RNS Number:2844Y
i-documentsystems Group PLC
8 July 2002
8 July 2002
i-documentsystems group plc
Interim Results for the six months ended 30 April 2002
Highlights
• Turnover up by 152% to £1.16m (2001: £459,379)
• Cash of £1.94m as at 30 April 2002 (rising to £3.13 million on 10 May
2002 post fund-raising and acquisition of The Planning Exchange)
• Strengthening of market position as a leading e-government solution
provider by winning 13 new council customers during the six months
taking the total to 40
• Commencement of UKPlanning (business process outsourcing and
information solution) rollout
• Further development of strategic marketing alliances
• Pathfinder Planning solution delivered for Wandsworth - the first of
its kind in the U.K.
• Pipeline opportunities continue to increase both in quantity and
quality
• Placing of new shares and acquisition of The Planning Exchange,
completed in May 2002
John Wisbey, Chairman, commented:
"I am pleased to report that i-documentsystems has made considerable progress
during the first six months of the current financial year, evidenced by the fact
that revenue has more than doubled to £1.158 million. The Group continues to
build upon and strengthen its position as a leading player in its chosen sectors
of e-government. As a result of mounting brand awareness and new opportunities,
orders in the pipeline continue to register healthy growth. The Board is
encouraged by these developments and believes the Group is on track to achieve
its stated aim of reaching profitability for the financial year ending October
2003.
"Since the end of the period under review, we have completed the acquisition of
the business and assets of The Planning Exchange. The combination of our
UKPlanning service and The Planning Exchange's Information Service enables us to
offer the premier business process outsourcing solution to the planning and
regeneration industry. This, in turn, will open up significant opportunities to
win new business from our existing customers and to build new revenue streams."
For further information please contact:
John Wisbey, Chairman 020 7353 5330
Andrew Fraser, CEO 020 7427 0660
Tim Bowen, CFO 020 7427 0660
Jonathan Rooper / Nadja Vetter, Cardew & Co. 020 7930 0777
Ben Thomson / Alasdair Robinson, Noble & Co. 0131 225 9677
i-documentsystems group plc
Chairman's Statement
For the six months ended 30 April 2002
I am pleased to report that i-documentsystems group plc ("the Group") has made
considerable progress during the first six months of the current year,
illustrated by the fact that revenue has more than doubled to £1.158 million
compared with the same period a year ago. The Group continues to build on and
strengthen its position as a lead player in its chosen sectors of e-government.
Through its Image-Gen software, the Group has successfully built upon its
position in the Local Government market. Image-Gen is now used by 40 local
authority clients compared with 19 at the end of April 2001 and 27 at 31 October
2001. The number of potential contracts in the pipeline is increasing and the
Group's partnerships with major systems integrators will open up additional new
business channels.
An important milestone in the period was winning, and completing in April 2002,
a Pathfinder project from Wandsworth Council for our UKPlanning product. The
Pathfinder initiative is a Central Government-backed project to demonstrate the
cutting edge of e-government delivery. We believe it is the only such project
in the U.K. and has high visibility in U.K. Local Government circles. It has
already led to a significant number of word of mouth inspired enquiries.
Towards the end of the half year the Group announced its intention to acquire
The Planning Exchange in Glasgow. This acquisition was completed at the
beginning of May, concurrent with a successful fund-raising of over £1.4 million
by the Group.
Operating and Financial Review
The Group incurred a loss of £559,437 (2001: £474,551) for the six months to 30
April 2002 on a turnover of £1.16 million (2001: £459,379). This equates to a
loss per share of 0.46 pence (2001: 0.41 pence). The gross margin increased
slightly to 75% for the period (2001: 72%).
The results were in line with expectations, with the increased loss due to a
planned rise in staff costs from £534,634 to £1.01 million reflecting the full
cost of staff recruited towards the end of the previous financial year. Net cash
as at 30 April 2002 amounted to £1.94 million compared with £3.16 million as at
30 April 2001. At 10 May 2002, following
the acquisition of The Planning Exchange and the capital raising, net cash stood
at £3.13 million.
It should be noted that the Group's accounting policy remains to write off in
full all R&D expenditure as soon as it is incurred. There has been no
capitalisation of expenses on any assets created internally.
Local Authority Business
The Group achieved its target of 40 local authority customers for Image-Gen by
the end of the six months under review. A total of 50 local authority clients
for Image-Gen remains the target for the end of the financial year. However, the
nature of our local authority relationships is evolving rapidly. The Group is
now winning contracts in a range of local authority departments, such as
housing, social services and education, some of which are significantly
different (both higher and lower) in scale and nature from the planning
department contracts which accounted for much of i-documentsystems' turnover
last year. The Planning Exchange adds approximately 70 further local authority
clients to the customer list.
