Interim Results

i-documentsystems Group PLC 8 July 2002 8 July 2002 i-documentsystems group plc Interim Results for the six months ended 30 April 2002 Highlights â€¢ Turnover up by 152% to Â£1.16m (2001: Â£459,379) â€¢ Cash of Â£1.94m as at 30 April 2002 (rising to Â£3.13 million on 10 May 2002 post fund-raising and acquisition of The Planning Exchange) â€¢ Strengthening of market position as a leading e-government solution provider by winning 13 new council customers during the six months taking the total to 40 â€¢ Commencement of UKPlanning (business process outsourcing and information solution) rollout â€¢ Further development of strategic marketing alliances â€¢ Pathfinder Planning solution delivered for Wandsworth - the first of its kind in the U.K. â€¢ Pipeline opportunities continue to increase both in quantity and quality â€¢ Placing of new shares and acquisition of The Planning Exchange, completed in May 2002 John Wisbey, Chairman, commented: 'I am pleased to report that i-documentsystems has made considerable progress during the first six months of the current financial year, evidenced by the fact that revenue has more than doubled to Â£1.158 million. The Group continues to build upon and strengthen its position as a leading player in its chosen sectors of e-government. As a result of mounting brand awareness and new opportunities, orders in the pipeline continue to register healthy growth. The Board is encouraged by these developments and believes the Group is on track to achieve its stated aim of reaching profitability for the financial year ending October 2003. 'Since the end of the period under review, we have completed the acquisition of the business and assets of The Planning Exchange. The combination of our UKPlanning service and The Planning Exchange's Information Service enables us to offer the premier business process outsourcing solution to the planning and regeneration industry. This, in turn, will open up significant opportunities to win new business from our existing customers and to build new revenue streams.' For further information please contact: John Wisbey, Chairman 020 7353 5330 Andrew Fraser, CEO 020 7427 0660 Tim Bowen, CFO 020 7427 0660 Jonathan Rooper / Nadja Vetter, Cardew & Co. 020 7930 0777 Ben Thomson / Alasdair Robinson, Noble & Co. 0131 225 9677 i-documentsystems group plc Chairman's Statement For the six months ended 30 April 2002 I am pleased to report that i-documentsystems group plc ('the Group') has made considerable progress during the first six months of the current year, illustrated by the fact that revenue has more than doubled to Â£1.158 million compared with the same period a year ago. The Group continues to build on and strengthen its position as a lead player in its chosen sectors of e-government. Through its Image-Gen software, the Group has successfully built upon its position in the Local Government market. Image-Gen is now used by 40 local authority clients compared with 19 at the end of April 2001 and 27 at 31 October 2001. The number of potential contracts in the pipeline is increasing and the Group's partnerships with major systems integrators will open up additional new business channels. An important milestone in the period was winning, and completing in April 2002, a Pathfinder project from Wandsworth Council for our UKPlanning product. The Pathfinder initiative is a Central Government-backed project to demonstrate the cutting edge of e-government delivery. We believe it is the only such project in the U.K. and has high visibility in U.K. Local Government circles. It has already led to a significant number of word of mouth inspired enquiries. Towards the end of the half year the Group announced its intention to acquire The Planning Exchange in Glasgow. This acquisition was completed at the beginning of May, concurrent with a successful fund-raising of over Â£1.4 million by the Group. Operating and Financial Review The Group incurred a loss of Â£559,437 (2001: Â£474,551) for the six months to 30 April 2002 on a turnover of Â£1.16 million (2001: Â£459,379). This equates to a loss per share of 0.46 pence (2001: 0.41 pence). The gross margin increased slightly to 75% for the period (2001: 72%). The results were in line with expectations, with the increased loss due to a planned rise in staff costs from Â£534,634 to Â£1.01 million reflecting the full cost of staff recruited towards the end of the previous financial year. Net cash as at 30 April 2002 amounted to Â£1.94 million compared with Â£3.16 million as at 30 April 2001. At 10 May 2002, following the acquisition of The Planning Exchange and the capital raising, net cash stood at Â£3.13 million. It should be noted that the Group's accounting policy remains to write off in full all R&D expenditure as soon as it is incurred. There has been no capitalisation of expenses on any assets created internally. Local Authority Business The Group achieved its target of 40 local authority customers for Image-Gen by the end of the six months under review. A total of 50 local authority clients for Image-Gen remains the target for the end of the financial year. However, the nature of our local authority relationships is evolving rapidly. The Group is now winning contracts in a range of local authority departments, such as housing, social services and education, some of which are significantly different (both higher and lower) in scale and nature from the planning department contracts which accounted for much of i-documentsystems' turnover last year. The Planning Exchange adds approximately 70 further local