Idox Group Regulatory News (IDOX)

19 Jun 2006 07:01

IDOX PLC19 June 2006 IDOX plc INTERIM RESULTS FOR IMMEDIATE RELEASE 19 June 2006-------------------------------------------------------------------------------- IDOX plc ("IDOX" or the "Company"), the information and knowledge managementcompany, today announced its interim results for the six months ended 30 April2006 which are in line with its trading statement on 5 May 2006. Financial and Operational Highlights • Revenue £6.91m (2005: £7.02m) • Breakeven position before tax (2005: £0.21m) • Strong cash generation up 45% to £5.38m (2005: £3.72m) • (Loss)/earnings per share (0.07p) (2005: 0.12p) • Strong cash generation and working capital discipline during a challenging first half • Major contract wins in a competitive market Martin Brooks, Chairman and Interim Chief Executive of IDOX, said: "Although revenues during the first half were at the level of the previous year,IDOX secured a number of significant large contracts in an increasinglycompetitive market and continued to deliver strong cash generation. The Board istaking steps to review the focus of the Group and to address key operationalissues. Trading for the full year is now expected to be close to the level oflast year, after which the effects of the operational focus should becomeapparent. We are confident that the changes we are making will enable us todeliver shareholder value." For further information please contact:Martin Brooks, Chairman & Interim Chief Executive 0870 333 7101Richard Kellett-Clarke, CFO 0870 333 7101Nadja Vetter / Emma Consett, Cardew Group 020 7930 0777 Notes to editors IDOX plc is a company specializing in software, solutions and recruitment forinformation management. IDOX Software is one of the leading players in the Local Government market formanaging paper and electronic records. IDOX Software has several modulesdesigned to capture, manage, store, preserve and, deliver information for usewithin an organisation and, for access externally by the public or otherpartners. The Group has a leading position in putting the Local GovernmentPlanning process online (its flagship Managed Services solution) and hasdeveloped the first true end-to-end e-Planning solution for Local Authoritiesand their citizens - UK Planning. Information Solutions develops and implements enterprise content managementstrategies that deliver improved business performance and services to customers.The team maintains a comprehensive database of bibliographic abstracts,supported by the largest collection of information in the UK, on all aspects ofbest practice and governance in the public sector. The Recruitment Division specialises in placing knowledge, information andrecords management specialists in permanent, interim contract and projectpositions. IDOX plc Chairman's and Chief Executive's Statement For the half year ended 30 April 2006 As announced in our trading statement on 5 May 2006, revenues for the first sixmonths to 30 April 2006 are at the level of the corresponding period of 2005.This is due to a combination of factors: competitive trading conditions in theSoftware market, a change in sales mix of Recruitment revenues, a flatperformance in the evolving Information Solutions business, and the loss of keysales staff at the beginning of the period. Some appropriate restructuringtogether with the appointment of new market facing personnel have given us thecapability to win and deliver more projects in the coming months. In spite of these factors, we have closed a number of sizeable contractsdemonstrating IDOX's ability to attract larger assignments. These largecontracts are more complex and take longer to complete. We have continued tosecure contracts in our traditional planning business, and in addition we havealso extended into other Council departments, such as revenues & benefits, as webecome increasingly recognised as a corporate-wide solutions provider. Financial Review Revenue for the six months ended 30 April 2006 were flat at £6.91m (2005:£7.02m). Profit before tax was breakeven (2005: £0.21m). The Group has remainedstrongly cash positive with cash rising by £1.66m to £5.38m at the half year(2005: £3.72m) which translates into 2.7p per share. The Local Authority market remained the Group's key focus, representing 44% ofthe Group's revenue. The wider public sector, is now 29%, and the private sector27% of Group revenue. The Group's recurring revenue is £3.2m representing 9.6% growth on 2005. TheSoftware division's first half performance has resulted in its largest everorder backlog being carried into the second half. Revenues in the Group's Information Solutions division remained flat during thefirst six months, due to staff shortages and recurring