Interim Results

IDOX PLC 19 June 2006 IDOX plc INTERIM RESULTS FOR IMMEDIATE RELEASE 19 June 2006 -------------------------------------------------------------------------------- IDOX plc ('IDOX' or the 'Company'), the information and knowledge management company, today announced its interim results for the six months ended 30 April 2006 which are in line with its trading statement on 5 May 2006. Financial and Operational Highlights â€¢ Revenue Â£6.91m (2005: Â£7.02m) â€¢ Breakeven position before tax (2005: Â£0.21m) â€¢ Strong cash generation up 45% to Â£5.38m (2005: Â£3.72m) â€¢ (Loss)/earnings per share (0.07p) (2005: 0.12p) â€¢ Strong cash generation and working capital discipline during a challenging first half â€¢ 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 increasingly competitive market and continued to deliver strong cash generation. The Board is taking steps to review the focus of the Group and to address key operational issues. Trading for the full year is now expected to be close to the level of last year, after which the effects of the operational focus should become apparent. We are confident that the changes we are making will enable us to deliver shareholder value.' For further information please contact: Martin Brooks, Chairman & Interim Chief Executive 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 company specializing in software, solutions and recruitment for information management. 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. 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 - UK Planning. Information Solutions develops and implements enterprise content management strategies 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 of best practice and governance in the public sector. The Recruitment Division specialises in placing knowledge, information and records management specialists in permanent, interim contract and project positions. 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 six months 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 the Software market, a change in sales mix of Recruitment revenues, a flat performance in the evolving Information Solutions business, and the loss of key sales staff at the beginning of the period. Some appropriate restructuring together with the appointment of new market facing personnel have given us the capability to win and deliver more projects in the coming months. In spite of these factors, we have closed a number of sizeable contracts demonstrating IDOX's ability to attract larger assignments. These large contracts are more complex and take longer to complete. We have continued to secure contracts in our traditional planning business, and in addition we have also extended into other Council departments, such as revenues & benefits, as we become increasingly recognised as a corporate-wide solutions provider. Financial Review Revenue for the six months ended 30 April 2006 were flat at Â£6.91m (2005: Â£7.02m). Profit before tax was breakeven (2005: Â£0.21m). The Group has remained strongly cash positive with cash rising by Â£1.66m to Â£5.38m at the half year (2005: Â£3.72m) which translates into 2.7p per share. The Local Authority market remained the Group's key focus, representing 44% of the Group's revenue. The wider public sector, is now 29%, and the private sector 27% of Group revenue. The Group's recurring revenue is Â£3.2m representing 9.6% growth on 2005. The Software division's first half performance has resulted in its largest ever order backlog being carried into the second half. Revenues in the Group's Information Solutions division remained flat during the first six months, due to staff shortages and recurring revenues have remained constant at approximately Â£0.9m. The situation has since been remedied and the outlook is improving. The division made a first half loss and steps have been taken to rectify this. Revenue in the Recruitment division was broadly unchanged. Although revenue from permanent recruitment increased by 63% on the previous year, revenues from contract recruitment were down as a result of a number of contracts converting to permanent placements and direct billing. This resulted in unchanged revenue a t Â£2.54m (2005 Â£2.56m) but with an increase in profitability. We expect the contract 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 and existing customers. New contracts at Leeds City Council, Glasgow City Council, Aylesbury Vale District Council and the New Forest Park Authority amount to more than Â£0.8m of new business alone. The Group is also extending its contracts into other Council departments and is increasingly being recognised as a corporate-wide solutions provider, securing contracts with Kings Lynn & West Norfolk Borough Council, Oadby & Wigston Borough Council, as well as an important contract extension for its new Records Management System with Colchester Borough Council. The initial implementations here total more than Â£0.4m. However, the performance in the first half of the financial year has been below expectations and steps are being taken to regain the initiative and focus the business on the bottom line performance. Information Solutions Despite flat revenues during the first half, IDOX's recognised expertise in knowledge and information management, combined with its technical capability, provides a solid platform from which to extend its innovative information solutions. 