The niche of local authority planning departments remains our prime sales target
as it allows potential entry into other departments. There are 468 local
authorities in the U.K., all of which are expected to comply with the Prime
Minister's directive to ensure that all appropriate Local Government services
are available electronically by 2005. Reinforcing this pressure from Central
Government, there is a strong cost saving and efficiency argument for electronic
availability of documents in planning departments. The Group continues to
believe that it is well placed to gain significant additional contracts from the
remainder of the U.K. local authorities. Our Pathfinder solution for Wandsworth
has demonstrated to other councils how e-government within planning can be best
delivered. Our participation in relevant trade shows continues to prove highly
successful, resulting in a significant number of sales opportunities.
Strategy and Alliances
The Board believes that significant opportunity exists to provide e-government
solutions for the range of tasks carried out by Environmental Services
departments within local authorities.
The Group will continue to seek strategic partnerships where appropriate in
order to widen its offering to other local authority departments and Central
Government to
facilitate the opening of new markets. Last year the Group entered such
partnerships with Hyder Business Services (HBS) and MVM Consultants plc, a
subsidiary of Anglian Water plc.
During the past six months, the Group has reached a three-year distribution
agreement with Serco for its Image-Gen suite of e-government products and
services. Under the agreement Serco will integrate Image-Gen with their own
software (using XML for the integration of data) and market the combined product
in their own core markets, including the substantial U.K. policeforce
marketplace. This is a clear indication that the Group's software is highly
adaptable and is scaleable to meet varying demands. Discussions are also being
held with other potential partners.
Banking and Financial Business
Although the Group's emphasis is not on the financial services sector we retain
a number of banking customers. The Group may develop this market further through
partnerships and reseller arrangements should the market opportunity broaden.
Product Development
There have been significant developments in our core suite of products.
Additional capability at our new Glasgow office has speeded our development of
both Image-Gen and UKPlanning. We have deliberately built functionality into
UKPlanning so that it can be used with the traditional Image-Gen product suite
allowing for enhancements to our i-portal and i-xml servers. Functionality was a
major factor in the success of the Wandsworth Pathfinder project. This required
the integration of intelligent electronic planning and building control forms
with on-line payment, address databases and CAD drawings. XML data was also
passed into the application system for further processing. This level of
integration enabled Wandsworth to achieve significant reductions in the costs of
processing applications. This, we believe, is the first fully integrated
submission mechanism to be implemented within Local Government in the U.K.
Image-Gen development has included J2EE server compliance, completion of an XML/
SOAP server interface compatible with Microsoft.NET, further development of
internally submitted forms functionality, electronic records management
capabilities, general improvements to the usability of the product, and an
interface to enable the
public display of committee records on a council web-site. Improvements have
also been made to the scalability of the product to facilitate its rollout to
potentially thousands of users across an organisation.
UKPlanning
The Group has developed further the UKPlanning system via an ASP (Application
Service Provider) model designed to enable local authorities to store and index
planning documents in order to make them available for public inspection on the
internet. The Group provides this service on an outsourced basis using its
existing Image-Gen technology, reducing the need for each council to develop
separate expertise. This allows each participating council's planning
applications to be accessed through a single internet portal
(www.ukplanning.com).
People
Staff numbers increased to 47 (25 as at 30 April 2001) during the period under
review. This expansion has been centred on the sales and marketing areas and in
the Glasgow office where we continue to take advantage of a highly skilled and
competitive pool of information technology talent available in Scotland.
Technical and sales support for Scotland and much of the North of England is
handled from Glasgow.
Our overall staff strategy has been to build a team capable of delivering and
managing our rapid business growth and help us to take advantage of business
opportunities.
With the acquisition of The Planning Exchange in May we have acquired an
additional 27 staff, taking overall staff numbers to 74 as at 10 May 2002. Other
than for a limited number of potential key new positions, most of the additional
staff earmarked for the UKPlanning business to business and business to commerce
phases have effectively been already gained through the acquisition of The
Planning Exchange.
Dividend
In line with stated policy, 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.
Recent developments and outlook
Acquisition of The Planning Exchange
As mentioned earlier, since the period under review, the Group (via its 100%
owned subsidiary Idox Information Services Limited) acquired the business and
assets of The Planning Exchange for £442,725. The Planning Exchange provides
content and information services to the planning and wider community relating to
economic, environmental and physical regeneration and development in the U.K.
The acquisition brings with it more than 300 customers of which approximately 70
are U.K. local authorities. Other clients include government departments,
consulting firms, housing organisations and research bodies.
