 New Ordinary Shares
at 7.5p per share. Certain Directors, who already have shareholdings in the
Company, and the Proposed Director are participating in the Placing and will
subscribe for a total of 5,066,667 Placing Shares having an aggregate value of
£380,000 at the Placing Price. The Placing has been arranged by Noble & Company
Limited.



Due to the size of CAPS in relation to the Group, the Acquisition constitutes a
reverse takeover under the AIM Rules and is therefore subject to approval of
Shareholders. Such approval is being sought at the EGM which has been convened
for 10.00  a.m. on 4 June 2007.



If the Resolutions are duly passed at the EGM, and the other conditions set out
in the Acquisition Agreement and Placing Agreement are met, the Enlarged Share
Capital will be admitted to trading on AIM. Dealings on AIM in the Enlarged
Share Capital are expected to commence on 5 June 2007 in respect of the VCT
Shares and Existing Ordinary Shares and on 6 June 2007 in respect of the Non-VCT
Shares.





2.              Background to and reasons for the Acquisition



Following completion of a strategic review in 2006, the Board announced in
December 2006 that it intended to pursue a strategy of refocusing IDOX on its
core business of providing software, solutions and services to government and
related bodies. Following a solid start to trading in the IDOX software business
for the current financial year, the Board believes that the acquisition of CAPS
will re-affirm and reinforce this strategy and provide IDOX with:



•       significant earnings enhancement and synergistic revenue and certain
cost reduction opportunities;



•       an opportunity to increase market share of the Enlarged Group;



•       a strengthening of IDOX's senior management team;



•       a strategic partnership with one of the world's leading Geographical
Information Systems (GIS) software providers; and



•       a platform for further acquisition growth.





3.              The market



3.1           Drivers and trends in ICT and other public sector spending



Policy drivers



The provision of public sector services has, in recent years, been the subject
of a number of government initiatives and studies, including:



•       The Modernising Government Programme, first published in 2000;



•       The Gershon Review, 'Releasing Resources for the Frontline: Independent
Review of Public Sector Efficiency', published in 2004;



•       The e-government initiative, which was introduced after the Labour
government was elected in 1997;



•       The Transformational Government Strategy, issued in November 2005;



•       Strong and prosperous communities - The Local Government White Paper,
published in October 2006;



•       The Lyons Report, published in March 2007; and



•       Government operational targets and the Pendleton surveys of e-planning
services available on local planning websites.



The Directors expect that further initiatives aimed at improving the public
sector service delivery will be adopted in the foreseeable future driven by a
desire to increase the quality and accessibility of public services. ICT is
expected to be a central element in the achievement of this objective.



In the market report of Kable Limited ('Kable') of March 2007 entitled 'UK
public sector overview to 2012' ('Kable Report'), Kable anticipates that growth
in public spending will slow to levels comparable with growth in the overall
economy and that, in this context, growth in ICT spending will be constrained.
The Directors believe that this will require the continued development of
systems, services and solutions, provided increasingly by the private sector.
The pressure will be to go on providing better public services, more
efficiently, for the same budget, within the constraints of the Comprehensive
Spending Review (CSR), which is currently underway.



Local government ICT



Local government accounts for the largest proportion of public sector ICT
expenditures, representing £3.5bn, or 25 per cent. of total UK public sector ICT
expenditure in 2006/07. The local government sector represents the key
marketplace for each of IDOX and CAPS. Following the expiry of the e-government
deadline in 2005, there was some slow-down in ICT spending growth in local
government, but this has recovered, and the sector is now growing again,
although such growth may slow in the longer term. The Kable Report predicts that
local government ICT spend will expand at a compound annual growth rate of 6.6
per cent. per annum between 2005/06 and 2011/12, compared with the average for
the public sector of 4.9 per cent. per annum. Local government ICT spend as a
proportion of public sector ICT spend is expected to grow to 23.8 per cent. in
FY2011/12, up from 21.6 per cent. in FY2005/06.



Delivery of visible benefits



The Directors believe that continued government pressure to improve front-line
services, as envisaged in the Lyons Report, and other factors such as
demographic change, will put increasing pressure on public services in the
future to deliver more, within the same overall budget. In addition, the
Directors expect that shortages of skilled staff in an ageing local government
workforce will necessitate improved and efficient processes using ICT in
e-solutions.



The Directors believe that productivity will therefore remain the key factor
shaping public sector ICT investment, with a change in emphasis from the
back-office to improved responsiveness and better communication with the public.
For suppliers, the future value proposition to the public sector needs to be
grounded in delivering business benefits that deliver a demonstrable return on
investment and are visible to a wider constituency.



The Transformational Government Strategy anticipated some of the key issues that
need to be addressed in the CSR.  It set out a vision for 21st century
government, requiring three transformations:



•       services enabled by IT must be designed around the citizen or business,
not the provider, and provided through modern, co-ordinated delivery channels;



•       Government must move to a shared services culture - in the front office,
in the back office, in information and in infrastructure - and release
efficiencies by standardisation, simplification and sharing; and



•       there must be a broadening and deepening of government's professionalism
in terms of the planning, delivery, management, skills and governance of IT
enabled change.



The first of these transformation elements emphasises the central role that ICT
will need to play in order to deliver the above transformations.



