RNS Number:1786G
i-documentsystems Group PLC
2 July 2001
2 July 2001
i-documentsystems group plc
Interim Results
For the six months ended 30 April 2001
Chairman Statement
The period to 30 April 2001 was a very significant one for the Group. The
Group further advanced its position as the market leader in converting UK
Local Authority planning applications and processes onto the Internet through
its Image-Gen suite of products, extended the capability of its products into
other local authority departments, brought its ASP model UKPlanning to beyond
the development stage, and became a quoted public company on the Alternative
Investment Market of the London Stock Exchange (AIM).
Financial Results
As explained in an announcement on 25 April 2001, the considerable progress
which the Group has made over the last six months, in particular the number
of local authority contracts won, has not yet been reflected in increased
revenues.
There are several reasons for this. Some authorities have opted to pay on a
rental basis which spreads revenues over a longer period. This boosts the
Group's income in the longer term but brings in less up-front. In addition,
some deals have been concluded later than expected.
A further factor which has affected our results is that a major investment
has been made in additional staff to accelerate the growth of the Group.
The Group therefore made a loss of #475,000 in the six months to April 2001
based on a turnover of #459,000. This equates to a loss per share of 0.41p.
Comparative figures for the same period last year were a loss of #92,000
based on a turnover of #483,000, equating to a loss per share of 0.19p.
Net Cash at 30 April 2001 was #3,161,000. As at 26 June 2001 this figure was
approximately #3,000,000.
Local Authority Business
The directors consider that the best indicator at present of the company's
progress is the number of local authorities that have committed to the
Group's products. This number has increased to 19 as at 30 April 2001 and is
anticipated to increase to 40 by 30 April 2002.
New contracts awarded in the six months ended 30 April 2001 were from Chester,
Croydon, East Lothian, Glasgow City, New Forest, Nottingham and South Holland
councils. The 19 local authorities using or committed to Image-Gen represent
a 76% share of the 25 local authorities believed to have document management
solutions in their Planning departments. There are 468 local authorities in
the UK, all of which are expected to comply with the Prime Minister's
directive to ensure that all local government services are available
electronically by 2005. As well as this pressure from Central Government,
there is a strong cost saving and efficiency argument for electronic
availability of documents in Planning departments. Consequently the Group
continues to believe that it is well placed to benefit from the remainder of
the 468 local authorities in the UK moving to similar solutions as the
existing 25.
The revenue model for the Group's income from a local authority is partly
determined by the size of the local authority, by the timing of when the
contract arises in the financial year and by the degree and timing of rollout
into other council departments over time.
Customers for Image-Gen include Westminster, the local authority with the
most planning applications in the UK, and the Western Isles, which has one of
the smallest number of planning applications. Five new local authorities were
signed up in the month of March, which is typically an important month for
council commitments. The geographical spread of the Group's local authority
business is now quite diverse.
After the period end, the Group made an announcement of an important contract
win for Gosport Council in the Revenue and Benefits area. Previously all
councils had largely been won through the Planning area. The Group also
announced the appointment of MVM Consultants plc, a subsidiary of Anglian
Water plc, as a reseller, which gives the Group access to 300 council
customers of MVM. Both of these deals are strategically important.
Our participation in various relevant trade shows has been very successful
with a significant number of opportunities to follow up and signs of
establishing our brand. The e-Government strategy has delivered significant
opportunities. These will be further enhanced with additional market
awareness driven by marketing and sales programmes over the next 12 months.
The Group has continued to enjoy a 100% customer retention rate among its
local authority customers. Not a single local authority customer has been
lost since the Group commenced business.
Banking and Financial Business
This is currently less significant as an area of focus for the Group than
local authorities, but remains an area where the Group sees potential. The
Group has a number of important banking customers including Abbey National,
Bank of America, CIBC and Sumitomo Bank. Applications provided include the
efficient electronic handling of derivatives documentation, and assisting
financial institutions with the process of storing documents demonstrating
that they know their customer (otherwise known as Enhanced Due Diligence).
The latter is in response to increasing pressure from financial regulators
concerned about money laundering.