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 Recruitment division's gross margin, as the roles being filled have become more specialised. The department has a focus on business development, recruitment of new staff and improvements in systems and processes. Recent developments Since the period end, Andrew Fraser has resigned as Chief Executive and Director of IDOX after seven years with the Group. I have assumed the additional role of Chief Executive for an interim period. The Board would like to thank Andrew for his considerable contribution to the growth of the Group and wish him every success in the future. Outlook The Board is in the process of refining the focus of each division and addressing key operational issues. These actions are not expected to have any impact on the current financial year. Trading for the full year is now expected to be close to the level of the previous year. New sales staff appointments have been made and while trading conditions will remain challenging, the outlook for the Group is encouraging. The Board has confidence in the business going forward and anticipates the declaration of a dividend. Martin Brooks Chairman and Chief Executive Officer 16 June 2006 This announcement was approved by the Board of Directors on 16 June 2006 Consolidated Profit and Loss Account For 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) Â£000 Â£000 Â£000 Turnover (2) 6,912 7,024 14,155 External charges (2,604) (2,613) (5,048) ------- ------- ------- 4,308 4,411 9,107 Staff costs (2,902) (2,874) (5,665) Other operating charges (1,471) (1,371) (2,685) ------- ------- ------- Operating (loss)/profit (65) 166 757 Net interest 66 48 119 ------- ------- ------- Profit on ordinary activities before taxation 1 214 876 Tax on profit on ordinary activities (3) (130) - 700 ------- ------- ------- ------- ------- ------- (Loss)/profit for the period transferred (from)/to reserves (129) 214 1,576 ------- ------- ------- (Loss)/earnings per share Basic and diluted (4) -0.07p 0.12p 0.85p Consolidated Balance Sheet At 30 April 2006 Note At At At 30 April 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) Â£000 Â£000 Â£000 Fixed assets Intangible fixed assets 4,313 4,976 4,602 Tangible assets 511 246 325 --------- -------- -------- 4,824 5,222 4,927 Current assets Stock 4 - - Debtors 3,859 3,804 4,132 Cash at bank and in hand 5,384 3,724 4,722 --------- -------- -------- 9,247 7,528 8,854 Creditors: amounts falling 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: amounts falling due after more than one year (10) (20) (10) --------- -------- -------- Net assets 9,271 8,548 9,811 --------- -------- -------- Capital and reserves Called up share capital (5) 1,953 1,873 1,873 Capital redemption reserve (6) 1,112 1,112 1,112 Share premium account (6) 8,982 8,162 8,162 Shares to be issued (6) - 1,400 1,300 Other reserves (6) 1,294 1,294 1,294 ESOP trust (6) (90) (79) (79) Profit and loss account (6) (3,980) (5,214) (3,851) --------- -------- -------- Shareholders' funds 9,271 8,548 9,811 --------- -------- -------- Consolidated Cash Flow Statement For 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) Â£000 Â£000 Â£000 Net cash inflow from operating activities (7) 926 1,000 2,126 Returns on investments and servicing of finance Interest received 66 48 119 -------- -------- -------- Net cash inflow from returns on investments and servicing of finance 66 48 119 Taxation - - - Capital expenditure and financial investment Purchase of tangible fixed assets (319) (121) (320) Purchase of investment (ESOP trust) (11) - - -------- -------- -------- Net cash outflow from capital 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 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 2005 annual report and financial statements. The policies remain as stated 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) Â£000 Â£000 Â£000 Turnover Software 2,661 2,784 5,748 Information Solutions 1,711 1,680 3,322 Recruitment 2,540 2,560 5,085 -------- ------- -------- 6,912 7,024 14,155 -------- ------- -------- Operating (loss)/profit Software 411 393 1,243 Information Solutions (278) 29 (37) Recruitment 91 33 114 -------- ------- -------- 224 455 1,320 Goodwill amortisation (289) (289) (563) -------- ------- -------- (65) 166 757 -------- ------- -------- Net assets Software 5,433 3,848 5,121 Information Solutions (624) (514) (288) Recruitment 149 238 376 -------- ------- -------- 4,958 3,572 5,209 Goodwill 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) Â£000 Â£000 Â£000 Current tax UK corporation tax - - 2 Adjustment in respect of