Local authorities have been encouraged, by the Government's e-government
initiative, to utilise the increased take-up of web-based services and broadband
by the public to communicate more efficiently with their stakeholders. The
Directors believe that local authorities will continue to invest to use this
medium further to meet government standards.



3.2           Implications for IDOX and CAPS



IDOX and CAPS are both well placed to benefit from the legislative drivers
outlined above and the Directors believe that the products of the two businesses
are set to enable the change so demanded.



IDOX capitalised on the early expenditure in e-government by being an early
adopter of browser and database technology to deliver cost effective image
storage solutions to local government. Added to this, its further development of
process workflow, records management, electronic forms, and consultancy services
offerings, means that it is able to offer local government an easily
configurable solution or service to manage the vast quantity of information
generated by it.



CAPS' nine 'UNI-form' software modules and related consultancy and services
provide legislatively up-to-date front- to back-office solutions which reflect
relevant legislation, which currently integrate with IDOX products to deliver
more efficient processes that enable local authorities to deliver the citizen-
and business-centric services outlined in the Transformational Government
Strategy. CAPS' solutions make information and services available to citizens
and businesses via the local authority's website. CAPS' systems are able to
communicate with other third party applications to interchange data, providing
clients with opportunities to improve the way they make data work for them,
reducing duplication and improving inter-departmental co-operation.





4.              Information on IDOX



4.1           History



IDOX is an information management company, specialising in the development and
delivery of software products, services and people predominantly to the public
sector. It counts half the UK local authorities as customers.



IDOX has been a supplier to the public sector since 1995, when it delivered a
solution for the planning department of Wandsworth Council two years before the
e-government initiative began. This established the platform for continuing
development of IDOX software for local authority purposes.



IDOX was admitted to AIM in December 2000. Between 2002 and 2004, IDOX made
three corporate acquisitions to expand its offering to incorporate information
management services, recruitment and the provision of content, including the
acquisition of TFPL Limited, a specialist recruitment and information services
business, in May 2004.



During 2006 the Board re-organised the business into three clearly defined
divisions:



•       IDOX Software;



•       Information Solutions; and



•       Recruitment.



At the same time, the Board re-affirmed a corporate strategy concentrating on
the core IDOX Software division, with plans to divest non-core businesses,
including Recruitment.



4.2           IDOX's businesses



a)              IDOX Software



IDOX Software is one of the largest providers of solutions for managing paper
and electronic records in local government in the UK. The modules within its
product portfolio enable an organisation to capture, store, manage, preserve and
publish information. At the core of the portfolio is a document and records
repository which has the facility to handle many types of documentation,
including multimedia, electronic documents, forms and email, or scanned images
from paper. All of the information stored within IDOX Software is easily
searchable and can be made available on the internet for use by the public, on
an intranet for use by internal staff or on an extranet for use by partner
organisations via its Web Access module.



Product portfolio



Each implementation of the IDOX Software document management system can be
specifically tailored to the customer's requirements. IDOX's six modules,
described below, are available individually or in a variety of combinations.



•       Document Management - An award-winning, flexible and easy-to-use
document management system which can be implemented in a single department or
throughout an entire organisation. Used in day-to-day case management, this
application seeks to reduce the costs associated with managing paper and
electronic files.



•       Workflow - Winner of the IM2000 Award for best workflow product, the
Workflow module provides a solution to the problems of information management.
The concept of Workflow involves the automation of a business process in which
documents, information or tasks are distributed from one user to another or one
department to another.



•       Knowledge Management - This component integrates optical character
recognition (OCR) software with a free text search facility that uses leading
internet technology, allowing simple or complex free text searches on the title
as well as the content of documents stored in the document management system.



•       Web Access - Provides organisations with a powerful and cost effective
method of accessing, managing and publishing documents and information over the
internet - whether via the organisation's own website, another hosted website,
an extranet or an intranet. The Web Access module enriches existing websites by
providing user registration, document display, feedback, online forms and
electronic payment.



•       XML Forms - Enables both internal staff and external customers to
complete electronic forms using a web browser, enabling an organisation to
completely replace paper forms with electronic forms and negating the need for
the re-entry of data.



•       XML Server - The XML server complements the total suite of products by
providing the most advanced set of XML (eXtensible Mark-up Language) integration
functionality available. Together with XML Forms, XML Server allows end-to-end
integration of data from the internet. If a member of the public completes an
electronic form on the website, this data is then pushed straight through into
the back office application with no need to re-enter data at any point in the
process.



Managed Services



IDOX has developed its managed services expertise by providing its flagship
service, UKPlanning, to local authorities over the past six years. UKPlanning
represents an end-to-end e-planning solution for local authorities and their
citizens. It is designed to provide Planning & Building Control departments with
an efficient means of realising e-government targets quickly, whilst reducing
the risk of administering applications, both online and offline. It removes the
need for planning and building control departments to set up their own internet
solution and, more importantly, keep the information up to date. Planning
applications are scanned and indexed using IDOX software and displayed on the
councils' websites, and on the UKPlanning website, for public review and
comment. Applications can also be made online.



b)              Information Solutions



Following its reorganisation in 2006, the Information Solutions division
provides services in two key areas:



•       Consultancy & Training, provided by the TFPL Consultancy & Training ('C&
T') team (part of IDOX's wholly-owned subsidiary, TFPL Limited, acquired in May
2004), is the first. This part of the business is focussing increasingly upon
Electronic Content Management consultancy and solutions and also provides a wide
range of courses on many aspects of information work; and



•       Content, where IDOX's team is one of the leading information providers
on community, economic, environmental and physical regeneration and development
in the UK.



