TIDMIDOX
RNS Number : 7568H
IDOX PLC
25 June 2013
25 June 2013
IDOX plc
Interim Results for the six months ended 30 April 2013
IDOX plc (AIM: IDOX, 'IDOX' or the 'Group'), a leading supplier
of software and services, announces interim results for the six
months ended 30 April 2013.
As the board has agreed a disposal of the non-core recruitment
business it discloses results for that division as discontinued
operations. The highlights therefore refer to continuing operations
only.
Highlights
-- Revenues 2% lower at GBP26.6m (H1 2012: GBP27.1m)
-- 31% of revenues generated internationally (H1 2012: 33%) with
growth in Europe and Australia
-- Acquisition of Artesys for GBP2.1m, extending the reach of
Engineering Information Management geographical into Africa
-- EBITDA* GBP5.8m (H1 2012: GBP8.1m)
-- Adjusted profit before tax** GBP5.0m (H1 2012: GBP7.2m)
-- Adjusted basic EPS** 1.02p (H1 2012: 1.58p). Basic EPS 0.43p (H1 2012: 0.67p)
-- Cash generation increased 10% to GBP10.2m (H1 2012: GBP9.3m)
-- Interim proposed dividend of 0.30p, 9% increase over last
year demonstrating the Board's confidence in the business
-- Agreement reached for disposal of recruitment business for
total consideration of up to GBP0.6m
Martin Brooks, Chairman, said:
"2012 saw the Group expand substantially its operational and
geographic reach through acquisition, whilst this year we are
focused on upgrading our operational systems and capabilities.
"While our trading performance in the first half was
disappointing, principally due to the delays in completing expected
large deals in the Engineering Information Management division, it
should be judged against the context of a larger and more developed
qualified prospect pipeline across all our divisions and an
expansion in the Company's global sales capability. This
encouraging backlog of orders and professional services work,
together with a greater emphasis on managed service contracts,
gives us confidence for a much improved second half and the Board
confirms expectations for the full year."
* EBITDA is defined as earnings before impairment, amortisation,
depreciation, restructuring, corporate finance and share option
costs
** Adjusted profit before tax and adjusted EPS excludes
amortisation, impairment, restructuring, corporate finance and
share option costs
Enquiries:
IDOX plc +44 (0) 20 7332 6000
Martin Brooks, Chairman
Richard Kellett-Clarke, Chief Executive
William Edmondson, Chief Financial
Officer
Investec Investment Bank plc (NOMAD
& Broker) +44 (0) 20 7597 5100
Andrew Pinder / Patrick Robb
FinnCap (Broker) +44 (0) 20 7220 0500
Stuart Andrews / Stephen Norcross
Leander PR +44 (0) 7795 168 157
Christian Taylor-Wilkinson
About Idox plc
Idox plc is a supplier of specialist document management
collaboration solutions and services to the UK public sector and
increasingly to highly regulated asset intensive industries around
the world in the wider corporate sector.
Its Public Sector Software Division is the leading applications
provider to UK local government for core functions relating to
land, people and property, such as its market leading planning
systems and election management software. Over 90% of UK local
authorities are now customers. The Group provides public sector
organisations with tools to manage information and knowledge,
documents, content, business processes and workflow as well as
connecting directly with the citizen via the web.
The Engineering Information Management Division delivers
engineering document control, project collaboration and facility
management applications to many leading companies in industries
such as oil & gas, architecture and construction, mining,
utilities, pharmaceuticals and transportation around the world.
Through the Information Solutions Division Idox also supplies,
predominantly to the public sector, decision support content such
as grants and planning policy information as well as related
specialist services.
The Group employs over 550 staff located in the UK, the USA,
Europe, India and Australia.
For more information see www.idoxplc.com.
Overview
The Group's trading performance in the first half was
disappointing, principally resulting from delays in completing some
expected large deals in the Engineering Information Management
("EIM") division which did not come through in the first half when
compared to 2012 when two significant enterprise deals were closed.
However, this disappointment should be set against a larger and
more developed qualified prospect pipeline and an expansion in the
Company's sales capability around the world. These excellent
prospects and delayed completions have not been lost to competition
or cancellation and remain to be completed in the second half of
the financial year and to improve our start to the next year. The
Company is taking active measures in strengthening management and
related processes to improve the identification, predictability and
forecasting of revenues in its growing worldwide operations.
