Final Results

IDOX PLC 12 December 2005 IDOX plc FINAL RESULTS FOR IMMEDIATE RELEASE 12 December 2005 IDOX plc ('IDOX'), the information and knowledge management company, today announced its final results for the year ended 31 October 2005. Highlights: • Turnover up 48% to £14.16m (2004: £9.56m) • Profit before tax up 878% to £0.88m (2004: profit £0.09m) • Cash up 69% to £4.72m (2004: £2.80m) • Earnings per share up 270% to 0.85p (2004: 0.23p) • Completion of core development of new Electronic Document and Records Management System and accreditation by The National Archive • The Board is confident of the Company's cash generation and will take steps to facilitate payment of a regular dividend in calendar 2005/2006. Andrew Fraser, Chief Executive of IDOX, said: 'I am pleased to report that IDOX is moving towards healthy profits and strong cash generation. Developments in the period under review have further strengthened the Company's position in the local authority and wider public sector market. The recruitment aspect to our business continues to perform well. Enhancements to our software suite received critical government accreditation and we experienced growing demand for our information solutions products that are reflected in a number of significant contract wins over the last 12 months. IDOX is now in an excellent position to continue the growth of all three business lines.' - ENDS - For further information please contact: Martin Brooks, Chairman 0870 333 7101 Andrew Fraser, CEO 0870 333 7101 Richard Kellett-Clarke, CFO 0870 333 7101 Nadja Vetter / Emma Consett, Cardew Group 020 7930 0777 Notes to editors IDOX plc is a fast-growing information and knowledge management company, specialising in the development and delivery of software products, information solutions and people for information management and knowledge sharing, primarily for the public sector enabling them to better manage their information. IDOX Software is one of the leading players in the local government market for managing paper and electronic records. IDOX Software has several modules designed to capture, manage, store, preserve and deliver information for use within an organisation, and for access externally - by the public or other partners. Its flagship UKPlanning Managed Services solution delivers the first true end-to-end e-Planning solution to enable Local Authorities to provide the Government Planning process online The Information solutions unit consists of a specialist consultancy that specialises in advising and devising creative and innovative solutions to problems associated with records, information, knowledge and content management. In-house and external training for clients using experienced facilitators and leading industry practitioners. A community for professionals; via subscription, providing them with a comprehensive database of bibliographic abstracts, and the largest collection of information in the UK, on all aspects of best practice, governance in the public sector. Our Experts identify, summarise and manage a vast resource of information to save member organisations time and money. The focus for the recruitment team is to find and place information professionals to deliver knowledge management, information management and records management projects - this might be for interim management and project teams, permanent or temporary posts. IDOX plc Chairman's Statement For the year ended 31 October 2005 I am delighted to announce a strong set of results for the year ended 31 October 2005, during which significant and sustainable profits were achieved by IDOX plc at pre and post tax level, accompanied by excellent cash generation. These results, together with a strong sales pipeline, give the Board sufficient confidence in the business going forward to anticipate the declaration of a dividend during 2006. This will require a reduction in the share capital for which shareholder and legal approval will be sought at the next Annual General Meeting of the Group. As a result of the improvement in trading performance the Group recognised the deferred tax asset which resulted in a one off gain to the profit and loss account. The Group's three business lines, Software, Information Solutions and Recruitment, have all made considerable progress during the period under review. The local authority market remains the Group's primary focus whilst it continues to develop its presence in the wider public sector with relationships gained through the companies the Group has acquired. The strength of IDOX's information and knowledge management capability, combined with its technical expertise, provides IDOX with a solid platform from which to further extend its innovative information solutions in the public and, where appropriate, the private sector. During the year, significant steps have been taken in an ongoing process to strengthen the business ready for the next stage of IDOX's development. These include: • A strategy review testing our assumptions; we have confirmed our belief in the public sector and our information solutions approach and we will continue to look to identify strategic opportunities to accelerate IDOX's growth strategy • A focus on organic growth, profitability, efficiency and cost control; some benefit has been recognised