Consultancy & Training



TFPL C&T offers clients expert advice and training to allow them to design,
implement and deliver knowledge and information management solutions. Recent
project wins have included significant content migration, content integration
and taxonomy development assignments. C&T also specialises in consultancy in the
areas of knowledge management, library and information services and records
management. The C&T team helped many public sector clients prepare for the
implementation of the Freedom of Information Act in 2005 through information and
records audits, strategy and process development, procedures and awareness
seminars and training sessions.



The team's training service provides both open and in-house courses in all
aspects of knowledge, information and records management. The team also develops
bespoke awareness and learning programmes for groups of clients.



Content



IDOX is one of the leading information providers on community, economic,
environmental and physical regeneration and development in the UK. This includes
forward planning and development control issues, e-government and Modernisation
Agenda, enterprise development, lifelong learning, social inclusion issues and
health and housing.



To satisfy the need for relevant information, IDOX scans all issues of over 500
journals and periodicals annually, looking for high quality, informative
articles on policy, its interpretation and its implementation, across a wide
range of subjects, topics and issues. It also receives many newsletters, press
releases, email alerts and eBulletins. In 2000, the British Library assessed
IDOX's collection of semi-published materials as better than its own or that
held by the former London Research Centre.



c)               Recruitment



IDOX's recruitment offering is provided through its TFPL business. TFPL operates
a recruitment agency for knowledge, information, records, web & content
management and for information provider positions. Services provided include
executive search and the placement of permanent, interim and contract personnel
in all positions requiring knowledge, information, library, records or web
content management skills and experience.



The Directors believe that TFPL's key ability is to fill positions which require
a blend of industry experience, technical knowledge and management capability.
To this end, TFPL maintains an extensive database of interviewed candidates at
all levels from graduate through to chief executive and additionally assists
them with career guidance and training. In the last 12 months it has extended
its services to provide specialist IT recruitment to its clients, adding to its
core services of information knowledge recruitment and information provider
recruitment.



As announced in December 2006, the Board plans to divest non-core businesses,
including recruitment.





5.              Information on CAPS



5.1           History



CAPS believes that it is the UK market leader in case management solutions which
are spatially enabled and which are developed exclusively for local government
departments and agencies, bringing together information about land, people and
property. It was formed in 1999 when its current owner, ESRI (Holdings) Ltd,
purchased Norsk Data's local government business unit known as NDlg.  Since
then, CAPS has enjoyed a five-fold increase in revenues and a significant
increase in market share. Today it employs more than 150 people and has
approximately 235 local authority customers, representing over 50 per cent. of
the total number of local authorities in the UK.



5.2           CAPS' business



CAPS works closely with local authorities to deliver technology products and
services that drive efficiencies, delivering a better service to citizens and
businesses whilst helping local authorities to meet e-government targets. Its
range of solutions brings together a number of UNI-form and partner products to
address key issues at the heart of the e-government drive for efficiency and
best practice in local authority administration and service provision, such as:



•       Handling geographic information;



•       Land charges;



•       Integration with legacy applications;



•       Effective data and communication management;



•       Public access to information;



•       Licensing administration; and



•       Planning administration.



Local authority processes, for which CAPS supplies its solutions, have the
propensity to create a substantial amount of paper documentation and IDOX has,
in some instances, supplied a document management module which sits alongside
CAPS' information integration solutions. This allows the electronic management
of the significant volume of paper that accumulate in processes like planning
applications, and access to it via the web.



UNI-form



UNI-form is a suite of nine integrated core software modules and solutions plus
a Gazetteer Management System and a range of sub-modules designed to enable
local authorities to meet government targets for efficient service delivery by
improving the administration and management of the delivery of services. Each of
the modules relates to a particular local government service and manages
enquiries, applications and implementation of the service. Each module works
effectively as a comprehensive stand alone solution or in conjunction with other
UNI-form modules, or with third party products and applications. Each solution
is designed by government experts to meet the needs of the following local
authority services:



•       Building control - assisting control officers to administer building
regulations;



•       Contaminated land - collection and collation of information and
licensing;



•       Environmental health - support to council officers: scheduling of
activities, monitoring of sources of concern; the building of a full
environmental health profile of an area;



•       Estates management* - recording and storing of property asset data;



•       Licensing - used for the granting, updating, extending or cancelling of
a licence;



•       Planning - allows planning officers to review all relevant property and
ownership data for any planning application, view a map and other spatial data
of the area against local developments and utilities, as well as to manage the
whole process from the application, through environmental and waste checks,
building and planning control, final permission and production of documents;



•       Private sector housing - a central repository of housing information for
analysis, monitoring, modelling of property needs and for the administration of
grant allocations and inspections;



•       Land charges - faster delivery of information through automation of
searches;



•       Trading standards - fulfilment of consumer protection obligations by
trading standards officers;



•       Gazetteer Management System (GMS)* - a central database including
geographical information updated by applicants and case officers. The database
is used for publication or to enable on-line enquiry. With the help of inbuilt
graphical information functionality, GMS provides visual representations of data
in the form of maps, to help users assess and make decisions based on
location-specific information;



•       Local development framework - centralisation, publication and on-line
inspection of records, policies and documents, relating to local service plans;



•       Street naming and numbering - management of naming process from
beginning to end; and



•       Anti-social behaviour - recording, processing and managing information
about acts of antisocial behaviour.