The core public sector business continues to perform well with
an increasing transition toward managed and hosted services;
building visibility of revenue for future years. However, due to
the electoral cycle calendar which saw a lower number of spring
local elections held in 2013 compared to 2012, our Public Sector
Division did not see the same level of revenue from its elections
business. We expect to see an uplift in activity in 2014 as a
result of higher election activity.
Operational Review
After a busy year of acquisitions in 2012, when Idox
substantially expanded its operational and geographic reach, we
have focused in the first half of this year on upgrading our
systems and operational capabilities. We have made only one small,
but strategically important, acquisition in the first half,
Artesys, which extends our geographical reach and opens up new Oil
& Gas markets for the EIM division in Africa.
The key back office projects have been the implementation of a
new Enterprise Resource Planning (ERP) system and the improved
integration of our internal and hosting technical
infrastructure.
Within the Public Sector business, despite the difficult cost
saving environment in local government, we have continued to
innovate and improve our solutions and add new clients with over 50
new systems being added in the first half of the year. The first
half also saw further extensions to the Westminster managed service
contract, increased demand for our planning Business Processing
Outsourcing (BPO) offering and further sales of managed and hosted
solutions bringing our total number of local authorities to 30. We
have recently launched a fully re-engineered elections product and
also delivered a major upgrade, Uniform 9, to our core case
management platform for planning and environmental health
products.
The Public Sector division has been successful in diversifying
the business from purely UK local government. We have won a number
of contracts for election systems in Norway, and have been
short-listed for a number of overseas planning solutions, some as
far afield as New Zealand. The Map for England demonstration
service, in partnership with the Royal Town Planning Institute, has
been well received as an initiative to spatially represent
information for the community and is now ready for wider commercial
development
The Engineering Information Management division had a positive
first half by growing its order pipeline by 30% from the start of
the year. However, this was countered by the disappointingly slow
start in booking licensing revenue due to delays in approval and
sign offs. The division made excellent progress in the
internationalisation of its product, the globalisation of its
support infrastructure and launched the first of its operational
improvements with the release of Workbook 1.0 and "Idox Live" for
the iPad. Both of these will be followed up with further releases
later in the year. The division also had a soft launch of its move
into BPO by concluding its first contract in May for the provision
of a system and virtual document control solution for a large
long-standing Canadian customer.
The acquisition of Artesys has fulfilled the goal of
strengthening our position in the French market as well as
expanding into the Oil & Gas Industry in African markets such
as Algeria and Angola. The FMx acquisition, made in October 2012,
took more effort to integrate than originally envisaged and has
required a thorough re-organisation. This is now complete and the
business is strengthening the management team in a number of areas
to enable it to speed up its international expansion.
The Information Solutions Division had a difficult start to the
year mainly in the projects area which was adversely affected by
government spending cuts and re-organisations, however the grants
information service maintained its subscription rates. Innovation
Connect, our Dutch based grants consultancy business, has expanded
its geographical footprint by opening a new office in the south
west of Holland as well as signing a joint venture partnership in
the north east. Innovation Connect is also planning expansion into
Germany, leveraging on our existing presence in Frankfurt.
Interactive Dialogues, our Brussels based e-learning business, had
a quiet start to the year but has grown a strong pipeline extending
its presence into the UK and is looking forward to a stronger
second half with the launch of its new platform which will offer a
significantly enhanced user experience.
The Board is pleased to announce it has agreed the terms of a
sale of its recruitment business, TFPL, to ILX Group plc (AIM :
ILX) for an initial consideration of GBP0.3m with potential
additional consideration of up to GBP0.3m dependent on the business
achieving certain performance targets in the 12 months following
disposal. The sale is expected to complete in the near future on
satisfaction of various completion conditions.
As part of an on-going process to strengthen the governance of
the Company, we are very pleased that Jeremy Millard has joined the
Board as a non-executive director in June, bringing broader City
experience to the Company.
Outlook
Within the Public Sector division, the growth in both hosted and
managed services has been particularly encouraging and is expected
to continue. The shift in the mix of revenues toward managed
services from upfront license sales increases revenue visibility in
future years although holds back growth in the current year's
revenues.
We have further work to do in the EIM division however the
organisational changes made in the first half, together with the
continued investment in sales resource and products, lays strong
foundations for the future growth of the business.
