Interim Results
i-documentsystems Group PLC
12 July 2004
i-documentsystems group plc
Interim Results for the six months ended 30 April 2004
Highlights
• Turnover increased by 72% to £3.28 million (2003: £1.90 million)
• Cash of £2.41 million at 30 April 2004 (2003: £2.15 million)
• Recurring annualised revenue £2.40 million (2003: £1.51 million)
• Gross margin of 85% (2003: 87%)
• Loss before tax of £0.19 million (2003: loss of £0.46 million)
• Profit after tax* of £0.05 million (2003: loss of £0.46 million)
*(Including R & D tax credit)
• Successful integration of acquisitions, new client wins and broadening of
services within existing client base
For further information:
Andrew Fraser, CEO i-documentsystems group plc 020 7427 0660
Tim Bowen, CFO and COO i-documentsystems group plc 020 7427 0660
Nadja Vetter / Richard Fallowfield Cardew Chancery 020 7930 0777
Notes to editors:
i-documentsystems group plc (IDOX) is a fast-growing information and knowledge
management company, specialising in the development and delivery of software
products, services and people for information management and knowledge sharing
for both the public and private sectors. The Group's focus is on managing the
world of structured and unstructured information, for, and on behalf of its
clients.
The Advisory team specialises in devising creative and innovative solutions to
problems associated with information, knowledge and content management. Where a
skills gap is identified, the Recruitment teams place candidates of all levels
into permanent, contract, and executive positions.
IDOX Software is one of the biggest sellers in Local Government for managing
paper and electronic records. IDOX Software has several modules designed to
capture, manage, store, preserve and deliver information for use both within an
organisation, and for access externally - by the public or other partners.
The Group maintains a comprehensive database of bibliographic abstracts,
supported by the largest collection of information in the UK, on all aspects of
best practice and governance in the public sector. Expert information
professionals identify, summarise and manage a vast resource of information from
all sectors to save member organisations time and money. This outsourced library
service is available via annual subscription.
Training is also a core offering and is delivered in a variety of formats via
leading industry practitioners.
The Group has a leading position in putting the Local Government Planning
process online (its flagship Managed Services solution) and has developed the
first true end-to-end e-Planning solution for Local Authorities and their
citizens - UKPlanning.
Chairman's Statement
For the six months ended 30 April 2004
I am pleased to announce the results for the six months ended 30 April 2004. The
results, which were in line with expectations, clearly demonstrate that our
strategy of combining software with content is proving to be successful. The
Group benefited from its growing client portfolio and expanded its services
among existing clients. Our performance further underlines our belief that the
Group's offering is unparalleled in the sector and would be exceedingly
difficult to replicate. IDOX is now positioned as one of the leading providers
of information management solutions in the UK public sector.
In line with expectations, the Group's revenues for the six months have
increased by 72% to £3.28 million (2003: £1.90 million). The Group incurred a
pre-tax loss of £0.19 million (2003: £0.46 million) and recorded an after tax
profit of £0.05 million. Cash reserves stood at £2.41 million compared with
£2.15 million at 30 April 2003.
The Group has continued to augment its recurring revenue through the increased
provision of its core services: software maintenance, long-term managed service
contracts and information subscriptions. Some £2.40 million of annualised
recurring revenues were achieved by the end of the period compared with £1.51
million at the end of April 2003. This steady income flow underpins our growth
strategy and will help to improve the overall quality of our earnings.
In line with our stated policy, earnings for the foreseeable future will be
re-invested to finance the growth of the business. The Directors, therefore, do
not recommend the payment of a dividend.
In March 2004 shareholders agreed to change the Group's name to IDOX plc. This
change will be effected in September 2004.
Since the end of the period under review, IDOX has acquired TFPL Ltd (TFPL), a
leading knowledge and information management services firm. Details of the
transaction were announced on 10 May 2004. The rationale for this acquisition is
the continued enhancement of our customer offering. The acquisition further
strengthens our information and knowledge management capability. In addition to
our core services, TFPL now enables IDOX to provide clients with expert
consultancy, project management and implementation together with training
resources and recruitment services for specialist personnel. Initial signs
indicate that TFPL's services have been very well received by our clients.