revenues have remainedconstant at approximately £0.9m. The situation has since been remedied and theoutlook is improving. The division made a first half loss and steps have beentaken to rectify this. Revenue in the Recruitment division was broadly unchanged. Although revenue frompermanent recruitment increased by 63% on the previous year, revenues fromcontract recruitment were down as a result of a number of contracts convertingto permanent placements and direct billing. This resulted in unchanged revenue at £2.54m (2005 £2.56m) but with an increase in profitability. We expect thecontract run rate to be built back up over the summer to historic levels. Operational Review Software The Local Authority market remains the primary market for our Software business.The first half has seen a number of significant contract wins with new andexisting customers. New contracts at Leeds City Council, Glasgow City Council,Aylesbury Vale District Council and the New Forest Park Authority amount to morethan £0.8m of new business alone. The Group is also extending its contracts intoother Council departments and is increasingly being recognised as acorporate-wide solutions provider, securing contracts with Kings Lynn & WestNorfolk Borough Council, Oadby & Wigston Borough Council, as well as animportant contract extension for its new Records Management System withColchester Borough Council. The initial implementations here total more than£0.4m. However, the performance in the first half of the financial year has been belowexpectations and steps are being taken to regain the initiative and focus thebusiness on the bottom line performance. Information Solutions Despite flat revenues during the first half, IDOX's recognised expertise inknowledge and information management, combined with its technical capability,provides a solid platform from which to extend its innovative informationsolutions. This allows us to open up opportunities in the wider Public,Government and Private sectors. Recruitment The permanent recruitment business has grown strongly as has the Recruitmentdivision's gross margin, as the roles being filled have become more specialised.The department has a focus on business development, recruitment of new staff andimprovements in systems and processes. Recent developments Since the period end, Andrew Fraser has resigned as Chief Executive and Directorof IDOX after seven years with the Group. I have assumed the additional role ofChief Executive for an interim period. The Board would like to thank Andrew forhis considerable contribution to the growth of the Group and wish him everysuccess in the future. Outlook The Board is in the process of refining the focus of each division andaddressing key operational issues. These actions are not expected to have anyimpact on the current financial year. Trading for the full year is now expectedto be close to the level of the previous year. New sales staff appointments havebeen made and while trading conditions will remain challenging, the outlook forthe Group is encouraging. The Board has confidence in the business going forward and anticipates thedeclaration of a dividend. Martin BrooksChairman and Chief Executive Officer16 June 2006 This announcement was approved by the Board of Directors on 16 June 2006 Consolidated Profit and Loss AccountFor the six months ended 30 April 2006 Note 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Turnover (2) 6,912 7,024 14,155External charges (2,604) (2,613) (5,048) ------- ------- ------- 4,308 4,411 9,107Staff costs (2,902) (2,874) (5,665)Other operatingcharges (1,471) (1,371) (2,685) ------- ------- ------- Operating(loss)/profit (65) 166 757Net interest 66 48 119 ------- ------- -------Profit on ordinaryactivities before taxation 1 214 876Tax on profit on ordinary activities (3) (130) - 700 ------- ------- ------- ------- ------- -------(Loss)/profit for the period transferred (from)/to reserves (129) 214 1,576 ------- ------- ------- (Loss)/earnings per shareBasic and diluted (4) -0.07p 0.12p 0.85p Consolidated Balance SheetAt 30 April 2006 Note At At At 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000Fixed assetsIntangible fixed assets 4,313 4,976 4,602Tangible assets 511 246 325 --------- -------- -------- 4,824 5,222 4,927Current assetsStock 4 - -Debtors 3,859 3,804 4,132Cash at bankand in hand 5,384 3,724 4,722 --------- -------- -------- 9,247 7,528 8,854 Creditors: amountsfalling due within one year (4,790) (4,182) (3,960) --------- -------- -------- Net current assets 4,457 3,346 4,894 Total assets less current liabilities 9,281 8,568 9,821 Creditors: amountsfalling due after more than one year (10) (20) (10) --------- -------- -------- Net assets 9,271 8,548 9,811 --------- -------- -------- Capital