All of the divisions have increased their qualified order
pipelines in the first half of the year and have an encouraging
backlog of orders and professional services work. This gives us
confidence for a much improved second half and the Board confirms
expectations for the full year.
Financial review
Group revenues from continuing operations fell by 2% to GBP26.6m
(H1 2012: GBP27.1m) reflecting the absence of a large enterprise
licence deal in the EIM segment whereas in the first half of last
year two significant enterprise licences sales in the USA were
included. Despite this the Group generated 31% of its revenues
internationally (H1 2012: 33%) with growth in Europe and Australia.
Gross profit earned from continuing operations was 2% lower at
GBP23.9m (H1 2012: GBP24.4m) and the Group saw gross margins stable
at 90%. The small fall in revenue coupled with higher overhead
costs related to acquisitions made in the past year resulted in
EBITDA from continuing operations of GBP5.8m (H1 2012:
GBP8.1m).
Performance by segment
The Public Sector software business, which accounted for 52% of
Group revenues (H1 2012: 51%), delivered revenues of GBP14.3m (H1
2012: GBP14.6m), 2% lower due mainly to an expected fall in
elections managed services revenue as a result of a lower number of
spring local elections in H1 2013 compared to H1 2012. Excluding
the elections business, public sector revenue was flat however new
sales, which includes an increasing proportion of managed and
hosted services business and contains an element of revenue
deferred to future years, increased by 36% which builds visibility
of future revenue. Recurring revenues within the Public Sector
software business were stable at 59% of segmental revenue.
The EIM business accounted for 30% of Group revenues (H1 2012:
31%) having declined by 8% to GBP8.2m (H1 2012: GBP8.9m). The prior
year comparator included two large enterprise deals which have not
yet been repeated in 2013 due to slippage in closing new sales in
the first half. However the pipeline of opportunities has grown
significantly which provides confidence for the second half of the
year. As a result of the shortfall in new licences sales revenue
declined organically by 22% however this was partially offset by
increased maintenance revenue and the GBP1.2m maiden contribution
from FMx, provider of facilities management software, which was
acquired in October 2012.
EIM recurring maintenance and SaaS revenues have performed well,
helped by the launch of the McLaren OnAir service, and represented
58% of segmental revenues (H1 2012: 46%). Artesys International,
acquired in April 2013 delivered GBP0.1m in revenues in the first
half. Geographically, revenues from the USA declined to 33% (H1
2012: 66%) of segmental revenue due to the strong licence sales in
the first half of 2012. Strong growth was seen in Australia where
revenues have benefited from investment in sales and technical
resource over the past year leading to a doubling of revenues to
GBP1m. There is also a growing proportion of revenue from African
and Middle Eastern countries which represented 11% (H1 2012: nil)
of EIM segmental revenues as a result of the FMx and Artesys
acquisitions and we expect this to continue to grow in the second
half of the year.
The Information Solutions business increased revenues by 11% to
GBP4.0m (H1 2012: GBP3.6m) as a result of the acquisition of the
grants consultancy business Currency Connect (now renamed
Innovation Connect) in May 2012. The grants subscription business
which faced headwinds in 2012 has seen improved levels of both
subscription renewal rates and new business during the first half
of the year which has reversed the revenue decline seen last year
and provides a firmer footing for the business going forward.
Performance in the projects business which develops funding
websites, mainly for the voluntary sector, has been poor providing
a drag on revenue of GBP0.4m compared to H1 2012 but not material
to the Group overall.
The Recruitment business revenues, disclosed as discontinued
operations, declined by 32% to GBP1.0m (H1 2012: GBP1.4m) as a
result of a further decline in the low margin contract recruitment
business and a soft permanent recruitment market in the first half.
Gross profit declined to GBP0.5m (H1 2012: GBP0.8m).
Profit before tax
Within the income statement, we present both profit before tax
and adjusted profit before tax which is a performance measure that
is not defined by GAAP but which the directors believe provides a
reliable and consistent measure of the Group's underlying financial
performance.
Adjusted profit before tax and adjusted EPS excludes
amortisation, impairment, restructuring, corporate finance and
share option costs.
