RNS Number:5960N
IDOX PLC
11 December 2006
IDOX plc
FINAL RESULTS
FOR IMMEDIATE RELEASE 11 December 2006
IDOX plc ("IDOX" or the "Company" or the "Group"), the information and knowledge
management company, today announces its final results for the year ended 31
October 2006.
Highlights:
* Turnover down 8% to #13.03m (2005: #14.16m)
* Cash up 2% to #4.83m (2005: 4.72m)
* Loss before tax #0.52m, including one-off reorganisation costs of #0.30m
(2005: profit #0.88m)
* #0.75m cost savings implemented with potential to rise to #1.0m
* Completed business review and implementing refocused strategy
- ENDS -
For further information please contact:
Martin Brooks, Chairman 0870 333 7101
Richard Kellett-Clarke, CFO 0870 333 7101
Notes to editors
IDOX plc is an information and knowledge management company, specialising in the
development and delivery of software products, information solutions and people
for information management and knowledge sharing, primarily for the public
sector, enabling clients to better manage their information.
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. Its flagship UKPlanning Managed Services solution delivers the first
true end-to-end e-Planning solution to enable Local Authorities to provide the
Government Planning process online
The Information solutions unit consists of a specialist consultancy that
specialises in advising and devising creative and innovative solutions to
problems associated with records, information, knowledge and content management.
It offers in-house and external training for clients using experienced
facilitators and leading industry practitioners. A community for professionals;
via subscription, providing them with a comprehensive database of bibliographic
abstracts, and the largest collection of information in the UK, on all aspects
of best practice, governance in the public sector. Our experts identify,
summarise and manage a vast resource of information to save member organisations
time and money.
The focus for the Recruitment team is to find and place information
professionals to deliver knowledge management, information management and
records management projects - this might be for interim management and project
teams, permanent or temporary posts.
IDOX plc
Chairman's and Chief Executive's Statement
For the year ended 31 October 2006
Chairman's and Chief Executive's Report
We ended the 2006 financial year in a much more encouraging way than we began.
Trading earlier in the year precipitated a number of actions by senior
management following a branch and root review of the entire business and its
cost structure. We finished the year with a strong net cash position of #4.83
million compared to #4.72 million for the previous year. We intend as promised
to propose the declaration of a maiden dividend payable in 2007.
The board has taken the following actions:
* Completed the review of all the businesses within the Group
* Identified #0.75 million annual cost savings with part implemented
in 2006 and the balance of the benefit expected in 2007, with the potential to
increase this to #1.0 million.
* Re-organised the business into three clearly defined divisions with
full attribution of all operating costs
* Re-affirmed a corporate strategy concentrating on the core IDOX
Software businesses and the intention to therefore divest non-core businesses,
including recruitment, which although excellent in their respective markets will
be better and more swiftly developed with greater cross-selling potential and
synergy by others having this as their primary area of focus
* Undertaken specific product and service quality and performance
improvements, particularly in the Software and Solutions division
* Consistent with the terms of my appointment, the Company is
initiating a search for a permanent Chief Executive Officer.
Financial Review
Consolidated revenues were #13.03 million, 8.0% down on the previous year of
#14.16 million. A loss before tax, including one-off reorganisation costs of
#0.30 million, of #0.52 million compared with the prior year's profit of #0.88
million.
Excluding goodwill and the exceptional staff cost the company made a small
profit of #0.36 million compared to #1.45 million for the previous year.
Software and Information Solutions increased annualised recurring revenue to
#3.1 million from #2.9 million.
At 31 October 2006 the net cash balance of the company increased to #4.83
million. (2005 #4.72 million).
Markets
Throughout the year there was a pronounced slowdown in decision-making and
purchasing by local authorities. This has also been noted publicly by other
system suppliers in our chosen markets. This appears to have reversed itself in
the last two months.
There was also a slowdown in both the learning and consultancy activities of the
Information Solutions business. However there were some indications of recovery
towards the end of the financial year when we completed work on a number of
large central government contracts.
The Recruitment market shifted markedly towards permanent and direct
appointments in the middle of the year, away from contract recruitment. Towards
the end of the year we have seen signs of renewed recovery in contract work
while retaining the same level of permanent assignments.