authority clients to the customer list. The niche of local authority planning departments remains our prime sales target as it allows potential entry into other departments. There are 468 local authorities in the U.K., all of which are expected to comply with the Prime Minister's directive to ensure that all appropriate Local Government services are available electronically by 2005. Reinforcing this pressure from Central Government, there is a strong cost saving and efficiency argument for electronic availability of documents in planning departments. The Group continues to believe that it is well placed to gain significant additional contracts from the remainder of the U.K. local authorities. Our Pathfinder solution for Wandsworth has demonstrated to other councils how e-government within planning can be best delivered. Our participation in relevant trade shows continues to prove highly successful, resulting in a significant number of sales opportunities. Strategy and Alliances The Board believes that significant opportunity exists to provide e-government solutions for the range of tasks carried out by Environmental Services departments within local authorities. The Group will continue to seek strategic partnerships where appropriate in order to widen its offering to other local authority departments and Central Government to facilitate the opening of new markets. Last year the Group entered such partnerships with Hyder Business Services (HBS) and MVM Consultants plc, a subsidiary of Anglian Water plc. During the past six months, the Group has reached a three-year distribution agreement with Serco for its Image-Gen suite of e-government products and services. Under the agreement Serco will integrate Image-Gen with their own software (using XML for the integration of data) and market the combined product in their own core markets, including the substantial U.K. policeforce marketplace. This is a clear indication that the Group's software is highly adaptable and is scaleable to meet varying demands. Discussions are also being held with other potential partners. Banking and Financial Business Although the Group's emphasis is not on the financial services sector we retain a number of banking customers. The Group may develop this market further through partnerships and reseller arrangements should the market opportunity broaden. Product Development There have been significant developments in our core suite of products. Additional capability at our new Glasgow office has speeded our development of both Image-Gen and UKPlanning. We have deliberately built functionality into UKPlanning so that it can be used with the traditional Image-Gen product suite allowing for enhancements to our i-portal and i-xml servers. Functionality was a major factor in the success of the Wandsworth Pathfinder project. This required the integration of intelligent electronic planning and building control forms with on-line payment, address databases and CAD drawings. XML data was also passed into the application system for further processing. This level of integration enabled Wandsworth to achieve significant reductions in the costs of processing applications. This, we believe, is the first fully integrated submission mechanism to be implemented within Local Government in the U.K. Image-Gen development has included J2EE server compliance, completion of an XML/ SOAP server interface compatible with Microsoft.NET, further development of internally submitted forms functionality, electronic records management capabilities, general improvements to the usability of the product, and an interface to enable the public display of committee records on a council web-site. Improvements have also been made to the scalability of the product to facilitate its rollout to potentially thousands of users across an organisation. UKPlanning The Group has developed further the UKPlanning system via an ASP (Application Service Provider) model designed to enable local authorities to store and index planning documents in order to make them available for public inspection on the internet. The Group provides this service on an outsourced basis using its existing Image-Gen technology, reducing the need for each council to develop separate expertise. This allows each participating council's planning applications to be accessed through a single internet portal (www.ukplanning.com). People Staff numbers increased to 47 (25 as at 30 April 2001) during the period under review. This expansion has been centred on the sales and marketing areas and in the Glasgow office where we continue to take advantage of a highly skilled and competitive pool of information technology talent available in Scotland. Technical and sales support for Scotland and much of the North of England is handled from Glasgow. Our overall staff strategy has been to build a team capable of delivering and managing our rapid business growth and help us to take advantage of business opportunities. With the acquisition of The Planning Exchange in May we have acquired an additional 27 staff, taking overall staff numbers to 74 as at 10 May 2002. Other than for a limited number of potential key new positions, most of the additional staff earmarked for the UKPlanning business to business and business to commerce phases have effectively been already gained through the acquisition of The Planning Exchange. Dividend In line with stated policy, earnings for the foreseeable future will be re-invested to finance the growth of the Group's business. The Directors do not recommend the payment of a dividend. Recent