Adjusted profit before tax from continuing operations decreased
31% to GBP5m (H1 2012: GBP7.2m). Overheads increased by GBP1.8m to
GBP18m (H1 2012: GBP16.2m) as a result of the full year impact of
the acquisitions of Opt2Vote in March 2012, Innovation Connect in
May 2012 and FMx in October 2012. Adjusting for this impact,
overheads reduced on a like-for-like basis by GBP0.5m. Finance
costs decreased from GBP0.6m to GBP0.5m as a result of a lower
average interest charge on drawn banking facilities.
Reported profit before tax from continuing operations decreased
38% to GBP2.1m (H1 2012: GBP3.4m). There was a one-off benefit of
GBP0.8m included in exceptional corporate finance costs related to
the release of earn-out obligations on the Opt2Vote acquisition
which is not now expected to be paid. Excluding this GBP0.8m
benefit, exceptional corporate finance and restructuring costs
reduced to GBP0.1m (H1 2012: GBP1.2m) as a result of lower
acquisition activity in the first half compared to last year.
Amortisation of acquired intangibles increased to GBP2.7m (H1
2012: GBP2.3m) reflecting a full year of amortisation on the
acquisitions made during 2012. There is a charge of GBP0.5m (H1
2012: nil) related to a further impairment of goodwill on our
recruitment business, TFPL which has been made to bring the
carrying value in line with likely disposal proceeds. The Group
continues to invest in developing innovative technology solutions
and has incurred capitalised Research & Development costs of
GBP0.5m in the first half of the year (H1 2012 : GBP0.3m).
Taxation, Earnings per share and dividends
The income tax expense for the period was GBP0.6m (H1 2012:
GBP1.1m), reflecting the lower profitability. The effective tax
rate as a percentage of adjusted profit before tax reduced to 13%
(H1 2012: 15%) as a result of lower profitability in the USA which
has a higher rate of corporation tax than the UK.
Adjusted earnings per share from total operations were 1.02p (H1
2012: 1.58p). Diluted adjusted earnings per share from total
operations were 0.97p (H1 2012: 1.51p). Basic earnings per share
from total operations were 0.42p (H1 2012: 0.69p). Diluted earnings
per share from total operations were 0.40p (H1 2012: 0.66p).
The Board proposes an interim dividend of 0.30p, an increase of
9% which, despite the disappointing first half performance reflects
its confidence in the opportunities available to the Group in the
remainder of the current financial year and beyond. Dividend cover,
based on adjusted basic earnings per share, remains comfortable at
over 3 times. The interim dividend will be paid on 21 August 2013
to shareholders on the register at 9 August 2013.
Balance sheet and cashflows
Cash generated from operating activities before tax increased to
GBP10.2m (H1 2012: GBP9.3m) and as a percentage of EBITDA increased
to 178%, up from 113% in the previous year. The high percentage in
both years reflects the seasonality of maintenance cash flows
within the public sector business. The improvement in cash
generation compared to last year reflects lower cash exceptional
charges and strong working capital management.
The Group ended the year with net debt of GBP17.7m (H1 2012:
GBP12.1m) after making acquisition related payments in the past 12
months of GBP11.4m and after total dividends of GBP2.3m. The
Group's total signed debt facilities at 30 April 2013 stood at
GBP32.7m, a combination of a term loan and flexible working capital
and acquisition revolving credit facilities. The Group has enjoyed
significant headroom against its banking covenants during the first
half of the year.