The UNI-form modules utilise software supplied by ESRI (UK) Limited, a
subsidiary of the Vendor and ESRI Inc., a U.S. Corporation which is not part of
the Vendor's Group. Such software provided by ESRI Inc. and ESRI (UK) Limited
will be used by CAPS pursuant to the terms of a Master Licence Agreement and
Business Partner Agreement respectively, details of which are set out in
paragraphs 12.4 and 12.5 of Part V of the admission document.



* These solutions are also supplied by ESRI (UK) Limited, a subsidiary of the
Vendor, as part of its business of designing and developing geographic
information system (GIS) technology.





6.              Competition



The experience of the Directors leads them to believe that IDOX has a number of
competitors in the local authority marketplace. Anite Group plc is a UK fully
listed company, with one of its divisions focusing on software in the public
sector. Northgate Information Solutions plc is also a fully listed UK company
which delivers software applications and outsourcing solutions to a number of
sectors including local government. Civica plc is an AIM listed company which
provides consulting, software and managed services to the public sector and
regulated services.



CAPS' key competitors can be broken down into two distinct categories:



(1)            those whose portfolios cover a similar broad range of software
applications - including Northgate Information Solutions and Civica; and



(2)            those who specialise in providing business process software
applications to one or only a few areas of relevance to local authorities (but
tend to be particularly strong niche players in those areas). These include
Ocella, Swift LG, MIS, Innogistic and Plantech.



CAPS is a leading provider of solutions relating to land, people and property.
It has a portfolio that can integrate seamlessly across local authority
functions, whilst also providing strong stand alone solutions within individual
departments. IDOX is a supplier of document management systems that focuses
solely on local government. As a result the Directors believe that no other
supplier has an equivalent depth of market knowledge in this area.



Large systems integrator organisations who would typically offer to outsource
the whole of an authority's IT operations work with specialist providers like
IDOX and CAPS to provide the business process applications needed by
authorities. The Enlarged Group will provide a larger single supplier option for
these organisations and the Directors believe it will remain a highly
competitive part of any outsourcing arrangement or consortium.





7.              IDOX audited results for year ended 31 October 2006



The following summarises IDOX's financial performance for its last three
accounting periods, showing the actual results for 2004-2006.


                             Year ended 31 October 2004  Year ended 31 October 2005  Year ended 31 October 2006
Turnover                                          £9.6m                      £14.2m                      £13.0m
Operating profit / (loss)                         £0.0m                       £0.8m                     £(0.7)m
Profit / (loss) after tax                         £0.4m                       £1.6m                     £(1.0)m



All of the revenue of IDOX is derived from within the European Union.





8.              CAPS audited results for year ended 31 December 2006



The following summarises CAPS' financial performance for its last three
accounting periods, showing the actual results for 2004-2006.


                            Year ended 31 December 2004 Year ended 31 December 2005 Year ended 31 December 2006
Turnover                                         £11.3m                      £15.3m                      £16.4m
Operating profit                                  £1.2m                       £1.8m                       £1.4m
Profit after tax                                  £0.8m                       £1.4m                       £0.9m



All of the revenue of CAPS is derived from within the European Union, except for
an immaterial amount which is derived from the Bahamas.





9.              Current trading, prospects and strategy



IDOX



The Directors believe that the Company's strategy to focus on its core business
of providing software, solutions and services to local government has been
validated by a number of new customer wins in IDOX's core market place. Overall,
since October 2006, trading has delivered a strong performance, with improved
revenue growth in the Software division.



Software division



The Software division has a growing prospect pipeline from new and existing
clients interested in the Company's new products.



New contract wins include a new Revenues and Benefits corporate system at
Caerphilly County Borough Council, being the Company's largest Revenues and
Benefits order yet. Further Revenues and Benefits orders were secured with Oadby
& Wigston Borough and Herefordshire Councils. Other recent contracts secured
since October 2006 have included a corporate Electronic Document Record
Management System (EDRMS) for Chichester City Council and a corporate solution
for Fife Fire and Rescue.



In relation to the Company's Planning, Licensing and Building Control public
access system, the Company won two contracts; one with Sevenoaks District
Council for its Online Planning Solution; and the other with West
Northamptonshire Development Corporation, for the provision of its UK Planning
managed service.



These contract wins bring the total number of new software systems contract wins
since October 2006 to seven.



Information Solutions division



The Information Solutions division is increasingly specialising in Enterprise
Content Management (ECM) consultancy and solutions. The division saw growth in
orders from government and media clients. Consultancy contract wins, including
the British Army, Department of Education and Skills and Yell amongst others,
are delivering double digit revenue growth compared to the first half year
ending 30 April 2006.



The Information Solutions division initiated a project in April 2007 to complete
a global electronic content migration project for a large international
professional services organisation.



Recruitment division



The higher margin permanent recruitment business continues to expand in both the
traditional markets and specialist IT appointments. The lower margin contract
recruitment business revenues remain below levels enjoyed in 2005 but the
monthly revenue run rate has recovered from the low point in mid 2006.