The Board remains committed to enhancing shareholder value through the
achievement of ongoing profitability and a strategy of increasing market share,
both organically and by acquisition. The pipeline and order book continues to
grow. Encouraged by our current progress, we believe that IDOX is on course for
its stated aim of moving into sustained profitability by the end of October
2004, with annualised revenues for the second half of the year in excess of £10
million for the first time.
In May 2004, I informed the Board of my decision to step down as Non Executive
Chairman of the Group as soon as a suitable successor could be identified. The
process of recruiting a successor is now under way. I have found my time as
Chairman of IDOX to be both tremendously exciting and very gratifying. It has
been a particular pleasure to have been involved in building a company that is
now widely perceived as a leader in its chosen field with a promising future.
IDOX's continued growth means that the Chairman's position requires a greater
time commitment than I can offer at this time.
Finally, I would like to extend my gratitude to our employees, customers,
suppliers and shareholders whose respective commitment and dedication to IDOX
represent an integral part of our continued success.
John Wisbey
Chairman
9 July 2004
Chief Executive's Report
For the six months ended 30 April 2004
Financial Review
The Group's revenues increased from £1.90 million to £3.28 million, a 72% gain,
for the six months ended 30 April 2004. The recorded profit after tax was £0.05
million taking into account a research & development tax credit of £0.24 million
which was received during the period. This equates to earnings per share of 0.03
pence (2003: loss per share of 0.33 pence). The Group reduced its pre-tax loss
from £0.46 million in April 2003 to £0.19 million. The gross margin for the
period was 85% (2003: 87%). Net cash at 30 April 2004 amounted to £2.41 million
(2003: £2.15 million).
We are pleased to report that the Group traded profitably for 3 months of the 6
month period under review.
IDOX has evolved and enhanced its product offering from that of a pure software
provider to a group that possesses a strong expertise in combining software with
content. With a focus on recurring income, IDOX greatly increased its annualised
recurring revenue from £1.51 million at the end of April 2003 to £2.40 million
at 30 April 2004. While in the first year of a managed service contract IDOX
receives less revenue than it would for an outright sale of software, the Group
believes that the creation of strong recurring revenue streams will give the
Group a higher quality of earnings and greater visibility in the future.
IDOX Product and Service Offerings
The Group's business base comprises three key areas: software, information and
managed services. All three divisions within the Group have made considerable
progress during the period. IDOX is now successfully positioned not only as an
important provider of information and software to Local Government but
increasingly as an information management company providing professional
expertise in the handling of information. This unique blend of software and
content has earned the Group recognition as a major player within Local
Government agencies and departments.
IDOX continues to make good progress in winning contracts in departments outside
its original expertise of Planning, such as Education, Social Services and Chief
Executive's departments. As providers of corporate solutions within Local
Authorities, the Group is exploring a range of opportunities mainly with
National and Regional Government where links to Local Government are required.
IDOX continued to increase its market share with 14 new Local Authority software
clients contracted since October 2003. The Group's software offering continues
to be rolled out across the new departments of existing Local Authority
customers as well as being integrated amongst the IT infrastructure of new
Councils. The cumulative result of having IDOX solutions installed in multiple
departments within a Local Authority is that IDOX is now being awarded larger
'corporate solution' type tenders.
The Group also continued to cross sell Mandoforms, the online forms specialist
acquired by IDOX in August 2003, while also winning new departments within the
existing Local Authority client base. This year Mandoforms has taken steps to
expand into the mobile electronic forms market. Two implementations, one at
Teignbridge District Council and one at Leicestershire County Council, have seen
the installation of benefits and social services forms on laptops, enabling
officers to record information in citizens' homes.
Our principal managed service offering, UKPlanning, continues to attract
considerable interest. This area of business is progressing well with 18
Councils now signed up. Prospects for UKPlanning remain positive as the benefits
and cost savings of the service become evident to customers.
IDOX's information service is increasingly being used by departments and
organisations as their in-house library. The Group believes it is only a small
step from this service offering to providing a managed service for all
information management requirements, including internally generated information.
