IDOX Idox Plc

RNS Number:3902L
IDOX PLC
01 November 2006


IDOX plc


1st November 2006


                                    IDOX plc

                       (the ''Company'' or ''IDOX'')

                                  Trading update


IDOX plc, the information and knowledge management group, announces good
progress in restructuring and refocusing the business, with substantial cost
savings.  In light of continued difficult trading conditions, the company now
expects the year ended 31 October 2006 revenues to be down on the year ended 31
October 2005 and to make a loss before reorganisation cost, with a small loss on
a normalised basis before goodwill. Achievement of significant full year cost
savings should underpin a much stronger profit performance in 2007.

Trading

  * Software orders were low in the second half. Further delays in the closure
    of deals and clients' slow pace of implementation has resulted in revenues
    in the second half below the previous year.  Gross margin percentage has
    been maintained.

  * Information solutions division has been reorganised and had a strong
    finish to the fourth quarter, closing large central government contracts
    totalling over #216,000, all of which will be recognised in the year ended
    31 October 2006.  Full-year revenue is expected to be level with the year
    ended 31 October 2005.  Gross margin strongly improved in the second half
    but the full-year margin is still expected to be marginally down on the year
    ended 31 October 2005.

  * While contract recruitment is showing signs of recovery and permanent and
    direct recruitment revenues are well ahead of the year ended 31 October
    2005, full-year turnover in the recruitment business is expected to be 12%
    down on the year ended 31 October 2005, due primarily to the change of mix
    of recruitment revenues from contract to permanent.  However, this change in
    mix has substantially increased the gross margin against the year ended 31
    October 2005, to 40% (year ended 31 October 2005 36%).

  * Overall, the directors believe that full-year revenues will be 9% below
    the year ended 31 October 2005, due in equal part to the drop in contract
    recruitment revenues and software sales.

  * Cash levels should be slightly below the first half due to delayed billing
    and one-off reorganisation costs which are detailed below.




Reorganisation


  * A company-wide cost reduction programme has been implemented to create a 
    much leaner management structure consisting of three profit centres. This 
    will give much greater transparency and allows for the elimination of 
    certain senior management positions. All development activities have been 
    concentrated in Glasgow following the closure of the Manchester office in 
    October.

  * We have identified potential annual cost savings of #1.0m and have already 
    implemented #0.7m of these.  These savings include a permanent reduction in 
    headcount of 16. These reductions will, assuming our expected revenue mix, 
    lead to a significant uplift in the underlying profitability and ensure that 
    we will be well positioned to take advantage of anticipated revenue growth 
    in the next financial year (year ended 31 October 2007).

  * One-off costs of this reorganisation as well as the costs associated with 
    the agreed settlement with the outgoing chief executive are expected to 
    amount to #300,000 and will all be recognised in the year ended 31 October 
    06.  A more detailed disclosure of the terms of these costs will be set out 
    in the annual report and accounts.

Strategy

The group is now re-focused on the following significant opportunities:

  * In software, in established channels selling direct and with partners
    to local authorities and the wider governmental markets exploiting our 
    existing customer links with over 216 local authorities; and

  * In information solutions and recruitment, in the public and private
    sectors where we are able to leverage our core competences in information
    management skills and their application delivering value from investment in
    technologies, under the respected TFPL brand.

We continue to look for consolidating acquisitions, with a focus on our software
business where we can leverage our significant local authority delivery channel,
to strengthen our position and deliver synergies.

Martin Brooks, Chairman and Interim CEO of IDOX plc, said: "The review we have
completed has improved our efficiency and accountability. The focus on
divisional performance will result in a flatter and more effective management
structure and an increased emphasis on quality and customer service. The cost
savings implemented by the year ended 31 October 2006 will feed through to
deliver profits in 2007. We are actively pursuing consolidating acquisition
opportunities currently in the government software and solutions market."





For further information, please contact:

IDOX plc

Martin Brooks, Chairman and Interim CEO       0870 333 7101

Richard Kellett - Clarke, CFO                 0870 333 7101





About IDOX

IDOX plc is an information management company, specialising in the development
and delivery of software products, services and people predominantly to the
public sector where nearly half the UK local authorities are customers,
representing a valuable channel to market for a widening range of products and
services. Many central government and wider public sector agencies are also
customers, as well as some private sector organisations.

The software division 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 and has developed the first true end-to-end e-planning
solution for local authorities and their citizens - UKPlanning.

The information solutions division specialises in devising creative and
innovative solutions to problems associated with records, information, knowledge
and content management.  Many government departments have benefited from its
advisory skills. Training is also offered and it also maintains a comprehensive
database of bibliographic abstracts, on all aspects of best practice and
governance in the public sector.



The recruitment division is a specialist business for information professionals
and places candidates of all levels into permanent, contract, and interim
management positions.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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