CAPS



CAPS' primary focus of delivering business process applications software and
consultancy and training services to the local government market continues to
generate success. Financial performance for the first quarter of 2007 has been
in line with expectations and the forward sales opportunities pipeline remains
strong from both existing and new customers.



The launch of two new software sub-modules, Street Naming & Numbering and
Planning Expert System have been received well by prospective customers and are
generating sales opportunities.





10.           The opportunity



The combination of the two businesses will result in an entity with pro forma
historic sales of over £29 million per annum, which the Directors believe will
provide the Enlarged Group with increased credibility to bid for larger, more
complex contracts.



The complementary products and services will also present the Group with
considerable cross-selling opportunities. Between them, the two businesses
supply their products to 70 per cent. of the number of local and development
authorities in the UK but only 12 per cent. use both IDOX and CAPS products. The
Directors believe, therefore, that there is a significant opportunity to
cross-sell into the combined customer base. In addition, the Board has
identified in excess of £1.5 million of annualised cost savings which it
believes can be implemented after the Acquisition is completed.



The direct customer relationship created through CAPS and the access to CAPS'
GIS mapping technology will allow bundling of CAPS and IDOX products, providing
local authority departments with a full end-to-end solution, providing the
customer with a pre-integrated solution, reducing the likelihood that a customer
will look to a third party to provide a document management solution and
improving the Enlarged Group's prospects of partnering in tenders with larger
integrators in the sector.



The Directors believe that the Acquisition will deliver significant and tangible
benefits for Shareholders and will provide IDOX with an excellent and enlarged
platform for further growth. The Board's strategy is for the Enlarged Group to
be the leading provider of front- to back-office solutions to the local
authority segment for land, property and people-based services.





11.           Principal terms of the Acquisition



The Company has agreed to acquire the entire issued share capital of CAPS for a
cash payment of £21 million to the Vendor. The Acquisition Agreement is
conditional, inter alia, upon:



(1)            the passing of the Resolutions;



(2)            successful conclusion of the Placing; and



(3)            Second Admission occurring on or before 30 June 2007.



It is expected that completion of the Acquisition and Second Admission will take
place on 6 June 2007. Further details of the Acquisition Agreement are contained
in paragraph 12.3 of Part V of the admission document.





12.           Board of the Enlarged Group



The Board of IDOX currently consists of Martin Brooks, Richard Kellett-Clarke,
Peter Lilley, Nigel Oxbrow, John Wisbey, and Christopher Wright. Steve
Ainsworth, the current managing director of CAPS, will join the Board as Chief
Executive Officer following the Acquisition and Martin Brooks will revert to his
previous role of Chairman. The board of IDOX following completion of the
Acquisition will therefore comprise:



Martin Brooks, age 56, Chairman



Martin Brooks was founding chief executive officer of Financial Times
Information, now FT Interactive, the world's leading supplier of securities
valuation data from 1994 to 1998.  Prior to that he was Managing Director of
Extel Financial Ltd., part of a career spanning 30 years in information,
publishing and IT, starting with the Financial Times in 1977. His more recent
assignments include chairing the publishing arm of The Institute of Chartered
Accountants in England and Wales until 2002.



Steve Ainsworth, age 41, Chief Executive Officer



Steve is currently managing director of CAPS with responsibility for the overall
leadership and management of the company and specific responsibility for
financial and commercial issues. Steve joined CAPS as commercial director in
2004 and was promoted to his current role in early 2005. Since this time CAPS
has doubled in size from £8.5 million turnover and £0.5 million profit to over
£16 million turnover and £1.5 million profit and from 85 staff to more than 150.
Prior to joining CAPS, Steve was managing director of a small business and IT
consultancy company that he founded. He also spent three years as a director of
luxury housebuilder, Laing Homes. In his role at Laing, and previously in his
five years as a principal consultant at PwC, Steve engaged in many business
performance improvement projects and activities to transform the performance of
many organisations. He has also held a number of positions within local
government.



Richard Kellett-Clarke, age 52, Chief Financial Officer and Chief Operating
Officer



Richard has over 20 years of board experience. He was most recently finance
director of Brady plc. Prior to this he was managing director of AFX NEWS Ltd.
He has held a variety of finance directorships with companies such as Extel
Financial Ltd (now FT Interactive), Eurotherm Ltd (now part of Invensys plc),
and Pickwick Group plc, as well as IT Director of Financial Times Information
Ltd.



John Wisbey, age 51, Non-Executive Director



John Wisbey is chairman and chief executive officer of Lombard Risk Management
plc, an AIM quoted company that specialises in software for bank regulatory
reporting, risk management and valuation. He is also the former chairman of
IDOX. Before founding Lombard Risk Management plc, he worked for 12 years at
Kleinwort Benson Limited in various positions in London and the Far East. His
last position there was as Head of Option Trading and a director in the Swap
Group.



Christopher Wright, age 49, Non-Executive Director



Christopher Wright was Global Head of Dresdner Kleinwort Capital from 1995 to
2003 and a Group board member of Dresdner Kleinwort Benson. He is now a director
of Merifin Capital Group and advisory director of Campbell Lutyens and Co
Limited. He is also a non-executive director of Lombard Risk Management plc,
Quester VCT plc, Roper Industries Inc and other public and private companies in
the USA and elsewhere.