IDOX is already consulting with existing and potential clients that require
information to be managed across several offices. IDOX has experience of
outsourcing through its UKPlanning ASP model which effectively relieves a
Council of much of the administrative burden in processing planning
applications.
Market Place and Market Dynamics
The market for Local Authority software solutions continues to grow. The Office
of the Deputy Prime Minister (ODPM) has committed additional expenditure to
support e-Government over the next two years, which should see budgets overall
higher than in any of the previous two years. The Freedom of Information Act,
which becomes effective in January 2005, will put further pressure on Councils
to be able to deliver information efficiently; the cost of old and inefficient
systems will increase dramatically with increased throughput. At the same time,
the e-Government deadline of 2005 remains and Councils now know they must commit
their budgets soon to be able to meet it.
While the number of firms attempting to enter the Local Authority marketplace
has increased of late, the only real impact on the Group has been that Councils
have taken longer to evaluate tenders as a result of an increase in volume of
responses. Substantial barriers to entry remain in this marketplace primarily
due to the necessity of having suitable reference sites.
In addition, the Government is encouraging Local Authorities to not merely add
technology to their existing processes, but to completely re-evaluate those
processes in order to fully support e-services. It is clear that Local
Authorities are struggling to understand how to manage and use the wealth of
information around them. IDOX aims to take a more comprehensive approach than
its competitors by providing the information, the tools to handle the
information and the expertise to implement and manage the process. Consequently
the Group continues to believe that it is well-placed to gain significant
additional contracts from the remainder of the UK Local Authorities, as well as
additional business from existing Local Authority customers.
Product and Service Development
The Group has integrated its software and content and is now carrying out an
increasing amount of project business creating and maintaining the information
and the web presentation for customers such as RegenWM, the Centre of Excellence
in Regeneration for the West Midlands; Futureskills Scotland, on behalf of
Scottish Enterprise and Highlands and Islands Enterprise; and the ODPM
Neighbourhood Renewal Unit's renewal.net. The Group believes the combined
offering of software and content is unique to IDOX and positions us well for
future projects.
The demand for electronic forms continues to increase. IDOX has developed a
substantially more sophisticated solution with the ability to validate converted
CAD (computer aided design) files visually, when forms are submitted online.
This is a real-time conversion allowing an applicant to view the submitted
drawing in CAD form and see the conversion in a non-proprietary format. The
number of electronic forms developed for Councils has increased significantly.
The development of the new Records Management module is expected to gain
National Archives accreditation later in 2004. This product is required to
enable IDOX Software to meet the Public Records Office 2002 specification which
is fast becoming a pre-requisite to conforming to the requirements of the
Freedom of Information Act and other legislation with which our customers must
comply.
People
Employees totalled 93 at 30 April 2004, compared with 94 at 31 October 2003 and
78 at 30 April 2003. The Group now possesses a team and infrastructure capable
of delivering and managing rapid business growth. The anticipated higher revenue
flows can be accommodated within a stable cost base.
Recent Developments
Since the end of the period under review IDOX has acquired TFPL, a leading
knowledge and information management consulting firm. TFPL is an established
information services company, headquartered in London, specialising in
consultancy, recruitment, training and research services. Since 1987, TFPL has
focused its resources on delivering information, knowledge, records and content
management expertise and solutions to clients across the financial and
professional services market as well as the public sector.
The acquisition of TFPL will enable IDOX to provide clients with expert
consultancy, project teams, training and recruitment services in addition to the
Group's information management software and services offering. The transaction
is further expected to provide the enlarged Group with considerable
cross-selling opportunities.
One of the recent information projects that IDOX has won is a contract in
partnership with TFPL to assist the ODPM and English Partnerships in
establishing a high level learning network of around 80 Chief Executives in the
public and private sectors who are involved in implementing the Sustainable
Communities Plan.
Funding for the transaction was arranged via a placing of 23,000,000 new
ordinary shares raising £2.30 million before issue expenses, at a price of 10p
per share.
Strategy and Outlook
The Group will continue to seek to increase its market share, revenue and
profitability, through organic growth and appropriate acquisitions. The Board's
goal is to build on this progress thereby ensuring profitability for 2004. While
it remains difficult to predict the timing of contract signings, the pipeline is
strong and a number of new contracts have already been secured since the end of
the period. The Group's recurring revenue streams from maintenance, information
services and UKPlanning form a secure foundation for our business and we remain
conservatively optimistic about future growth plans.