This acquisition has the potential to be far more significant to the Group than
its size might suggest and allows us to be an important provider of information
as well as software to local government. As the market evolves, this combination
is likely to have considerable strategic value. Not only will it enable us to
provide a more comprehensive service and achieve cross-selling opportunities,
but it also means that in certain areas it will be very difficult for any
competitor to replicate our offering. We are pleased with the cultural and
business combination and have high expectations of what we can achieve together
in our common marketplace.
Funding of the acquisition
A total of 11,986,668 new ordinary 1 penny shares (New Ordinary Shares) were
placed on behalf of the Group with new and existing institutional investors, at
a price of 12 pence per share. The New Ordinary Shares rank pari passu with the
existing ordinary shares of the Group and represent 8.54 per cent of the
enlarged issued share capital of the Group.
The Placing raised £1.44 million before expenses of the issue, the proceeds of
which were used towards the acquisition of The Planning Exchange and to augment
the Group's existing working capital. The acquisition was completed on 7 May
2002. The new shares started trading on 10 May 2002 on the Alternative
Investment Market (AIM) of the London Stock Exchange.
Outlook
Overall, the first half of the financial year to 31 October 2002 was in line
with our expectations to more than double revenue compared with the
corresponding period of 2001. The Board believes that very significant revenue
growth is likely to be achieved for the full year to October 2002, excluding the
additions to revenue that will arise from The Planning Exchange.
The Board's primary focus remains to continue to build market share, having put
in place much of the necessary management and infrastructure. As a result of
mounting brand awareness and new opportunities, orders in the pipeline continue
to register healthy growth. The Board is encouraged by these developments and
believes the Group is on track to achieve its stated aim of reaching
profitability for the year ending October 2003.
The staff of i-documentsystems have all worked very hard and deserve
considerable recognition and thanks, both in Glasgow and in London, for
achieving over 100% organic revenue growth while managing the Group's first
acquisition. We are delighted to welcome the staff of The Planning Exchange to
the Group; it is very encouraging that post merger integration is being
accomplished very swiftly and so effectively.
John Wisbey
Chairman
5 July 2002
The interim report was approved by the Board of Directors on 5 July 2002.
i-documentsystems group plc
Consolidated Profit and Loss Account
For the six months ended 30 April 2002
Note 6 months to 30 6 months to 12 months to
April 2002 30 April 2001 31 October 2001
(unaudited) (unaudited) (audited) £
£ £
Turnover 1,158,948 459,379 1,201,192
External charges (291,575) (126,847) (431,730)
867,373 332,532 769,462
Staff costs (1,011,130) (534,634) (1,296,372)
Other operating charges (450,233) (348,645) (800,885)
Operating loss (593,990) (550,747) (1,327,795)
Net interest 34,553 76,196 146,522
Loss on ordinary activities
before taxation (559,437) (474,551) (1,181,273)
Tax on loss on ordinary
activities 0 0 0
Loss for the period
transferred from reserves (559,437) (474,551) (1,181,273)
Loss per share (pence)
Basic and diluted (3) (0.46) (0.41) (0.97)
i-documentsystems group plc
Consolidated Balance Sheet
At 30 April 2002
At At At
30 April 2002 30 April 2001 31 October 2001
(unaudited) (unaudited) (audited)
£ £ £
Fixed assets
Tangible assets 142,518 62,755 124,094
Current assets
Debtors 1,015,337 659,764 797,096
Cash at the bank and in hand 1,938,552 3,161,742 2,371,758
2,953,889 3,821,506 3,168,854
Creditors: amounts falling due
within one year (988,758) (510,437) (625,862)
Net current assets 1,965,131 3,311,069 2,542,992
Net assets 2,107,649 3,373,824 2,667,086
Capital and reserves
Called up share capital 1,283,172 1,283,172 1,283,172
Deferred share capital 1,112,014 1,112,014 1,112,014
Share premium capital 2,789,389 2,789,405 2,789,389
Other reserves 1,239,471 1,239,471 1,239,471
Profit and loss account (4,316,397) (3,050,238) (3,756,960)
Equity shareholders' funds 2,107,649 3,373,824 2,667,086
i-documentsystems group plc
Consolidated Cash Flow Statement
For the six months ended 30 April 2002
Note 6 months to 6 months to 12 months to
30 April 2002 30 April 31 October 2001
(unaudited) 2001 (audited)
£ (unaudited) £
£
Net cash outflow from operating
activities (4) (389,540) (712,298) (1,477,539)
Returns on investment and
servicing of finance
Interest received 32,291 76,196 145,439
Net cash inflow from returns on
investments and servicing of
finance 32,291 76,196 145,439
Capital expenditure and financial
investment
Purchase of tangible fixed assets (75,957) (47,835) (142,921)
Sale of tangible fixed assets 0 0 1,116
Net cash outflow from capital
expenditure and financial
investment (75,957) (47,835) (141,805)
Financing
Issue of share capital 0 3,115,913 3,115,897
Net cash inflow from financing 0 3,115,913 3,115,897
(Decrease)/increase in cash (433,206) 2,431,976 1,641,992
i-documentsystems group plc
Notes on the Interim Report
For the six months ended 30 April 2002
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 2001
annual report and financial statements. The policies remain as stated in the
annual report for the year ended 31 October 2001. The Group has implemented
FRS19 Deferred Tax.