developments and outlook Acquisition of The Planning Exchange As mentioned earlier, since the period under review, the Group (via its 100% owned subsidiary Idox Information Services Limited) acquired the business and assets of The Planning Exchange for Â£442,725. The Planning Exchange provides content and information services to the planning and wider community relating to economic, environmental and physical regeneration and development in the U.K. The acquisition brings with it more than 300 customers of which approximately 70 are U.K. local authorities. Other clients include government departments, consulting firms, housing organisations and research bodies. This acquisition has the potential to be far more significant to the Group than its size might suggest and allows us to be an important provider of information as well as software to local government. As the market evolves, this combination is likely to have considerable strategic value. Not only will it enable us to provide a more comprehensive service and achieve cross-selling opportunities, but it also means that in certain areas it will be very difficult for any competitor to replicate our offering. We are pleased with the cultural and business combination and have high expectations of what we can achieve together in our common marketplace. Funding of the acquisition A total of 11,986,668 new ordinary 1 penny shares (New Ordinary Shares) were placed on behalf of the Group with new and existing institutional investors, at a price of 12 pence per share. The New Ordinary Shares rank pari passu with the existing ordinary shares of the Group and represent 8.54 per cent of the enlarged issued share capital of the Group. The Placing raised Â£1.44 million before expenses of the issue, the proceeds of which were used towards the acquisition of The Planning Exchange and to augment the Group's existing working capital. The acquisition was completed on 7 May 2002. The new shares started trading on 10 May 2002 on the Alternative Investment Market (AIM) of the London Stock Exchange. Outlook Overall, the first half of the financial year to 31 October 2002 was in line with our expectations to more than double revenue compared with the corresponding period of 2001. The Board believes that very significant revenue growth is likely to be achieved for the full year to October 2002, excluding the additions to revenue that will arise from The Planning Exchange. The Board's primary focus remains to continue to build market share, having put in place much of the necessary management and infrastructure. As a result of mounting brand awareness and new opportunities, orders in the pipeline continue to register healthy growth. The Board is encouraged by these developments and believes the Group is on track to achieve its stated aim of reaching profitability for the year ending October 2003. The staff of i-documentsystems have all worked very hard and deserve considerable recognition and thanks, both in Glasgow and in London, for achieving over 100% organic revenue growth while managing the Group's first acquisition. We are delighted to welcome the staff of The Planning Exchange to the Group; it is very encouraging that post merger integration is being accomplished very swiftly and so effectively. John Wisbey Chairman 5 July 2002 The interim report was approved by the Board of Directors on 5 July 2002. i-documentsystems group plc Consolidated Profit and Loss Account For the six months ended 30 April 2002 Note 6 months to 30 6 months to 12 months to April 2002 30 April 2001 31 October 2001 (unaudited) (unaudited) (audited) Â£ Â£ Â£ Turnover 1,158,948 459,379 1,201,192 External charges (291,575) (126,847) (431,730) 867,373 332,532 769,462 Staff costs (1,011,130) (534,634) (1,296,372) Other operating charges (450,233) (348,645) (800,885) Operating loss (593,990) (550,747) (1,327,795) Net interest 34,553 76,196 146,522 Loss on ordinary activities before taxation (559,437) (474,551) (1,181,273) Tax on loss on ordinary activities 0 0 0 Loss for the period transferred from reserves (559,437) (474,551) (1,181,273) Loss per share (pence) Basic and diluted (3) (0.46) (0.41) (0.97) i-documentsystems group plc Consolidated Balance Sheet At 30 April 2002 At At At 30 April 2002 30 April 2001 31 October 2001 (unaudited) (unaudited) (audited) Â£ Â£ Â£ Fixed assets Tangible assets 142,518 62,755 124,094 Current assets Debtors 1,015,337 659,764 797,096 Cash at the bank and in hand 1,938,552 3,161,742 2,371,758 2,953,889 3,821,506 3,168,854 Creditors: amounts falling due within one year (988,758) (510,437) (625,862) Net current assets 1,965,131 3,311,069 2,542,992 Net assets 2,107,649 3,373,824 2,667,086 Capital and reserves Called up share capital 1,283,172 1,283,172 1,283,172 Deferred share capital 1,112,014 1,112,014 1,112,014 Share premium capital 2,789,389 2,789,405 2,789,389 Other reserves 1,239,471 1,239,471 1,239,471 Profit and loss account (4,316,397) (3,050,238) (3,756,960) Equity shareholders' funds 2,107,649 3,373,824 2,667,086 i-documentsystems group plc Consolidated Cash Flow Statement For the six months ended 30 April 2002 Note 6 months to 6 months to 12 months to 30 April 2002 30 April 31 October 2001 (unaudited) 2001 (audited) Â£ (unaudited) Â£ Â£ Net cash outflow from operating activities (4) (389,540) (712,298) (1,477,539) Returns on investment and servicing of finance Interest received 32,291 76,196 145,439 Net cash inflow from returns on investments and servicing of finance 32,291 76,196 145,439 Capital expenditure and financial investment Purchase of tangible fixed assets (75,957) (47,835) (142,921) Sale of tangible fixed assets 0 0 1,116 Net cash outflow from capital expenditure and financial investment (75,957) (47,835) (141,805) Financing Issue of share capital 0 3,115,913 3,115,897 Net cash inflow from financing 0 3,115,913 3,115,897 (Decrease)/increase in cash (433,206) 2,431,976 1,641,992 i-documentsystems group plc Notes on the Interim Report For the six months ended 30 April 2002 1 Basis of Preparation The interim financial information has been prepared in accordance with applicable United Kingdom accounting standards and under the historical cost convention. The principal accounting policies of the Group are set out in the Group's 2001 annual report and financial statements. The policies remain as stated in the annual report for the year ended 31 October 2001. The Group has implemented FRS19 Deferred Tax. The called up share capital and other reserves at 30 April 2001 have been re-presented for consistency with the balance sheets at 31 October 2001 and 30 April 2002. There has been no alteration to the total amount of capital and reserves at 30 April 2001. 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 2001 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 Post Balance Sheet Events On 7 May 2002, Idox Information Services Limited, a newly formed subsidiary of i-documentsystems group plc, acquired the assets and liabilities of The Planning Exchange. The Planning Exchange provides content and information services to the planning and wider community on aspects of economic, environmental and physical regeneration and development in the U.K. to a client base of over 300 subscribers, of which approximately a quarter are local authorities. Other clients include government departments, consulting firms, housing organisations and research bodies. The total consideration is Â£442,725. On 10 May 2002, the Group placed a total of 11,986,668 new ordinary 1 penny shares ('New Ordinary Shares') with new and existing institutional investors, at a price of 12 pence per share. The Placing raised Â£1,438,400 before expenses. The proceeds were used towards the acquisition of the trade and net assets of The Planning Exchange as well as to augment the Group's existing working capital. The New Ordinary Shares rank pari passu with the existing ordinary shares of the Group and represent 8.54 per cent of the enlarged issued share capital of the Group. Dealings in the New Ordinary Shares commenced on Friday 10 May 2002. An unaudited pro forma balance sheet showing the effect the placing and acquisition would have had if they had occurred on 30 April 2002 is shown below: 2 Post Balance Sheet Events (continued) Balance sheet at Aquisition and Pro forma 30 April 2002 placing balance sheet (unaudited) (unaudited) (unaudited) Â£ Â£ Â£ Fixed assets Tangible 142,518 49,285 191,803 Intangible 727,156 727,156 142,518 776,441 918,959 Current assets Debtors 1,015,337 363,327 1,378,664 Cash at bank and in hand 1,938,552 1,191,730 3,130,282 2,953,889 1,555,057 4,508,946 Creditors: amounts falling due within one year (988,758) (928,524) (1,917,282) Net current assets 1,965,131 626,533 2,591,664 Net assets 2,107,649 1,402,974 3,510,623 Capital and reserves Called up share capital 1,283,172 119,867 1,403,039 Deferred share capital 1,112,014 1,112,014 Share premium account 2,789,389 1,288,999 4,078,388 Other reserves 1,239,471 1,239,471 Profit and loss account (4,316,397) (5,892) (4,322,289) Equity shareholders' funds 2,107,649 1,402,974 3,510,623 3 Loss Per Share The loss per share is calculated by reference to the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during each period, as follows: 6 months to 6 months to 12 months to 30 April 2002 30 April 2001 31 October 2001 (unaudited) (unaudited) (audited) Â£ Â£ Â£ Loss for the period (Â£) (559,437) (474,551) (1,181,273) Weighted average numbers of shares in issue 122,139,763 115,962,000 122,139,763 Loss per share (pence) (0.46) (0.41) (0.97) The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per ordinary share are identical to those used for basic loss per ordinary share. This is because the conversion of preference shares or exercise of options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of FRS 14 Earnings per Share. 4 Net Cash Outflow from Operating Activities 6 months to 6 months to 12 months to 30 April 2002 30 April 2001 31 October 2001 (unaudited) (unaudited) (audited) Â£ Â£ Â£ Operating loss (559,437) (550,747) (1,327,795) Depreciation 57,533 16,926 50,674 Loss on disposal of tangible fixed assets 0 1,117 0 Increase in debtors (215,979) (414,938) (551,187) Increase in creditors 362,896 235,344 350,769 Net cash outflow from operating activities (389,540) (712,298) (1,477,539) 5 Reconciliation of Net Cash Flow to Movement in Net Funds 6 months to 6 months to 12 months to 30 April 2002 30 April 2001 31 October 2001 (unaudited) (unaudited) (audited) Â£ Â£ Â£ (Decrease)/increase in cash in the period, being movement in net funds in the period (433,206) 2,431,976 1,641,992 Net funds at 1 November 2001 2,371,758 729,766 729,766 Net funds at 30 April 2002 1,938,552 3,161,742 2,371,758 6 A copy of the Interim Report for the six months to 30 April 2002 will be sent to shareholders as soon as possible. Copies of this announcement will be available, free of charge, for a period of one month from the Company's Nominated Adviser: Noble & Company Limited 1 Frederick's Place London EC2R 8AB This information is provided by RNS The company news service from the London Stock Exchange

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