Andrew Fraser
Chief Executive
9 July 2004
This announcement was approved by the Board of Directors on 9 July 2004.
Consolidated Profit and Loss Account
For the six months ended 30 April 2004
Note 6 months to 30 6 months to 30 12 months to
April 2004 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Turnover 3,283,879 1,903,078 4,472,305
External charges (504,747) (245,344) (611,361)
2,779,132 1,657,734 3,860,944
Staff costs (2,068,182) (1,554,171) (3,224,149)
Other operating charges (936,821) (599,813) (1,305,717)
Operating loss (225,871) (496,250) (668,922)
Net interest 33,551 37,068 73,862
Loss on ordinary activities
before taxation (192,320) (459,182) (595,060)
Tax on loss on ordinary
activities (2) 243,613 - -
Profit / (loss) for the period
transferred to / (from) reserves 51,293 (459,182) (595,060)
Earnings / (loss) per share
Basic and diluted (3) 0.03p (0.33)p (0.42)p
Consolidated Balance Sheet
At 30 April 2004
At At At
30 April 2004 30 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Fixed assets
Intangible fixed assets 1,590,491 660,606 1,703,513
Tangible assets 278,884 285,818 255,561
Investments 79,491 28,344 28,344
1,948,866 974,768 1,987,418
Current assets
Debtors 2,171,852 1,427,078 1,530,906
Cash at bank and in hand 2,414,244 2,148,311 2,646,695
4,586,096 3,575,389 4,177,601
Creditors: amounts falling due within
one year (3,159,026) (2,268,936) (2,840,376)
Net current assets 1,427,070 1,306,453 1,337,225
Total assets less current liabilities 3,375,936 2,281,221 3,324,643
Creditors: amounts falling due after
more than one year (30,000) (40,000) (30,000)
Net assets 3,345,936 2,241,221 3,294,643
Capital and reserves
Called up share capital 1,536,789 1,408,039 1,536,789
Share premium account 5,159,088 4,098,538 5,159,088
Capital redemption reserve 1,112,014 - 1,112,014
Other reserves 1,294,745 2,406,759 1,294,745
Profit and loss account (5,756,700) (5,672,115) (5,807,993)
Shareholders' funds 3,345,936 2,241,221 3,294,643
Consolidated Cash Flow Statement
For the six months ended 30 April 2004
Note 6 months to 30 6 months to 30 12 months to
April 2004 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Net cash outflow from
operating activities (4) (184,448) (295,756) (624,388)
Returns on investments and
servicing of finance
Interest received 35,270 36,031 71,825
Net cash inflow from
returns on investments
and servicing of finance 35,270 36,031 71,825
Taxation 243,613 - -
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (148,626) (129,716) (210,810)
Sale of tangible fixed
assets - - 3,026
Purchase of investment (51,147) - -
Net cash outflow from
capital expenditure and
financial investment (199,773) (129,716) (207,784)
Acquisitions
Purchase of trade and
assets - - (89,591)
Net cash balances acquired
with trade and assets - - (230,419)
Deferred consideration paid
for previous acquisition (127,113) - -
Net cash outflow from
acquisitions (127,113) - (320,010)
Financing
Issue of shares - - 1,189,300
Net cash inflow from
financing - - 1,189,300
(Decrease) / increase in
cash (232,451) (389,441) 108,943
Notes on the Interim Report
For the six months to 30 April 2004
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 2003 annual report and financial statements. The policies remain as
stated in the annual report for the year ended 31 October 2003. 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 2003 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 TAX ON LOSS ON ORDINARY ACTIVITIES
The tax credit represents:
6 months to 6 months to 12 months to
30 April 2004 30 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Research and development tax
credits 243,613 - -
3 EARNINGS / (LOSS) PER SHARE
The earnings / (loss) per share is calculated by reference to the earnings /
(loss) attributable to ordinary shareholders divided by the weighted average
number of shares in issue during each period, as follows:
6 months to 6 months to 12 months to
30 April 2004 30 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Profit / (loss) for the period 51,293 (459,182) (595,060)
Weighted average number of
shares in issue 153,324,507 140,470,273 142,805,965
Basic and diluted earnings /
(loss) per share 0.03p (0.33)p (0.42)p
The share options are anti dilutive under FRS 14.