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 April 2013
As restated As restated
6 months 6 months 12 months
to to to
30 April 30 April 31 October
13 12 12
(unaudited) (unaudited) (audited)
Continuing operations Note GBP000 GBP000 GBP000
Revenue 3 26,569 27,136 55,382
External charges (2,713) (2,772) (5,335)
-------------- ------------- ------------
Gross margin 23,856 24,364 50,047
Staff costs (13,822) (12,948) (25,930)
Other operating charges (4,243) (3,344) (7,500)
-------------- ------------- ------------
Earnings before amortisation,
depreciation, impairment,
restructuring, corporate
finance and share option
costs 5,791 8,072 16,617
Depreciation (347) (333) (589)
Amortisation (2,728) (2,292) (4,609)
Impairment of intangible
fixed assets (457) - (1,000)
Restructuring costs (88) (318) (406)
Corporate finance costs 764 (896) (1,109)
Share option costs (315) (256) (707)
-------------- ------------- ------------
Operating profit 2,620 3,977 8,197
Finance income 68 12 18
Finance costs (546) (583) (1,273)
------------------------------- ----- -------------- ------------- ------------
Analysed as:
Adjusted profit before tax 4,966 7,168 14,773
Impairment of intangible
fixed assets (457) - (1,000)
Amortisation of intangible
fixed assets (2,728) (2,292) (4,609)
Restructuring costs (88) (318) (406)
Corporate finance costs 764 (896) (1,109)
Share option costs (315) (256) (707)
------------------------------- ----- -------------- ------------- ------------
Profit before taxation 2,142 3,406 6,942
Income tax expense 4 (635) (1,079) (201)
-------------- ------------- ------------
Profit for the period from
continuing operations 1,507 2,327 6,741
Other comprehensive income
for the period net of tax - (27) 61
-------------- ------------- ------------
Total comprehensive income
for the period attributable
to owners of the parent from
continuing operations 1,507 2,300 6,802
============== ============= ============
Profit for the period from
continuing operations 1,507 2,327 6,741
Net result from discontinued
operations 8 (52) 58 (36)
-------------- ------------- ------------
Net result for the period 1,455 2,385 6,705
============== ============= ============
Basic and diluted earnings
per share
Continuing operations
Basic 5 0.43p 0.67p 1.95p
Diluted 5 0.41p 0.64p 1.85p
Total operations
Basic 5 0.42p 0.69p 1.94p
Diluted 5 0.40p 0.66p 1.84p
The accompanying notes form an integral part of these financial
statements.
Consolidated Interim Balance Sheet
At 30 April 2013
At At At
30 April 30 April 12 31 October
13 12
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
ASSETS Note
Non-current assets
Property, plant and equipment 979 673 817
Intangible assets 71,196 65,017 71,371
Other long-term financial
assets - - -
Deferred tax assets 1,254 337 1,417
------------- ------------- ------------
Total non-current assets 73,429 66,027 73,605
Trade and other receivables 22,526 21,629 16,913
Cash at bank 9,147 11,628 3,640
Disposal group 9 990 - -
------------- ------------- ------------
Total current assets 32,663 33,257 20,553
------------- ------------- ------------
Total assets 106,092 99,284 94,158
------------- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 4,446 4,276 5,460
Other liabilities 27,263 27,957 17,286
Provisions 193 72 76
Current tax 1,296 1,487 1,020
Derivative financial instruments 113 35 136
Borrowings 2,639 2,300 2,300
Disposal group 9 818 - -
------------- ------------- ------------
Total current liabilities 36,768 36,127 26,278
Non-current liabilities
Deferred tax liabilities 5,784 6,257 6,101
Borrowings 24,221 21,400 22,879
------------- ------------- ------------
Total non-current liabilities 30,005 27,657 28,980
------------- ------------- ------------
Total liabilities 66,773 63,784 55,258
------------- ------------- ------------
Net assets 39,319 35,500 38,900
============= ============= ============
EQUITY
Called up share capital 3,485 3,463 3,485
Capital redemption reserve 1,112 1,112 1,112
Share premium account 10,197 10,017 10,197
Treasury reserve (83) (107) (107)
Shares options reserve 1,948 1,556 1,825
Merger reserve 1,294 1,294 1,294
ESOP trust (102) (92) (95)
Foreign currency translation
reserve 117 14 102
Retained earnings 21,351 18,243 21,087
------------- ------------- ------------
Total equity 39,319 35,500 38,900
============= ============= ============
The accompanying notes form an integral part of these financial
statements.