and reservesCalled upshare capital (5) 1,953 1,873 1,873Capital redemptionreserve (6) 1,112 1,112 1,112Share premiumaccount (6) 8,982 8,162 8,162Shares to beissued (6) - 1,400 1,300Other reserves (6) 1,294 1,294 1,294ESOP trust (6) (90) (79) (79)Profit andloss account (6) (3,980) (5,214) (3,851) --------- -------- --------Shareholders'funds 9,271 8,548 9,811 --------- -------- -------- Consolidated Cash Flow StatementFor the six months ended 30 April 2006 Note 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000Net cash inflow from operating activities (7) 926 1,000 2,126 Returns on investments andservicing of financeInterest received 66 48 119 -------- -------- -------- Net cash inflow fromreturns on investments and servicing of finance 66 48 119 Taxation - - - Capital expenditure andfinancial investmentPurchase of tangible fixedassets (319) (121) (320)Purchase of investment(ESOP trust) (11) - - -------- -------- -------- Net cash outflow fromcapital expenditure and financial investment (330) (121) (320)Acquisitions and disposals - - -Financing - - - -------- -------- --------Increase in cash (8) 662 927 1,925 -------- -------- -------- Notes on the Interim Report For the six months to 30 April 2006 1 BASIS OF PREPARATION The interim financial information has been prepared in accordance withapplicable United Kingdom accounting standards and under the historical costconvention. The principal accounting policies of the Group are set out in theGroup's 2005 annual report and financial statements. The policies remain asstated in the annual report for the year ended 31 October 2005. Recent accounting standards issued in the United Kingdom do not have a material impact on the Group. The financial information set out in this report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ended 31 October 2005 have been extracted from the statutory accounts, which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985. The interim financial statements have been reviewed by the Company's auditors. A copy of the auditors' review report is attached to the Interim Report. 2 SEGMENTAL ANALYSIS Turnover, operating (loss)/profit and net assets by class of business are set out below: 6 months to 6 months to 12 months to 30 April 2006 30 April 2005* 31 October 2005* (unaudited) (unaudited) (unaudited) £000 £000 £000TurnoverSoftware 2,661 2,784 5,748Information Solutions 1,711 1,680 3,322Recruitment 2,540 2,560 5,085 -------- ------- -------- 6,912 7,024 14,155 -------- ------- -------- Operating (loss)/profit Software 411 393 1,243Information Solutions (278) 29 (37)Recruitment 91 33 114 -------- ------- -------- 224 455 1,320Goodwill amortisation (289) (289) (563) -------- ------- -------- (65) 166 757 -------- ------- -------- Net assetsSoftware 5,433 3,848 5,121Information Solutions (624) (514) (288)Recruitment 149 238 376 -------- ------- -------- 4,958 3,572 5,209Goodwill 4,313 4,976 4,602 -------- ------- -------- 9,271 8,548 9,811 -------- ------- -------- * The segmental analysis has been expanded to provide more detailed information of the divisional performance. 3 TAX ON PROFIT ON ORDINARY ACTIVITIES The tax charge/(credit) is made up as follows: 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000Current taxUK corporation tax - - 2Adjustment in respect ofprior periods 41 - - -------- -------- --------Total current tax 41 - 2 Deferred tax - originationand reversal of timingdifferences 89 - (702) -------- -------- --------Tax on profit on ordinaryactivities 130 - (700) -------- -------- -------- Unrelieved trading losses of £1,683,000 (2005: £1,974,000) which, whencalculated at the standard rate of corporation tax in the United Kingdom of 30%,amounts to £505,000 (2005: £592,000). These remain available to offset againstfuture taxable trading profits. During the year ended 31 October 2004,£1,514,000 of tax losses relating to prior periods (years ended 31 October 2001and 31 October 2002) were surrendered in exchange for the research anddevelopment tax credit. The tax credits in relation to the year ended 31 October2002 may be subject to claw back by the Inland Revenue but if this occurred 2/3of the tax losses surrendered in respect of that year would be reinstated. 4 (LOSS)/EARNINGS PER SHARE The (loss)/earnings per share is calculated by reference to the (loss)/earningsattributable to ordinary shareholders divided by the weighted average number ofshares in issue during each period, as follows: 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited)(Loss)/profit for the period (£000) (129) 214 1,576Weighted average number ofshares in issue 190,479,843 182,949,266 185,229,865Dilutive effect of shareoptions - - 357,474 -------- -------- --------Total 190,479,843 182,949,266 185,587,339 -------- -------- --------Basic and diluted (loss)/earnings per share (0.07)p 0.12p 0.85p The share options are anti dilutive under FRS 14 in respect of the six monthsended 30 April 2006 and 30 April 2005. 