during this reporting period and there will be continued focus on this next year • Strengthening the depth of the executive team through the appointment of Richard Kellett-Clarke as Chief Financial Officer and Richard Pinder as Group Sales and Marketing Director • A comprehensive review of remuneration benefits and incentives undertaken by independent remuneration consultants, with a view to helping the Board achieve the optimum alignment between shareholder and employee interests • The enhancement of a more formalised risk management process in line with recognised good practice • The move to modern London offices, on expiry of the existing lease, which will aid efficiency, working of multi-disciplined teams and provide better facilities for customers and staff alike. Looking to the coming year, it is the Group's intention to continue to build on the success of the past year and continue to pursue organic growth and resultant profits while seeking suitable acquisitions that fit its strategic business and stringent integration criteria. It remains for me to thank our customers, suppliers and dedicated colleagues in the Company for helping IDOX to achieve such a successful and transforming year. Martin Brooks Chairman 9 December 2005 IDOX plc Chief Executive's Report For the year ended 31 October 2005 Financial Review IDOX revenues increased from £9.56 million to £14.16 million, an increase of 48% overall, for the twelve months ended 31 October 2005. Profit before tax amounted to £0.88 million (2004: profit of £0.09 million). Earnings per share was 0.85 pence (2004: 0.23 pence). Net cash at 31 October 2005 amounted to £4.72 million (2004: £2.80 million). IDOX Software and Information Services increased its annualised recurring revenue from £2.56 million at the end of October 2004 to £2.92 million at 31 October 2005. Market Dynamics The Group has continued to expand within the local authority market and now has a presence in over 45% of the 468 local authorities in the UK, with considerable scope to increase revenues per client. We have broadened and deepened our offering in this market, strengthening our position as a provider of corporate-wide information management solutions. In the last 12 months the Group has provided various software, information and knowledge management services to over 172 central government departments and agencies. The opportunity pipeline for our products and services continues to grow and the expected cross-selling opportunities among our business divisions have begun to materialise. The drive for efficiency and effectiveness, the Freedom of Information Act, the Children's Bill, Priority Service Outcomes, the e-Government deadlines and other similar initiatives continue to create opportunities for the Group within local authorities and the wider public sector. The approval this year of our Records Management Software product by The National Archives has further strengthened our position in local authorities and will open new opportunities in other government departments and agencies. The unique combination of services built through acquisition and organically has continued to add revenues with growing interest in information architecture and our content auditing skills. The blend of our technical consultancy skills and our information consulting capability in this area is beginning to develop new offerings such as a content audit tool which semi-automates the content auditing process, reducing the cost and improving the results. As the volume of content accumulates within organisations the ability to manage, track and control this becomes a significant problem and we believe the skills base, products and services IDOX has built represent a significant opportunity. Product and Service Offerings The Group's respective business lines have made considerable progress during the period. The local authority market remained the primary sector with 46% of the Group's revenue. IDOX continued to strengthen its presence in the wider public sector as a result of relationships gained through the companies the Group acquired. This part of the business now represents 27% of the Group's revenues. IDOX drives 27% of its business from the private sector which will continue to develop in specific areas, such as professional services, which have proven successful. Software The Software line of our business develops document and records management software, electronic forms and web publishing solutions to capture and deliver information via the web. Workflow is used to distribute information around an organisation, be it an e-form filled in by a member of the public or a scanned document. In addition to selling our software, the IDOX approach has been to use these technology platforms to build solutions to meet specific vertical requirements, such as the UKPlanning Managed Service. This 'software as a service' model enables IDOX to manage the delivery of the product and services on behalf of the client. To date, 21 local authorities outsource to us the administration and presentation of their planning applications on the web. We are particularly pleased with The National Archives accreditation of IDOX's Records Management Software product. This product will provide IDOX's customers with the tools to manage their