Rt. Hon Peter Lilley MP, age 63, Non-Executive Director



Peter Lilley, MP for Hitchin and Harpenden, held two major cabinet posts in the
last Conservative Government. He was Parliamentary Private Secretary to
Ministers for Local Government from 1983-84. He was appointed Secretary of State
for Trade and Industry from 1990-92, becoming Secretary of State for Social
Security from 1992-97. He was previously a director for Greenwell Montagu
Limited. He is currently a non-executive director of JP Morgan Flemings
Claverhouse Investment Trust and a Member of the Advisory Board of the School of
Management at the University of Southampton.



Nigel Oxbrow, age 54, Non-Executive Director



Managing Director of TFPL Limited until October 2006, Nigel has over 30 years of
experience in the knowledge and information world and regularly advises clients
on knowledge management and information management issues. He is a frequent
speaker at knowledge and information management conferences and a keen
commentator on industry changes. Nigel is currently involved in many knowledge
management forums, and is on the advisory committees for Leeds, Loughborough and
Long Island Universities. Previously he has been a member of the British
Standards Institution's Knowledge Management Committee, chairman of EUSIDIC -
the European Association of Information Services, a member of the UK
Governments' Library and Information Services Council, vice-president of the
Institute of Information Scientists, a member of the Board of Trustees of Dublin
Core Metadata Initiative, and a board director of the Special Libraries
Association. Nigel founded TFPL in 1987.





13.           Share Incentive Arrangements



The Directors believe that the Company's success is highly dependent on the
quality and loyalty of its senior executives including both employees and
directors. To assist in the recruitment, retention and motivation of high
quality employees, the Directors believe that the Company must have an effective
remuneration strategy. The Directors consider that an important part of the
Company's remuneration strategy is the ability to award equity incentives and,
in particular, share options. Since 2000, the Company has adopted a series of
options and other share incentive arrangements designed to meet the requirements
of the Company at the time and to satisfy the various tax and other regulatory
requirements applicable at the time.



The overall limit of the number of shares available under all the different
arrangements was originally set at 15 per cent. of issued share capital and has
been maintained.



Further details of the share incentive arrangements currently in existence
together with details of the subsisting options as at the date of the admission
document are set out in paragraph 4 of Part V of the admission document.





14.           Corporate governance



The Directors acknowledge the importance of the principles set out in the
Combined Code. Although compliance with the Combined Code is not compulsory for
AIM companies, the Directors intend to continue to apply the principles as far
as practicable and appropriate for a public company of its size as follows:



Board



The board will continue to meet regularly and will be responsible for strategy,
performance, approval of major capital projects and the framework of internal
controls. The board has a formal schedule of matters specifically reserved to it
for decision. To enable the board to discharge its duties, the directors will
receive appropriate and timely information. Briefing papers are distributed to
all directors in advance of board meetings, while all directors have access to
the advice and services of the Company Secretary, who is responsible for
ensuring that procedures of the board are followed and that applicable rules and
regulations are complied with. The articles of association provide that
directors are subject to re-election at the first opportunity after their
appointment and each member of the board will voluntarily submit to re-election
at intervals of three years thereafter.



Audit committee



The audit committee is made up of Christopher Wright (Chairman), Peter Lilley
and John Wisbey. The committee meets at least twice a year and meetings will be
arranged in conjunction with the publication of the Enlarged Group's financial
statements. The committee will, inter alia, monitor the financial integrity of
the Enlarged Group, review financial information, review accounting policies,
clarity of disclosures, internal controls and risk management systems and the
Enlarged Group's internal audit requirement and oversee the relationship with
external auditors.



Remuneration committee



The remuneration committee is made up of Peter Lilley (Chairman), John Wisbey
and Christopher Wright. The committee meets not less than twice a year.
Appointments to the committee are for a period of up to three years which may be
extended for two further three year periods. The committee determines and agrees
with the board the framework for the remuneration and benefits of the executive
directors and such members of the executive management team as it is designated
to consider. The remuneration of the non-executive directors is a matter for the
executive directors. The committee reviews the appropriateness of the
remuneration policy in the light of all relevant factors and has regard to the
provisions and recommendations of the Combined Code, the AIM Rules and
associated guidance.



Nomination committee



The nomination committee is made up of Peter Lilley (Chairman), John Wisbey and
Christopher Wright.



AIM compliance committee



In line with new regulations, the Company intends to establish an AIM compliance
committee in the near future.





15.           Dividend policy



Following the Company's maiden dividend of 0.05p per Ordinary Share, which was
paid earlier in 2007, it is the Directors' intention to maintain a progressive
dividend policy.





16.           Reasons for Placing and use of proceeds



The net proceeds of the Placing of New Ordinary Shares receivable by the Company
will be approximately £9.6 million. These will be used to satisfy part of the
consideration payable for the Acquisition and to provide the Enlarged Group with
sufficient working capital to enable it to implement its strategy.



Certain Directors, who already have shareholdings in the Company, and the
Proposed Director are participating in the Placing and will subscribe for a
total of 5,066,667 Placing Shares having an aggregate value of £380,000 at the
Placing Price.