The called up share capital and other reserves at 30 April 2001 have been
re-presented for consistency with the balance sheets at 31 October 2001 and 30
April 2002. There has been no alteration to the total amount of capital and
reserves at 30 April 2001.
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 2001 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 Post Balance Sheet Events
On 7 May 2002, Idox Information Services Limited, a newly formed subsidiary of
i-documentsystems group plc, acquired the assets and liabilities of The Planning
Exchange. The Planning Exchange provides content and information services to the
planning and wider community on aspects of economic, environmental and physical
regeneration and development in the U.K. to a client base of over 300
subscribers, of which approximately a quarter are local authorities. Other
clients include government departments, consulting firms, housing organisations
and research bodies. The total consideration is £442,725.
On 10 May 2002, the Group placed a total of 11,986,668 new ordinary 1 penny
shares ("New Ordinary Shares") with new and existing institutional investors, at
a price of 12 pence per share. The Placing raised £1,438,400 before expenses.
The proceeds were used towards the acquisition of the trade and net assets of
The Planning Exchange 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 8.54 per cent of the enlarged issued share
capital of the Group. Dealings in the New Ordinary Shares commenced on Friday
10 May 2002.
An unaudited pro forma balance sheet showing the effect the placing and
acquisition would have had if they had occurred on 30 April 2002 is shown below:
2 Post Balance Sheet Events (continued)
Balance sheet at Aquisition and Pro forma
30 April 2002 placing balance sheet
(unaudited) (unaudited) (unaudited)
£ £ £
Fixed assets
Tangible 142,518 49,285 191,803
Intangible 727,156 727,156
142,518 776,441 918,959
Current assets
Debtors 1,015,337 363,327 1,378,664
Cash at bank and in
hand 1,938,552 1,191,730 3,130,282
2,953,889 1,555,057 4,508,946
Creditors: amounts
falling due within one
year (988,758) (928,524) (1,917,282)
Net current assets 1,965,131 626,533 2,591,664
Net assets 2,107,649 1,402,974 3,510,623
Capital and reserves
Called up share
capital 1,283,172 119,867 1,403,039
Deferred share capital 1,112,014 1,112,014
Share premium account 2,789,389 1,288,999 4,078,388
Other reserves 1,239,471 1,239,471
Profit and loss
account (4,316,397) (5,892) (4,322,289)
Equity shareholders'
funds 2,107,649 1,402,974 3,510,623
3 Loss Per Share
The loss per 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 6 months to 12 months to
30 April 2002 30 April 2001 31 October 2001
(unaudited) (unaudited) (audited)
£ £ £
Loss for the period (£) (559,437) (474,551) (1,181,273)
Weighted average numbers of
shares in issue 122,139,763 115,962,000 122,139,763
Loss per share (pence) (0.46) (0.41) (0.97)
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 share and is therefore not dilutive under
the terms of FRS 14 Earnings per Share.
4 Net Cash Outflow from Operating Activities
6 months to 6 months to 12 months to
30 April 2002 30 April 2001 31 October 2001
(unaudited) (unaudited) (audited)
£ £ £
Operating loss (559,437) (550,747) (1,327,795)
Depreciation 57,533 16,926 50,674
Loss on disposal of
tangible fixed assets 0 1,117 0
Increase in debtors (215,979) (414,938) (551,187)
Increase in creditors 362,896 235,344 350,769
Net cash outflow from
operating activities (389,540) (712,298) (1,477,539)
5 Reconciliation of Net Cash Flow to Movement in Net Funds
6 months to 6 months to 12 months to
30 April 2002 30 April 2001 31 October 2001
(unaudited) (unaudited) (audited)
£ £ £
(Decrease)/increase in cash
in the period, being
movement in net funds in the
period (433,206) 2,431,976 1,641,992
Net funds at 1 November 2001 2,371,758 729,766 729,766
Net funds at 30 April 2002 1,938,552 3,161,742 2,371,758
6 A copy of the Interim Report for the six months to 30 April 2002 will
be sent to shareholders as soon as possible. Copies of this announcement will
be available, free of charge, for a period of one month from the Company's
Nominated Adviser:
Noble & Company Limited
1 Frederick's Place
London
EC2R 8AB
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