information assets better and hence comply with relevant legislation. To date there are only 11 companies with this UK accreditation. This state of the art J2EE application, designed using the very latest software development techniques, provides significant technical and operational benefits to our clients in managing their information assets. This year the Software teams have also expanded the way in which our technology is used within a Revenues and Benefits department, working in partnership with Tonbridge and Malling Borough Council to build the next generation of products to meet the specific needs of this complex, process-orientated environment. Together with our work to extend the product in partnership with existing customers for Housing and Social Services departments, the team have undoubtedly completed the suite of products needed to deliver corporate solutions to local government. This achievement provides the Group with the ability to deliver larger contracts and the potential to address more information management needs of its existing customers, creating bigger opportunities from its growing customer base. Further new business opportunities in the wider public sector continue to matierialise, such as the recent e-forms implementations in the Metropolitan Police and the Kent Police. The British Transport Police have recently subscribed to the IDOX Information Service, demonstrating the potential wider appeal of our solutions outside the local authority market. As we grow and develop relationships in the wider public sector we will continue to find new cross-selling opportunities for all of our business lines. Information Solutions IDOX's Information Solutions capability includes advisory and training services focused on information and knowledge management, content provision for the public sector arena and information orientated projects. These information projects typically combine the Group's products and services to deliver a particular outcome for a client. We continue to expand our electronic library content to meet the needs of new customers. For example, NHS Scotland has commissioned us to source, abstract and add full text material on health inequalities and, as a consequence of four police forces joining the service, we now source additional content to suit their needs. Such developments benefit all of our subscribers with new content as well as bringing in specific new revenue. We continue to develop our particular expertise in planning, development and regeneration through several information orientated projects for the Office of the Deputy Prime Minister, English Partnerships, Communities Scotland and the new Academy for Sustainable Communities. Our outsourced library service is now enabling us to create and manage specialist web-based libraries for a range of public sector clients. In response to client demand we have combined our consultancy expertise in content management and information architecture with our technical capability to develop a new web and content management audit service. Our team has developed specialist tools and techniques to identify and collect large quantities of content across many different platforms, clean it, structure it and migrate it to new platforms, making it easier to access and manage. This unique blend of advice, content and technology has earned the Group recognition as a major information and knowledge management specialist within local and central government and their agencies. Recruitment The focus for the Recruitment team is to find and place information professionals to deliver knowledge management, information management and records management projects - this might be for interim management and project teams, permanent or temporary posts. Contract recruitment revenues, from placing interim managers, temporary staff and project teams, was the area of strongest growth on the previous year. IDOX's recruitment strength is its horizontal approach, helping clients in all sectors recruit knowledge, information, content and records management staff. In the last year the division has seen considerable movement of people with private sector experience into the public and not-for-profit sectors where the demand for information and records skills has been high. We anticipate continued strong demand from all sectors in the coming year and were particularly encouraged by the increase in the number of registered vacancies from the private sector in the last three months of our financial year. The recruitment teams will be working with other parts of the Group to further extend revenues in the areas of web and content management and information architecture; areas where roles require strong technical capability combined with traditional information management skills. During the last 12 months we have seen a growing interest in the value-added services that we provide, including career counselling, career management and career workshops to support employees experiencing change in the workplace. Strategic Alliances The Group will continue to develop strategic partnerships, where appropriate, in order to widen its offering to the public sector and other markets. Discussions are regularly held with other potential partners and we do expect to announce contracts with