The Placing is to be conducted in two tranches, with Second Admission in respect
of the Non-VCT Shares taking place subsequent to, and conditional upon, First
Admission in respect of the Existing Ordinary Shares and VCT Shares. The
Directors have been advised that by structuring the admission of the VCT and
Non- VCT Shares in this manner, VCTs will be able to participate in the Placing
which would otherwise not be the case if the VCT and Non-VCT Shares were
admitted to trading simultaneously, as the gross asset limit for VCT investment
would be exceeded by receipt of the combined proceeds of the placing of the VCT
and Non-VCT Shares.



Investors should be aware that Noble has the right, in the event that Second
Admission does not occur by 8.00 a.m. on 30 June 2007, or such later date as
Noble may agree, to terminate its obligations under the Placing Agreement in
respect of Second Admission and the placing of the Non-VCT Shares in addition to
its rights to terminate the Placing Agreement prior to First Admission in
accordance with its terms.



The New Ordinary Shares will represent approximately 42.9 per cent. of the
Enlarged Share Capital of the Company immediately following Admission. The
Placing Price represents a discount of approximately 3.3 per cent. to the share
price of 7.75p per share at close of business on 9 May 2007.



The New Ordinary Shares will, on the relevant admission, rank pari passu in all
respects with the Existing Ordinary Shares and will have the right to receive
all dividends and other distributions thereafter declared, made or paid in
respect of the issued ordinary share capital of the Company.



It is expected that the net proceeds of the Placing of New Ordinary Shares will
be received by the Company on or around 7 June 2007.



In the event that First Admission becomes effective but Second Admission does
not, the proceeds relating to the First Admission will be invested on a short
term basis while the Board explores methods of returning such proceeds to the
relevant Placees.





17.           Banking Facility



The Company has entered into committed bank facilities with Bank of Scotland
totalling £11.6 million. Draw-down of funds will be conditional, inter alia, on
Second Admission. These facilities will be used by the Company to part finance
the Acquisition. Details of these bank facilities are summarised in paragraph
12.6 of Part V of the admission document.





18.           Admission to AIM and dealings



The Acquisition constitutes a reverse takeover under the AIM Rules and is
therefore dependent upon the approval of Shareholders being given at the
Extraordinary General Meeting, notice of which is set out at the end of the
admission document. A resolution will be proposed at the EGM to approve the
Acquisition. If all of the Resolutions are duly passed at the EGM, and the other
conditions set out in the Placing Agreement are met, applications will be made
for the Enlarged Share Capital to be admitted to trading on AIM.



It is anticipated that First Admission will become effective and that dealings
will commence in the Existing Ordinary Shares and the VCT Shares at 8.00 a.m. on
5 June 2007 and that Second Admission will become effective and that dealings
will commence in the Non-VCT Shares at 8.00 a.m. on 6 June 2007.



If the Resolutions are not all duly passed, the Existing Ordinary Shares will
continue to be traded on AIM and the New Ordinary Shares will not be issued or
admitted to AIM.





19.           Extraordinary General Meeting



An Extraordinary General Meeting of the Company will be held at the offices of
Memery Crystal LLP, 44 Southampton Buildings, London WC2A 1AP at 10.00 a.m. on 4
June 2007. At the EGM, the following resolutions will be considered by the
holders of the Existing Ordinary Shares and, if thought fit, passed:



(1)            an ordinary resolution to approve the acquisition by the Company
of CAPS Solutions Limited on the terms and subject to the conditions contained
in the Acquisition Agreement.



(2)            an ordinary resolution to increase the authorised share capital
of the Company from £2,970,000 to £6,500,000 by the creation of 353,000,000 new
Ordinary Shares of £0.01 each.



(3)            an ordinary resolution to authorise the directors to allot
relevant securities of the Company up to an aggregate nominal amount of
£2,903,672.



(4)            a special resolution to empower the directors to allot equity
securities pursuant to the authority conferred by resolution 3 above provided
that this power shall be limited to:



(i)       the allotment of up to 146,666,667 New Ordinary Shares in connection
with the Placing;



(ii)     the allotment of equity securities for cash in connection with any
rights issue or pre-emptive offer in favour of holders of equity securities
generally; and



(iii)   the allotment, otherwise than pursuant to sub-paragraphs (i) and (ii)
above, of equity securities for cash up to an aggregate nominal amount of
£512,891.



Resolutions (1) to (3), as ordinary resolutions, will require a simple majority
of those voting in person or, on a poll, by proxy in favour of the resolutions.
Resolution 4, as a special resolution, will require approval by not less than 75
per cent. of the votes cast by Shareholders voting in person or, on a poll, by
proxy.





20.           Irrevocable undertakings



The Company has received irrevocable undertakings from the Directors, and
certain other shareholders to vote, or to procure the votes of Ordinary Shares
held, in favour of the Resolutions to be proposed at the EGM in respect of a
total of 94,677,248 Ordinary Shares representing approximately 48.5 per cent. of
the Existing Ordinary Shares.





21.           VCT Qualifying Holding Status



On the basis of the information provided, HM Revenue & Customs has given
provisional assurance that IDOX will comply with the requirements of Chapter 4
of Part 6 of the Income Tax Act 2007 in respect of monies raised by a VCT by an
issue of shares or securities prior to 6 April 2006 and that the Ordinary Shares
will be eligible shares for the purposes of VCTs. The continuing status of the
VCT Shares as a qualifying holding for VCT purposes will be conditional, inter
alia, upon the Company and the VCT continuing to satisfy the relevant
requirements.