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 April 2013
Called Capital Share Treasury Share Merger ESOP Foreign Retained Total
up redemption premium reserve options reserve trust currency earnings
share reserve account reserve retranslation
capital reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
GBP000
Balance at 1
November 2011
(audited) 3,463 1,112 10,017 (204) 1,366 1,294 (93) 41 17,375 34,371
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Share options
granted - - - - 227 - - - - 227
Purchase of
Treasury
shares - - - (37) - - - - - (37)
Transfer on
exercise of
share
options - - - 134 (37) - - - (272) (175)
Sale of -
Treasury
shares - - - - - - - - -
Equity
dividends
paid - - - - - - - - (1,245) (1,245)
ESOP trust - - - - - - 1 - - 1
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Transactions
with owners - - - 97 190 - 1 - (1,517) (1,229)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Profit for the
period - - - - - - - - 2,385 2,385
Other
comprehensive
income
Exchange
differences
in reserves - - - - - - - (27) - (27)
Total
comprehensive
income for
the period - - - - - - - (27) 2,385 2,358
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
At 30 April
2012
(unaudited) 3,463 1,112 10,017 (107) 1,556 1,294 (92) 14 18,243 35,500
======== =========== ======== ========= ======== ======== ======= ============== ========= ========
Issue of share
capital 22 - 180 - - - - - - 202
Transfer on
exercise of
share
options - - - - (72) - - - (525) (597)
Purchase of -
Treasury
shares - - - - - - - - -
Share options
granted - - - - 341 - - - - 341
ESOP trust - - - - - - (3) - (3)
Equity
dividends
paid - - - - - - - - (951) (951)
Transactions
with owners 22 - 180 - 269 - (3) - (1,476) (1,008)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Profit for the
period - - - - - - - - 4,320 4,320
Other
comprehensive
income
Exchange
gains on
retranslation
of foreign
operations - - - - - - - 88 - 88
Total
comprehensive
income for
the period - - - - - - - 88 4,320 4,408
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Balance at 31
October 2012
(audited) 3,485 1,112 10,197 (107) 1,825 1,294 (95) 102 21,087 38,900
======== =========== ======== ========= ======== ======== ======= ============== ========= ========
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 April 2013
Called Capital Share Treasury Share Merger ESOP Foreign Retained Total
up redemption premium reserve options reserve trust currency earnings
share reserve account reserve retranslation
capital reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
GBP000
Share options
granted - - - - 131 - - - - 131
Share award
granted - - - - - - - - 205 205
Transfer on
exercise of
share
options - - - 24 (8) - - - (3) 13
Sale of -
Treasury sales - - - - - - - - -
Equity
dividends
paid - - - - - - - - (1,393) (1,393)
ESOP trust - - - - - - (7) - - (7)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Transactions
with owners - - - 24 123 - (7) - (1,191) (1,051)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Profit for the
period - - - - - - - - 1,455 1,455
Exchange
differences
in reserves - - - - - - - 15 - 15
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Total
comprehensive
income
for the
period - - - - - - - 15 1,455 1,470
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
At 30 April
2013
(unaudited) 3,485 1,112 10,197 (83) 1,948 1,294 (102) 117 21,351 39,319
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated Interim Statement of Cash Flows
For the six months ended 30 April 2013
6 months As Restated As Restated
to 6 months 12 months
30 April to to
2013 (unaudited) 30 April 31 October
GBP000 2012 (unaudited) 2012
GBP000 (audited)
GBP000
Cash flows from operating activities
Profit for the period before taxation 2,590 3,416 7,942
Adjustments for:
Depreciation 347 333 589
Amortisation 2,728 2,292 4,609
Finance income (6) (12) (18)
Finance costs 454 456 791
Interest rate swap liability (23) - 136
Debt issue costs amortisation 95 57 109
Exchange (gain)/loss (38) (27) 60
Share option costs 324 216 544
Movement in receivables (5,120) (8,516) (2,765)
Movement in payables 8,865 11,046 452
------------------ ------------------ ------------
Cash generated by operations 10,216 9,261 12,449
Tax on profit paid (728) (911) (2,560)
Cash generated from discontinued
operations 61 (28) (154)
Net cash from operating activities 9,549 8,322 9,735
Cash flows from investing activities
Acquisition of subsidiaries net
of cash acquired (1,779) (15,022) (23,266)
Deferred consideration paid relating
to subsidiaries acquired in prior
period (182) - (320)
Purchase of property, plant &
equipment (500) (200) (523)
Purchase of intangible assets (745) (495) (1,240)
Finance income 6 12 18
Net cash used in investing activities (3,200) (15,705) (25,331)
Cash flows from financing activities
Interest paid (454) (348) (620)
New loans 6,900 23,700 27,800
Loan related costs 24 (475) (430)
Loan repayments (5,800) - (2,300)
Equity dividends paid (1,393) (1,245) (2,196)
Sale/(Purchase) of own shares 15 (213) (610)
------------------ ------------------ ------------
Net cash flows (used in)/from
financing activities (708) 21,419 21,644
------------------ ------------------ ------------
Net movement on cash and cash
equivalents 5,641 14,036 6,048
Cash and cash equivalents at the
beginning of the period 3,640 (2,408) (2,408)
Cash and cash equivalents at the
end of the period 9,281 11,628 3,640
================== ================== ============
The accompanying notes form an integral part of these financial
statements.