Operational Review
Software Solutions
The software business has had a frustratingly difficult year as a result of the
overall slowdown of market growth following the formal end of the e-Government
initiative. Operational issues in implementing new business, and technical
issues with some new product offerings had to be addressed and were largely
resolved in the second half. It is encouraging to note that the business
continues to record strong sales to its existing customers. Greater emphasis is
now being placed on improvements in quality and service to our clients and
improved product releases.
During the year the division completed and has received customer acceptance for
its e-licensing, e-building control modules, as well as its innovative revenue &
benefits system.
Information Solutions
The local authority and library services and their project teams had another
successful year.
The division started the year with strong sales but at much reduced margins in
some areas, weaker than expected participation on training courses, and low
utilisation rates for its in-house consultants. This, plus the loss of some key
staff, and less favourable market conditions, resulted in revenues falling under
budget and below the prior year levels at the half-year point. The business has,
however, made a good recovery in the second half with some important account "
wins" and much improved margins and staff utilisation: ending the year with
full-year revenues broadly flat year-on-year and with margins restored to
historical levels.
The business proposition has now been extended to provide broader consultancy
services for electronic content management as well as the traditional areas of
knowledge and information management.
Recruitment
The market for information professionals has remained generally strong with good
growth in permanent appointments and direct engagement replacing the previous
year's growth in contract recruitment. However, the change in mix caused
combined revenues to decline by 10.4% despite permanent recruitment rising 63.7%
above prior year levels. The division's gross margin improved to 40.5% compared
to 32.9% last year.
The strong performance in the first half has continued through to the second
half along with early signs of an improvement in contract placements as well. In
addition to strengthening the permanent recruitment team in the first half, the
division has added its first specialist IT recruiter and is looking to extend
its offering in this area in 2007.
We have looked closely at consultant productivity and invested in a specialist
recruitment system, which will go live by the end of Q1 and is expected to
improve productivity, and customer care and candidate experience.
Personnel
The average number of employees was 150 compared to 141 in the previous year.
The re-organisation reduced the headcount by 12.
Senior Management and Succession
I would like to extend the thanks of the board to Nigel Oxbrow, founder of TFPL,
which was acquired by IDOX in 2004, who stepped down as an executive director at
the end of October, but who will remain a non-executive director of IDOX where
we will continue to benefit from his advice.
As I mentioned in the interim report, Andrew Fraser resigned in June as Chief
Executive Officer of IDOX, after seven years with the Group and the Board thanks
him for his contribution to the growth of the Group.
I have indicated to the board that I am prepared to complete the process of
reorganisation and recovery and re-set the strategic direction of the business
as Interim Chief Executive Officer.
Outlook
The new trading year has started positively both in terms of orders and
revenues, although it is too early to pronounce this as a trend.
Your board believes there are further opportunities in all three divisions for
growth and improvement in trading performance. The markets for all three
divisions are expected to show long-term growth. The improvements made in all
three divisions are expected to show through during the new trading year.
Strategy
In 2007 management will concentrate further on strengthening operations, product
delivery and profitability while looking for opportunities in the software and
related government market place allowing for both organic growth and
acquisition. As noted above, the board feels, however, that the Recruitment and
related assets, while excellent in their respective markets and capable of
further organic growth, will be better supported within another organisation
which has these activities as its primary focus. We have therefore instructed
our advisors to pursue strategic options in order to optimise the value of these
assets to our shareholders.
We have recognised the need for a clearly focused strategy emphasising and
building upon our local authority relationships. Consistent with this we are
actively pursuing consolidation opportunities in this core business activity.
Dividend Policy
The business has been restructured to permit the payment of a dividend. We will
propose that a dividend of 0.05p per share to be declared and paid to
shareholders.
Conclusion
The board believes that a renewed commercial focus on the local authority
software business is the best way of re-building shareholder value and greatly
simplifying what has been historically a confusing investor story.
IDOX has an enviable client retention rate and customer base in local
authorities and is expanding out from the traditional strong position in
planning to be a corporate solution and we are encouraged by our successes to
date in bringing a more effective solution to the revenue and benefits field.