Product Development
The development of our key suite of products has been significant. In order
to establish ourselves as a corporate provider we have added additional
functionality within Image-Gen. Some of this has been achieved by enhancing
our own software. We have also incorporated the third party JetForms product
which delivers the immediate benefit of electronic forms with an output in
XML (eXtensible Mark-up Language) delivering compliance with e-GIF
(Government Interoperability Framework), a mandatory component within Local
Government.
The Group announced in its flotation prospectus its intention to develop the
UKPlanning system, an ASP (Application Service Provider) model for local
authority planning applications. Rather than each council separately
developing the expertise to store and index documents and maintaining the
hardware infrastructure to make these available on the internet, the Group
would provide this service on an outsourced basis using its existing
Image-Gen technology, and it would be possible to view each participating
council's planning applications through a single portal known as
ukplanning.com. This new service has received considerable acceptance from
the user community. The Group has made significant headway with implementing
this service and has had two customers, Hackney and Wandsworth, testing the
system in a live environment. This has proved successful so far with Phase 1
completed in June 2001. There are significant development tasks outstanding
but it is anticipated that the remaining phases should be completed by the
end of the calendar year.
The Group won an award for the best workflow product for its Image-Gen i-flow
product at the IM2000 awards in November 2000.
People
The Group has seen a large rise in staff numbers over the past six months as
the board has started aggressively to execute the business plan anticipated
during flotation. In June 2001 staff numbers were 30 as against 18 in October
2000. This expansion has been centred on the Sales and Marketing areas and in
the recently established Glasgow office, taking advantage of a skilled and
highly competitive pool of IT talent available in Scotland. Support for
Scotland and much of the North of England will be carried out from Glasgow.
It is anticipated that for the Group's current businesses the number of
employees in Scotland will in due course exceed that in London.
AIM Flotation
Despite a very difficult market for the technology sector at the end of 2000,
the Group, through Noble & Company Limited as Nominated Advisors and Brokers,
raised #3,400,000 on AIM at a price of 12p per share (#3,000,000 after issue
costs and expenses). The shares commenced trading on AIM on 19 December 2000.
At the same time a further #1,970,000 of preference shares already issued by
the Group were converted into ordinary shares at an average price of
approximately 9.5p per share. Since admission to AIM, shares have traded in a
range of 10.75p to 23.25p.
Dividend
As stated in the float prospectus, 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.
Outlook
The board is very positive about i-documentsystems' future. This is based on
the investment that has now been made in infrastructure, the significant
increase in pipeline revenues, the rise in brand awareness, and finally on
the continued e-Government push towards total electronic services by 2005.
However, given the variation in length of time between contract award and
revenue recognition, the speed of revenue growth remains difficult to
forecast in the short term and fluctuations in half yearly revenue figures
may occur for some time.
Summary
The half year has been a period of laying firm foundations. The board is
intent on developing the group as a major player in its chosen marketplace.
The board's primary focus is to build market share and it is therefore
unlikely that the Group will return to profit during the expansion phase over
the next 18 months. It is hoped to achieve profitability in the year to
October 2003.
All our staff deserve congratulations for maintaining the company's market
leading position despite the considerable time pressures resulting from the
flotation. The directors join me in thanking them and also our advisors for
all their good work.