22.           Recommendation



The Directors unanimously recommend that Shareholders vote in favour of the
Resolutions to be proposed at the EGM, as they have irrevocably undertaken to do
in respect of their own beneficial shareholdings amounting to, in aggregate,
34,129,042 Ordinary Shares (representing 17.5 per cent. of the Existing Ordinary
Shares).







DEFINITIONS



In this announcement, where the context permits, the expressions set out below
shall bear the following meanings:


'Acquisition'             the proposed acquisition, by IDOX, of the entire issued share capital of CAPS pursuant
                          to the Acquisition Agreement;

'Acquisition Agreement'   the conditional agreement, dated 9 May 2007, between the Vendor and the Company
                          relating to the sale and purchase of the entire issued share capital of CAPS, more
                          particularly described at paragraph 12.3 of Part V of the admission document;

'Act'                     the Companies Act 1985, as amended or substituted by the Companies Act 2006;

'Admission'               the admission of the Enlarged Share Capital to trading on AIM following completion of
                          the Placing;

'AIM'                     AIM, an exchange regulated market operated by the London Stock Exchange;

'AIM Rules'               the rules applicable to AIM companies, as published by the London Stock Exchange from
                          time to time;

'Board' or 'Directors'    the existing directors of IDOX, being Martin Brooks, Richard Kellett-Clarke, John
                          Wisbey, Christopher Wright, Peter Lilley and Nigel Oxbrow;

'CAPS'                    CAPS Solutions Limited, a company incorporated in England and Wales with registered
                          number 3760128;

'Combined Code'           the combined code on corporate governance issued by the Financial Reporting Council, as
                          amended from time to time;

'Company' or 'IDOX'       IDOX plc, a company incorporated in England and Wales with registered number 3984070;

'Companies Acts'          the Companies Acts as defined in section 2 of the Companies Act 2006;

'CREST'                   the computerised settlement system used to facilitate the transfer of title of shares
                          in uncertificated form operated by CRESTCo Limited for UK, Irish and international
                          securities;

'CREST Regulations'       the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended;

'Enlarged Group'          the Group following completion of the Acquisition, including CAPS;

'Enlarged Share Capital'  the Ordinary Shares in issue immediately following Second Admission;

'Existing Ordinary Shares the Ordinary Shares in issue at the date of the admission document;
'

'Extraordinary General    the extraordinary general meeting of the Company to be held at 10.00 a.m. on 4 June
Meeting' or 'EGM'         2007, at the offices of Memery Crystal LLP, notice of which is set out at the end of
                          the admission document;

'First Admission'         the admission of the Existing Ordinary Shares and the VCT Shares to trading on AIM
                          becoming effective in accordance with the AIM Rules;

'Form of Proxy'           the form of proxy accompanying the admission document for use by Shareholders in
                          connection with the EGM;

'FSA'                     the Financial Services Authority, the single statutory regulator under FSMA;

'FSMA'                    the Financial Services and Markets Act 2000, as amended;

'FY'                      financial year;

'Group'                   IDOX and its subsidiary undertakings at the date of the admission document;

'LIBOR'                   the London Inter-Bank Offered Rate;

'London Stock Exchange'   London Stock Exchange plc;

'New Ordinary Shares'     146,666,667 new Ordinary Shares, comprising the VCT Shares and the Non-VCT Shares, to
                          be issued pursuant to the Placing;

'Noble'                   Noble & Company Limited, a company incorporated in Scotland with registered number
                          SC127487 and having its registered office at 76 George Street, Edinburgh EH2 3BU and
                          regulated by the FSA;

'Non-VCT Shares'          the New Ordinary Shares other than the VCT Shares;

'Official List'           the Official List maintained by the FSA in accordance with section 74(1) of FSMA for
                          the purposes of Part VI of FSMA;

'Ordinary Shares'         ordinary shares of 1p each in the capital of the Company;

'Placing'                 the conditional placing by Noble on behalf of the Company of the Placing Shares at the
                          Placing Price pursuant to the Placing Agreement;

'Placing Agreement'       the conditional agreement dated, 10 May 2007, between the Company, the Directors, the
                          Proposed Director and Noble relating to the Placing, summary details of which are set
                          out in paragraph 12.1 of Part V of the admission document;

'Placing Price'           7.5p per Placing Share;

'Placing Shares'          the New Ordinary Shares to be subscribed for at the Placing Price pursuant to the
                          Placing;

'Proposed Director'       Steven Mark Ainsworth;

'Prospectus Rules'        The Prospectus Rules published by the FSA from time to time;

'Resolutions'             the resolutions set out in the notice of Extraordinary General Meeting set out at the
                          end of the admission document;

'Second Admission'        the admission of the Non-VCT Shares to trading on AIM becoming effective in accordance
                          with the AIM Rules;

'Shareholders'            holders of Ordinary Shares from time to time;

'Share Option Plans'      the share option agreements and schemes summarised in paragraph 4 of Part V of the
                          admission document;

'Takeover Code'           the Takeover Code published by the Panel on Takeovers and Mergers;

'VCT Shares'              58,695,000 new Ordinary Shares to be placed with certain VCTs pursuant to the Placing
                          which are expected to be treated as a qualifying holding for the purposes of VCT
                          legislation;

'VCT'                     Venture Capital Trust; and

'Vendor'                  ESRI Holdings Limited.




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