new partner organisations in coming months. Personnel The Group's employees totalled 139 at 31 October 2005, virtually unchanged compared with 140 at 31 October 2004. This is the result of completing core development projects and the redeployment of resources to customer facing roles. The Group possesses a team and infrastructure capable of delivering and managing continued business growth. Strategy and Outlook The Group concentrates on the delivery of Information and Knowledge management solutions in the local authority market while continuing to develop client base in the wider public sector. The focus of our work is on helping clients manage their information assets more efficiently, particularly unstructured data. As the volume and diversity of information continues to grow, organisations have significant issues to overcome, be that legislation, compliance, efficiency or maximising the use of the information assets held. A shortage of qualified expertise in the market gives the Group confidence that we will be able to continue our growth in our chosen fields and market. It is anticipated that over the next few years, as both local and central government bodies continue to deliver their e-Government programmes those established suppliers, such as IDOX, will have to adapt to efficiency and cost-saving drivers. The new initiatives such as the Gershon Efficiency Review aim to reduce expenditure on administration. IDOX believes it is ideally suited to continue assisting with improvements in efficiency, albeit under the Transformational Government Agenda. The Group has positioned itself to take advantage of the need to deliver efficient content management solutions by uniquely being able to supply not just the software but the three key components needed: • 'fit for purpose' software products • the skills and know-how for content delivery • the people to deliver consistency in order to gain a return on investment. The Group is continuing to augment its product and service offering and gain market share, delivering increased revenues and profitability through organic growth and appropriate accretive acquisitions. Andrew Fraser Chief Executive 9 December 2005 This announcement was approved by the Board of Directors on 9 December 2005. IDOX plc Consolidated Profit and Loss Account For the year ended 31 October 2005 2005 2004 Note £000 £000 _____________________________________________________________________________ Turnover 2 14,155 9,555 External charges (5,048) (2,636) ________ ________ 9,107 6,919 Staff costs (5,665) (4,778) Other operating charges (2,685) (2,134) ________ ________ Operating profit 757 7 Interest receivable 119 82 ________ ________ Profit on ordinary activities before taxation 876 89 Tax on profit on ordinary activities 3 700 292 ________ ________ Profit for the year transferred to reserves 1,576 381 Earnings per share - basic and diluted (pence) 4 0.85p 0.23p All operations are attributable to continuing operations. There are no recognised gains or losses other than those set out above. IDOX plc Consolidated Balance Sheet At 31 October 2005 2005 2004 £000 £000 ______________________________________________________________________________ Fixed assets Intangible assets 4,602 5,265 Tangible assets 325 247 ________ ________ 4,927 5,512 ________ ________ Current assets Debtors 4,132 3,312 Cash at bank and in hand 4,722 2,797 ________ ________ 8,854 6,109 Creditors: amounts falling due within one year (3,960) (3,266) ________ ________ Net current assets 4,894 2,843 ________ ________ Total assets less current liabilities 9,821 8,355 Creditors: amounts falling due after more than one year (10) (20) ________ ________ Net assets 9,811 8,335 ________ ________ Capital and reserves Called up share capital 1,873 1,821 Capital redemption reserve 1,112 1,112 Share premium account 8,162 7,614 Shares to be issued 1,300 2,000 Other reserves 1,294 1,294 ESOP trust (79) (79) Profit and loss account (3,851) (5,427) ________ ________ Shareholders' funds 9,811 8,335 ________ ________ IDOX plc Consolidated Cash Flow Statement For the year ended 31 October 2005 2005 2004 Note £000 £000 __________________________________________________________________________________________________ Net cash inflow/(outflow) from operating activities 5 2,126 (801) Returns on investments and servicing of finance Interest received 119 82 ______ ______ Net cash inflow from returns on investments and servicing of finance 119 82 Tax credit received - 244 Capital expenditure and financial investment Purchase of tangible fixed assets (320) (240) Sale of tangible fixed assets - 12 Purchase of investment (ESOP trust) - (51) ______ ______ Net cash outflow from capital expenditure and financial investment (320) (279) Acquisitions Purchase of companies during the year - (1,668) Deferred consideration - (10) Net cash balances acquired with the company - 380 ______ ______ Net cash outflow from acquisitions - (1,298) Financing Issue of shares - 2,300 Costs for issue - (98) ______ ______ Net cash inflow from returns on investments and servicing of finance - 2,202 ______ ______ Increase in cash 1,925 150 ______ ______ IDOX plc Reconciliation of Movements in Shareholders' Funds For the year ended 31 October 2005 2005 2004 £000 £000 ________________________________________________________________ Profit for the financial year 1,576 381 Additions to ESOP trust - (51) Shares issued 600 2,739 Shares to be issued (600) 2,000 Adjustment in estimate of shares to be issued (100) - _______ _______ Net increase in shareholders' funds 1,476 5,069 Shareholders' funds at 1 November 2004 8,335 3,266 _______ _______ Shareholders' funds at 31 October 2005 9,811 8,335 _______ _______ IDOX plc Notes to the announcement For the year ended 31 October 2005 1 BASIS OF PREPARATION The financial statements have 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 2004 annual report and accounts. 