5 SHARE CAPITAL 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- --------Authorised: 297,000,000 ordinary shares of 1peach 2,970 2,970 2,970 -------- -------- --------Allotted, called up and fully paid 195,260,900 ordinary shares of 1peach (2005: 187,243,083) 1,953 1,873 1,873 -------- -------- -------- Movement in Issued Share Capital in the Period On 30 January 2006, a total of 8,017,817 new ordinary 1p shares (New OrdinaryShares) were issued to the Vendors of TFPL Limited, at a price of 11.225p. Thisshare issue was part of the earnout for the acquisition of TFPL Limited. Thedifference between the total consideration of £900,000 and the total nominalvalue of £80,000, amounting to £820,000, has been credited to the share premiumaccount. The New Ordinary Shares rank pari passu with the existing ordinaryshares of the Company and represented 4.11 per cent of the enlarged issued sharecapital of the Company at that time. The new shares started trading on the 30January 2006 on the AIM Market of the London Stock Exchange. 6 SHARE PREMIUM ACCOUNT AND RESERVES Issued Capital Share Shares Other ESOP Profit Total share redemption premium to be reserves trust and loss capital reserve issued account £000 £000 £000 £000 £000 £000 £000 £000 At 1 November 2005 1,873 1,112 8,162 1,300 1,294 (79) (3,851) 9,811New sharesissued 80 - 820 (900) - - - -Adjustment - - - (400) - (11) - (411)Loss for the period - - - - - - (129) (129) ------- -------- ------- ------- ------- ------- ------- -------At 30 April 2006 1,953 1,112 8,982 - 1,294 (90) (3,980) 9,271 ------- -------- ------- ------- ------- ------- ------- ------- The adjustment in the shares to be issued represents a renegotiation of theearnout payable to the Vendors of TFPL Limited, with the final two tranches of£200,000 now payable in cash. This has therefore been reclassified as aliability, shown within creditors due within one year. The Group established anew HM Revenue & Customs approved, share investment plan for the benefit ofemployees during the period. This allows staff to purchase up to £1,500 ofshares each year which will be matched by the Group. The matching shares areheld in the ESOP Trust until a three year qualifying period has elapsed. At 30April 2006, the value of matching shares held was £11,000 (2005: £Nil). 7 NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Operating (loss)/ profit (65) 166 757Depreciation 133 122 242Goodwill amortisation 289 289 563Increase in stock (4) - -Decrease /(increase) indebtors 143 (492) (118)Increase in creditors 430 915 682 -------- -------- --------Net cash inflow fromoperating activities 926 1,000 2,126 -------- -------- -------- 8 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months to 6 months to 12 months to 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) £000 £000 £000Increase in cash in theperiod, being movement innet funds in the period 662 927 1,925Net funds at 1 November 2005 4,722 2,797 2,797Net funds at 30 April 2006 5,384 3,724 4,722 9 POST BALANCE SHEET EVENTS On 31 May 2006, the Group purchased 30,748 shares in the Company at a price of8.75p and sold 495 shares at a price of 8.00p as part of the IDOX shareinvestment plan. Of the shares purchased, half relates to the matching sharespurchased by the Group. On 31 May 2006, the Group paid £200,000 in cash to theVendors of TFPL Limited in satisfaction of the penultimate tranche of theearnout. INDEPENDENT REVIEW REPORT IDOX PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 April 2006 which comprises the consolidated profit andloss account, consolidated balance sheet, consolidated cash flow statement andthe related notes 1 to 9. We have read the other information contained in theinterim report which comprises only the Chairman's and Chief Executive's statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Our responsibilities do not extend to any other information. This report is made solely to the company's members, as a body, in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusion we have formed. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. They areresponsible for preparing the interim report and ensuring that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists primarily of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom auditing standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 April 2006. GRANT THORNTON UK LLPCHARTERED ACCOUNTANTSLONDON 16 June 2006 This information is provided by RNS The company news service from the London Stock Exchange