Notes to the Interim Consolidated Financial Statements
For the six months ended 30 April 2013
1. GENERAL INFORMATION
IDOX plc is a supplier of specialist document management
collaboration solutions and services to the UK public sector and to
highly regulated asset intensive industries around the world in the
wider corporate sector. The company is a public limited company
which is listed on the Alternative Investment Market and is
incorporated and domiciled in the UK. The address of its registered
office is Chancery Exchange,10 Furnival Street, London, EC4A 1AB.
The registered number of the company is 03984070.
2. BASIS OF PREPARATION
The financial information for the period ended 30 April 2013 set
out in this interim report does not constitute statutory accounts
as defined in Section 434 of the Companies Act 2006. The Group's
statutory financial statements for the year ended 31 October 2012
have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unmodified and did not
contain statements under Section 498(2) or Section 498(3) of the
Companies Act 2006.
The interim financial information has been prepared using the
same accounting policies and estimation techniques as will be
adopted in the Group financial statements for the year ending 31
October 2013. The Group financial statements for the year ended 31
October 2012 were prepared under International Financial Reporting
Standards as adopted by the European Union. These interim financial
statements have been prepared on a consistent basis and format. The
provisions of IAS 34 'Interim Financial Reporting' have not been
applied in full.
The company have complied with IFRS 5 (Non Current Assets Held
for Sale and Discontinued Operations) for the first time for the
period ended 30 April 2013. Non current assets (or disposal groups)
are classified as assets held for sale when their carrying amount
is to be recovered principally through a sale transaction and a
sale is considered highly probable. They are stated at the lower of
carrying value and net realisable value. As a result comparative
amounts for both the consolidated interim statement of
comprehensive income and consolidated interim statement of cash
flows have been restated to remove the effect of the discontinued
operation.
3. SEGMENTAL ANALYSIS
As at 30 April 2013, the Group is primarily organised into four
main business segments, which are detailed below. Financial
information is reported to the Board on a business unit basis with
revenue and operating profits split by business unit. Each business
unit is deemed a reportable segment as each offer different
products and services.
-- Public Sector Software - delivering software and service
solutions to mainly local government customers across a broad range
of departments
-- Engineering Information Management - delivering engineering
document management and control solutions to asset intensive
industry sectors
-- Information Solutions - delivering both an information
service and consultancy services to a diverse range of customers
across both private and public sectors
-- Recruitment - providing personnel with information,
knowledge, records and content management expertise to a diverse
range of customers
The Board have determined that the Recruitment business will be
actively sold. As Recruitment is a separately identifiable
operating segment the results for the period ended 30 April 2013,
and comparative periods, have been reclassified as a discontinued
operation.
Segment revenue comprises sales to external customers and
excludes gains arising on the disposal of assets and finance
income. Segment profit reported to the Board represents the profit
earned by each segment before the allocation of taxation, Group
interest payments and Group corporate finance costs. The assets and
liabilities of the Group are not reviewed by the chief
decision-maker on a segment basis.
The Group does not place reliance on any specific customer and
has no individual customer that generates 10% or more of its total
Group revenue.