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 2005 and the consolidated profit and loss account, consolidated cash flow statement and associated notes for the year ended 31 October 2005 have been extracted from the statutory accounts upon which the auditors opinion is unqualified and does not include any a 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: 2005 2004 £000 £000 ______________________________________________________ Turnover Information management solutions 9,070 7,142 Information management recruitment 5,085 2,413 ________ _______ 14,155 9,555 ________ _______ Operating profit Information management solutions 1,005 111 Information management recruitment 315 275 ________ _______ 1,320 386 Goodwill amortisation (563) (379) ________ _______ 757 7 ________ _______ Net assets Information management solutions 4,717 2,416 Information management recruitment 492 654 ________ _______ 5,209 3,070 Goodwill 4,602 5,265 ________ _______ 9,811 8,335 ________ _______ 3 TAX ON profit ON ORDINARY ACTIVITIES The tax credit is made up as follows: 2005 2004 £000 £000 ________________________________________________________________________________ Current tax UK corporation tax 2 (27) Research and development tax credit - (244) _______ _______ Total current tax 2 (271) Deferred tax - origination and reversal of timing differences (702) (21) _______ _______ Tax on profit on ordinary activities (700) (292) _______ _______ Unrelieved trading losses of £1,974,000 (2004: £3,337,000) which, when calculated at the standard rate of corporation tax in the United Kingdom of 30%, amounts to £592,000 (2004: £1,001,000). These remain available to offset against future taxable trading profits. During the year ended 31 October 2004 £1,514,000 of tax losses relating to prior periods (years ended 31 October 2001 and 31 October 2002) were surrendered in exchange for the research and development tax credit. The tax credits may be subject to claw back by the HMRC but if this occurred 2/3 of the tax losses surrendered in respect of that year would be reinstated. During the year the Group recognised deferred tax asset of £702,000 (2004: £21,000). This was due to the improvement in the trading performance for the past year and the strong sales pipeline for the forthcoming year. Factors affecting the tax charge/(credit) in the period: 2005 2004 £000 £000 _________________________________________________________________________ Profit on ordinary activities before taxation 876 89 ______ ______ Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% 263 27 Effects of: Prior year adjustment 2 - Expenses not deductible for tax purposes 154 22 Depreciation in excess of capital allowances 45 72 Other timing differences (21) 19 Difference in tax rates - (4) Research and development - (244) Decrease in tax losses (441) (163) ______ ______ 2 (271) ______ ______ 4 EARNINGS PER SHARE The earnings per ordinary share is calculated by reference to the profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during each period, as follows: 2005 2004 £000 £000 _____________________________________________________________________________ Profit for the year 1,576 381 Weighted average number of shares in issue 185,229,865 166,384,328 Dilutive effect of share options 357,474 - ___________ ___________ Total 185,587,339 166,384,328 ___________ ___________ Earnings per share - basic and diluted (pence) 0.85p 0.23p 5 NET CASH inflow/(OUTFLOW) FROM OPERATING ACTIVITIES 2005 2004 £000 £000 ____________________________________________________________________________ Operating profit 757 7 Depreciation 242 256 Goodwill amortisation 563 379 Goodwill adjustment - 34 Loss on sale of fixed assets - 1 Increase in debtors (118) (739) Increase/(decrease) in creditors 682 (739) ________ _______ Net cash inflow/(outflow) from operating activities 2,126 (801) ________ _______ 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £000 £000 _____________________________________________________________________________ Increase in cash in the year, being movement in net funds in the year 1,925 150 Net funds at 1 November 2004 2,797 2,647 _______ ________ Net funds at 31 October 2005 4,722 2,797 _______ ________ 7 FURTHER COPIES Copies of this announcement and the full annual report and accounts 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, Times Square, 160 Queen Victoria Street, London, EC4V 4 BF, Tel: 0870 333 7101. Copies of the full financial statements will be posted to shareholders on 12 December 2005. This information is provided by RNS The company news service from the London Stock Exchange RURAA

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