prior periods 41 - - -------- -------- -------- Total current tax 41 - 2 Deferred tax - origination and reversal of timing differences 89 - (702) -------- -------- -------- Tax on profit on ordinary activities 130 - (700) -------- -------- -------- Unrelieved trading losses of Â£1,683,000 (2005: Â£1,974,000) which, when calculated at the standard rate of corporation tax in the United Kingdom of 30%, amounts to Â£505,000 (2005: Â£592,000). These remain available to offset against future taxable trading profits. During the year ended 31 October 2004, Â£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 in relation to the year ended 31 October 2002 may be subject to claw back by the Inland Revenue but if this occurred 2/3 of 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)/earnings 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 2006 30 April 2005 31 October 2005 (unaudited) (unaudited) (audited) (Loss)/profit for the period (Â£000) (129) 214 1,576 Weighted average number of shares in issue 190,479,843 182,949,266 185,229,865 Dilutive effect of share options - - 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 months ended 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) Â£000 Â£000 Â£000 -------- -------- -------- Authorised: 297,000,000 ordinary shares of 1p each 2,970 2,970 2,970 -------- -------- -------- Allotted, called up and fully paid 195,260,900 ordinary shares of 1p each (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 Ordinary Shares) were issued to the Vendors of TFPL Limited, at a price of 11.225p. This share issue was part of the earnout for the acquisition of TFPL Limited. The difference between the total consideration of Â£900,000 and the total nominal value of Â£80,000, amounting to Â£820,000, has been credited to the share premium account. The New Ordinary Shares rank pari passu with the existing ordinary shares of the Company and represented 4.11 per cent of the enlarged issued share capital of the Company at that time. The new shares started trading on the 30 January 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 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 November 2005 1,873 1,112 8,162 1,300 1,294 (79) (3,851) 9,811 New shares issued 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 the earnout payable to the Vendors of TFPL Limited, with the final two tranches of Â£200,000 now payable in cash. This has therefore been reclassified as a liability, shown within creditors due within one year. The Group established a new HM Revenue & Customs approved, share investment plan for the benefit of employees during the period. This allows staff to purchase up to Â£1,500 of shares each year which will be matched by the Group. The matching shares are held in the ESOP Trust until a three year qualifying period has elapsed. At 30 April 2006, the value of matching shares held was Â£11,000 (2005: Â£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) Â£000 Â£000 Â£000 Operating (loss)/ profit (65) 166 757 Depreciation 133 122 242 Goodwill amortisation 289 289 563 Increase in stock (4) - - Decrease /(increase) in debtors 143 (492) (118) Increase in creditors 430 915 682 -------- -------- -------- Net cash inflow from operating 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) Â£000 Â£000 Â£000 Increase in cash in the period, being movement in net funds in the period 662 927 1,925 Net funds at 1 November 2005 4,722 2,797 2,797 Net 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 of 8.75p and sold 495 shares at a price of 8.00p as part of the IDOX share investment plan. Of the shares purchased, half relates to the matching shares purchased by the Group. On 31 May 2006, the Group paid Â£200,000 in cash to the Vendors of TFPL Limited in satisfaction of the penultimate tranche of the earnout. INDEPENDENT REVIEW REPORT IDOX PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 April 2006 which comprises the consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement and the related notes 1 to 9. We have read the other information contained in the interim 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 accordance with guidance contained in APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review work has been undertaken so that we might state to the company's members those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our review work, for this report, or for the conclusion we have formed. Directors' Responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. They are responsible for preparing the interim report and ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, 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 Board for use in the United Kingdom. A review consists primarily of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 April 2006. GRANT THORNTON UK LLP CHARTERED ACCOUNTANTS LONDON 16 June 2006 This information is provided by RNS The company news service from the London Stock Exchange

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