John Wisbey
Chairman
29 June 2001
The interim statement was approved by the Board on 29 June 2001
Consolidated Profit and Loss Account
For the six months ended 30 April 2001
6 months to 30 7 months to 31 6 months to 30
Apr 2001 Oct 2000 Apr 2000
(unaudited) (audited) (unaudited)
# # #
Turnover 459,379 501,648 482,960
External charges (126,847) (80,631) (61,090)
332,532 421,017 421,870
Staff costs (534,634) (438,624) (235,178)
Other operating
charges (348,645) (192,607) (189,484)
Operating loss (550,747) (210,214) (2,792)
Net interest 76,196 (32,556) (89,181)
Loss on ordinary
activities before
taxation (474,551) (242,770) (91,973)
Tax on loss on
ordinary activities 0 0 0
Loss for the
period
transferred to
reserves (474,551) (242,770) (91,973)
Loss per share
(pence)
Basic 0.41 0.33 0.19
Diluted 0.41 0.33 0.19
Consolidated Balance Sheet
At 30 April 2001
At At At
30 Apr 2001 31 Oct 2000 30 Apr 2000
(unaudited) (audited) (unaudited)
# # #
Fixed assets
Tangible assets 62,755 32,963 4,937
Current assets
Debtors 659,764 244,826 419,237
Cash at bank and in hand 3,161,742 729,766 2,505
3,821,506 974,592 421,742
Creditors: amounts falling due
within one year (510,437) (275,093) (164,974)
Net current assets 3,311,069 699,499 256,768
Total assets less current
liabilities 3,373,824 732,462 261,705
Creditors: amounts falling due
after more than one year 0 0 (1,947,524)
3,373,824 732,462 1,685,819)
Capital and reserves
Called up share capital 2,395,186 2,103,218 632,218
Share premium account 4,028,876 1,204,931 112,401
Profit and loss account (3,050,238) (2,575,687) (2,430,438)
3,373,824 732,462 (1,685,819)
Shareholders' funds
Equity 3,373,824 (1,072,360) (1,685,819)
Non-equity 0 1,804,822 0
3,373,824 732,462 (1,685,819)
Consolidated Cash Flow Statement
For the six months ended 30 April 2001
6 months to 30 7 months to 31 6 months to 30
Apr 2001 Oct 2000 Apr 2000
(unaudited) (audited) (unaudited)
# # #
Net cash outflow from
operating activities (712,298) (28,358) (103,796)
Returns on investments
and servicing of
finance
Interest received 76,196 5,150 0
Interest paid 0 (37,706) (89,181)
Net cash (outflow)
from returns on
investments and
servicing of finance 76,196 (32,556) (89,181)
Capital expenditure
and financial
investment
Purchase of tangible
fixed assets (47,835) (33,866) (3,853)
Net cash outflow from
capital expenditure
and financial
investment (47,835) (33,866) (3,853)
Financing
Issue of share capital 3,443,206 2,563,530 344,619
Expenses paid in
connection with share
issues (327,293) 0 0
Repayment of long term
borrowings 0 (1,947,524) (150,086)
Net cash inflow from
financing 3,115,913 616,006 194,533
Increase/(decrease) in
cash 2,431,976 521,226 (2,297)
Notes to the Interim Results
For the six months ended 30 April 2001
1. BASIS OF PREPARATION
The interim financial information has been prepared based on accounting
policies consistent with those set out in the company's statutory accounts
for the period ended 31 October 2000.
The financial information set out in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The figures for the period ended 31 October 2000 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.
2. LOSS PER SHARE
The loss per ordinary 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 7 months to 6 months to
30 Apr 2001 31 Oct 2000 30 Apr 2000
# # #
Loss for the
period (475,000) (243,000) (92,000)
Weighted
average number
of shares in
issue 115,962,000 74,079,000 47,740,600
Loss per share (0.41)p (0.33)p (0.19)p
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 ordinary share and is therefore not
dilutive under the terms of FRS 14.
The number of shares for comparative periods has been restated to reflect the
sub-divisions of each #1 ordinary share into 100 ordinary shares of 1p each
3. FURTHER COPIES
A copy of the Interim Report is due to be sent to all shareholders on or
about 2 July 2001. Copies of this announcement and the Interim Results are
available, free of charge for one month from the date of this announcement
from the Group's Nominated Advisor and Broker, Noble & Company Limited, 1
Frederick's Place, London EC3R 8AB.
For further information please contact:
John Wisbey Chairman i-documentsystems group plc 020 7353 5330
Andrew Fraser CEO i-documentsystems group plc 020 7353 5008
Tim Bowen FD i-documentsystems group plc 020 7353 5008
Patrick Booth-Clibborn
Chris Barker Noble & Company Ltd 020 7367 5600
Jonathan Rooper
Nadja Vetter Cardew & Co 020 7930 0777
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