I would like to thank our staff and former colleagues who have left us for their
skill, dedication and support during this last challenging year.
Martin Brooks
Chairman and Chief Executive Officer
11 December 2006
This announcement was approved by the Board of Directors on 8 December 2006.
IDOX plc
Consolidated Profit and Loss Account
For the year ended 31 October 2006
2006 2005
Note #000 #000
Turnover 2 13,031 14,155
External charges (4,473) (5,048)
Gross Profit 8,558 9,107
Staff costs (5,931) (5,665)
Exceptional staff costs 3 (299) -
Other operating charges (2,992) (2,685)
Operating (loss)/profit (664) 757
Interest receivable 149 119
(Loss)/profit on ordinary activities before taxation (515) 876
Tax on (loss)/profit on ordinary activities 4 (472) 700
(Loss)/profit for the year transferred (from)/to reserves (987) 1,576
(Loss)/profit per share - basic and diluted (pence) 5 (0.51p) 0.85p
All operations are attributable to continuing operations. There are no
recognised gains or losses other than those set out above.
IDOX plc
Consolidated Balance Sheet
At 31 October 2006
2006 2005
restated
#000 #000
Fixed assets
Intangible assets 4,024 4,602
Tangible assets 433 325
4,457 4,927
Current assets
Debtors 3,019 4,132
Cash at bank and in hand 4,830 4,722
7,849 8,854
Creditors: amounts falling due within one year (3,899) (4,860)
Net current assets 3,950 3,994
Total assets less current liabilities 8,407 8,921
Creditors: amounts falling due after more than one year - (410)
Net assets 8,407 8,511
Capital and reserves
Called up share capital 1,953 1,873
Capital redemption reserve 1,112 1,112
Share premium account 820 8,162
Other reserves 1,294 1,294
ESOP trust (96) (79)
Profit and loss account 3,324 (3,851)
Shareholders' funds 8,407 8,511
IDOX plc
Consolidated Cash Flow Statement
For the year ended 31 October 2006
2006 2005
Note #000 #000
Net cash inflow from operating activities 6 554 2,126
Returns on investments and servicing of finance
Interest received 149 119
Net cash inflow from returns on investments and servicing of 149 119
finance
Capital expenditure and financial investment
Purchase of tangible fixed assets (378) (320)
Purchase of investment (ESOP trust) (17) -
Net cash outflow from capital expenditure and financial (395) (320)
investment
Acquisitions
Deferred consideration paid (200) -
Net cash outflow from acquisitions (200) -
Increase in cash 108 1,925
IDOX plc
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 October 2006
2006 2005
restated
#000 #000
(Loss)/profit for the financial year (987) 1,576
Additions to ESOP trust (17) -
Shares issued 900 -
Shares to be issued reclassified to liabilities under FRS 25 - (1,300)
Adjustment in estimate of shares to be issued - (100)
Net (decrease)/increase in shareholders' funds (104) 176
Shareholders' funds at 1 November 2005 8,511 8,335
Shareholders' funds at 31 October 2006 8,407 8,511
IDOX plc
Notes to the announcement
For the year ended 31 October 2006
1 BASIS OF PREPARATION
The preliminary announcement has been prepared in accordance with applicable
United Kingdom accounting standards and under the historical cost convention.
The principal accounting policies have remained unchanged from those set out in
the Group's 2005 annual report and accounts with the exception of the adoption
of the following applicable accounting standard:
* FRS 21 'Events after the balance sheet date'
* FRS 22 ' Earnings per share'
* FRS 25 'Financial Instruments: Disclosure and Presentation'
The adoption of the presentation requirements of FRS 25 in the year has resulted
in a change in accounting policy in respect of deferred consideration payable on
acquisition of a subsidiary in a prior period. Shares to be issued at 31 October
2005 are deemed to be a liability under this standard and have been transferred
from equity to creditors. This change in accounting policy has had no impact on
the profit and loss account in the current or prior year. The adoption of FRS
21 has resulted in the proposed dividend not being disclosed as a liability at
31 October 2006. With the exception of the above, these accounting standards
have had no material impact on the current or prior year results or balance
sheet positions of the Group.