4 NET CASH OUTFLOW FROM OPERATING ACTIVITIES
6 months to 6 months to 12 months to
30 April 2004 30 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
Operating loss (225,871) (496,250) (668,922)
Depreciation 124,290 103,625 216,644
Goodwill amortisation 89,335 36,300 81,669
Loss / (profit) on sale of fixed
assets 1,013 - (834)
Increase in debtors (642,665) (258,814) (217,592)
Increase / (decrease)
creditors 469,450 319,383 (35,353)
Net cash outflow from operating
activities (184,448) (295,756) (624,388)
5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
6 months to 6 months to 12 months to
30 April 2004 30 April 2003 31 October 2003
(unaudited) (unaudited) (audited)
£ £ £
(Decrease) / increase in cash in
the period, being movement in
net funds in the period (232,451) (389,441) 108,943
Net funds at 1 November 2003 2,646,695 2,537,752 2,537,752
Net funds at 30 April 2004 2,414,244 2,148,311 2,646,695
6 POST BALANCE SHEET EVENTS
On 10 May 2004, i-documentsystems group plc announced the acquisition of the
entire share capital of TFPL Limited for a maximum consideration of £4 million.
TFPL is an established information services company, headquartered in London,
specialising in consultancy, recruitment, training and research services. Since
1987, TFPL has focused its resources on delivering information, knowledge,
records and content management expertise and solutions to clients across the
financial and professional services market as well as the public sector. The
initial consideration was approximately £2 million (in cash and shares). The
remainder is payable in shares contingent on gross profit targets being met
during the period to October 2006.
On 12 May 2004, the Group placed a total of 23,000,000 new ordinary 1 penny
shares (New Ordinary Shares) with new and existing institutional investors, at a
price of 10 pence per share. The Placing raised £2.30 million before expenses.
The proceeds were used towards the acquisition of TFPL Limited 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 12.63 per
cent of the enlarged issued share capital of the Group. Dealings in the New
Ordinary Shares commenced on Wednesday 12 May 2004. An unaudited pro-forma
balance sheet which illustrates the effect the acquisition and placing would
have had if they had occurred on 30 April 2004 is shown below:
IDOX incl.
TFPL Acquisition and Placing Balance Sheet Acquisition TFPL and
at 30 April Placing Placing
2004 and Balance Sheet
(unaudited) (unaudited) (unaudited)
£ £ £
Fixed assets
Intangible fixed assets 1,590,491 3,975,373 5,565,864
Tangible assets 278,884 20,620 299,504
Investments 79,491 - 79,491
1,948,866 3,995,993 5,944,859
Current assets
Debtors 2,171,852 1,000,033 3,171,885
Cash at bank and in hand 2,414,244 915,133 3,329,377
4,586,096 1,915,166 6,501,262
Creditors: amounts falling due
within one year (3,159,026) (1,171,532) (4,330,558)
Net current assets 1,427,070 743,634 2,170,704
Total assets less current
liabilities 3,375,936 4,739,627 8,115,563
Creditors: amounts falling due
after more than one year (30,000) - (30,000)
Net assets 3,345,936 4,739,627 8,085,563
Capital and reserves
Called up share capital 1,536,789 283,694 1,820,483
Share premium account 5,159,088 2,455,933 7,615,021
Shares to be issued - 2,000,000 2,000,000
Capital redemption reserve 1,112,014 - 1,112,014
Other reserves 1,294,745 - 1,294,745
Profit and loss account (5,756,700) - (5,756,700)
Shareholders' funds 3,345,936 4,739,627 8,085,563
7. FURTHER COPIES
Copies of this announcement and the interim 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 i-documentsystems group plc, 10th Floor, 21 New Fetter
Lane, London EC4A 1AJ, Tel: 020 7427 0660. Copies of the interim report and
accounts will be posted to shareholders on 12 July 2004
This information is provided by RNS
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