The financial information set out in this announcement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
consolidated balance sheet at 31 October 2006 and the consolidated profit and
loss account, consolidated cash flow statement and associated notes for the year
ended 31 October 2006 have been extracted from the statutory accounts upon which
the auditors opinion is unqualified and does not include any a statement under
section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the Registrar of
Companies.
2 SEGMENTAL ANALYSIS
Turnover, operating profit and net assets by class of business are set out
below:
2006 2005
restated
#000 #000
Turnover
Software Solutions 5,204 5,748
Information Solutions 3,271 3,322
Recruitment 4,556 5,085
13,031 14,155
Operating (loss)/profit
Software Solutions 286 1,243
Information Solutions (436) (37)
Recruitment 64 114
(86) 1,320
Goodwill amortisation (578) (563)
(664) 757
Net assets
Software Solutions 1,750 3,821
Information Solutions 1,100 (288)
Recruitment 1,533 376
4,383 3,909
Goodwill 4,024 4,602
8,407 8,511
3 EXCEPTIONAL COSTS
Exceptional Staff Costs
Exceptional staff costs of #299,000 (2005: #nil) were incurred in the year and
relate to the implementation of the Group's announced policy of restructuring
and refocusing the business.
4 TAX ON (LOSS)/profit ON ORDINARY ACTIVITIES
The tax charge/(credit) is made up as follows:
2006 2005
#000 #000
Current tax
UK corporation tax 43 2
Total current tax 43 2
Deferred tax - origination and reversal of timing differences 429 (702)
Tax on (loss)/profit on ordinary activities 472 (700)
Unrelieved trading losses of #616,000 (2005: #1,976,000) which, when calculated
at the standard rate of corporation tax in the United Kingdom of 30%, amounts to
#185,000 (2005: #593,000). These remain available to offset against future
taxable trading profits. During the year ended 31 October 2004 #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 may be subject to claw back by the HMRC but if this occurred 2/3
of the tax losses surrendered in respect of that year would be reinstated.
Factors affecting the tax charge/(credit) in the period:
2006 2005
#000 #000
(Loss)/profit on ordinary activities before taxation (515) 876
(Loss)/profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 30% (155) 263
Effects of:
Prior year adjustment 43 2
Expenses not deductible for tax purposes 164 154
Depreciation in excess of capital allowances (9) 45
Other timing differences 9 (21)
Group relief of current year losses (42) -
Increase/(decrease) in tax losses 33 (441)
43 2
Provision for deferred tax asset
Accelerated capital allowances 75 105
Other timing differences 28 19
Tax losses carried forward 185 593
Provision for deferred tax asset 288 717
There were no unprovided deferred tax assets at 31 October 2006 or 31 October
2005.
At 1 November 2005 717 15
Adjustment for the year (429) 702
At 31 October 2006 288 717
5 (loss)/earnings per share
The (loss)/earnings per ordinary 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:
2006 2005
#000 #000
(Loss)/profit for the year (987) 1,576
Weighted average number of shares in issue 192,517,399 185,229,685
Basic and diluted (loss)/earnings per share (0.51p) 0.85p
The share options are anti dilutive under FRS 22. Share options that would
potentially dilute basic earnings per share but which were not included in the
calculation because they were anti-dilutive for the periods presented.
6 NET CASH inflow FROM OPERATING ACTIVITIES
2006 2005
#000 #000
Operating (loss)/profit (664) 757
Depreciation 270 242
Goodwill amortisation 578 563
Decrease/(increase) in debtors 642 (118)
(Decrease)/increase in creditors (272) 682
Net cash inflow from operating activities 554 2,126
7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2006 2005
#000 #000
Increase in cash in the year, being movement in net funds in the 108 1,925
year
Net funds at 1 November 2005 4,722 2,797
Net funds at 31 October 2006 4,830 4,722
8 FURTHER COPIES
Copies of this announcement and the full annual 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 IDOX plc, 2nd floor, Times Square,
160 Queen Victoria Street, London, EC4V 4 BF, Tel: 0870 333 7101. Copies of the
full financial statements will be posted to shareholders in the week commencing
18 December 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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