The segment revenues by geographic location for the period ended
30 April 2013 are as follows:
Continuing Discontinued Total operations
operations operations (unaudited)
(unaudited) (unaudited) GBP000
6 months to 30 April 2013 GBP000 GBP000
Revenues from external customers:
United Kingdom 18,411 884 19,295
USA/Canada 2,680 - 2,680
Europe 3,540 76 3,616
Australia/Rest
of World 1,938 5 1,943
------------------- ------------- -----------------
26,569 965 27,534
=================== ============= =================
The segment revenues by geographic location for the period ended
30 April 2012 are as follows:
Continuing Discontinued Total operations
operations operations (unaudited)
(unaudited) (unaudited) GBP000
6 months to 30 April 2012 GBP000 GBP000
Revenues from external customers:
United Kingdom 18,234 1,420 19,654
USA/Canada 5,825 - 5,825
Europe 2,534 - 2,534
Australia/Rest
of World 543 - 543
------------- ------------- -----------------
27,136 1,420 28,556
============= ============= =================
The segment results for the 6 months to 30 April 2013 were:
Public Recruitment
Sector Engineering Information (discontinued
Software Information Solutions operation) Total
GBP000 Management GBP000 GBP000 GBP000
GBP000
Revenues from external
customers 14,337 8,244 3,988 965 27,534
Cost of sales (1,764) (662) (287) (482) (3,195)
---------- -------------- -------------- --------------- ---------
Gross profit 12,573 7,582 3,701 483 24,339
Operating costs (8,242) (6,289) (3,534) (522) (18,587)
---------- -------------- -------------- --------------- ---------
Profit/(loss) before
interest, tax, impairment,
depreciation, amortisation,
share option, corporate
finance and restructuring
costs 4,331 1,293 167 (39) 5,752
---------- -------------- -------------- --------------- ---------
Depreciation (234) (63) (50) (1) (348)
Amortisation (1,525) (667) (536) - (2,728)
Impairment of goodwill - - - (457) (457)
Share options costs (226) (36) (54) (12) (328)
Corporate finance costs 850 (49) - (37) 764
Restructuring (6) (51) (31) - (88)
Profit/(loss) before
interest and tax 3,190 427 (504) (546) 2,567
Interest receivable - 1 - - 1
Finance costs net (54) 126 (22) - 50
---------- -------------- -------------- --------------- ---------
Segment profit/(loss)
(see reconciliation below) 3,136 554 (526) (546) 2,618
========== ============== ============== =============== =========
The segment results for the 6 months to 30 April 2012 are as
follows:
Public Engineering Recruitment
Sector Information Information (discontinued
Software Management Solutions operation) Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenues from external
customers 14,603 8,934 3,599 1,420 28,556
Cost of sales (1,907) (544) (321) (648) (3,420)
---------- ------------- -------------- --------------- ---------
Gross profit 12,696 8,390 3,278 772 25,136
Operating costs (7,826) (5,826) (2,639) (684) (16,975)
---------- ------------- -------------- --------------- ---------
Profit before interest,
tax, depreciation, amortisation,
share option and restructuring
costs 4,870 2,564 639 88 8,161
---------- ------------- -------------- --------------- ---------
Depreciation (161) (121) (51) (4) (337)
Amortisation (1,462) (494) (337) (4) (2,297)
Share options costs (209) (30) (17) (12) (268)
Restructuring (111) (35) (172) - (318)
Profit before interest
and tax 2,927 1,884 62 68 4,941
Interest receivable - 1 3 - 4
---------- ------------- -------------- --------------- ---------
Segment profit (see reconciliation
below) 2,927 1,885 65 68 4,945
========== ============= ============== =============== =========
Reconciliations of reportable profit:
6 months 6 months
to to
30 April 30 April
2013 (unaudited) 2012 (unaudited)
GBP000 GBP000
Total profit for reportable segments 2,618 4,945
Corporate finance costs - (896)
Net financial costs (529) (575)
Discontinued operations loss
/(profit)* 53 (68)
------------------------ ------------------
Profit before taxation from continuing
operations 2,142 3,406
======================== ==================
Corporate finance costs comprise legal fees in relation to
arrangement of Group working capital facilities. Net financial
costs relate to Group bank loan interest, bank facility fee
amortisation and fair value loss on financial derivatives which
have not been included in reportable segments.
*Discontinued operations loss/(profit) excludes Group costs
allocated to the segment relating to impairment of goodwill and
corporate finance costs relating to disposal.
4. TAX ON PROFIT ON ORDINARY ACTIVITIES
6 months 6 months 12 months
to to to
30 April 30 April 31 October
2013 (unaudited) 2012 (unaudited) 2012
GBP000 GBP000 (audited)
GBP000
Current tax
Corporation tax on profits for
the period 820 1,602 1,455
Foreign tax on overseas companies 191 - 1,108
Under provision in respect of
prior periods (123) 2 (70)
---------------- ------------------- -------------
Total current tax 888 1,604 2,493
---------------- ------------------- -------------
Deferred tax
Origination and reversal of
timing differences (254) (239) (1,712)
Amortisation of intangibles
difference in tax rate - (275) (580)
Adjustments in respect of prior
periods - (1) -
---------------- ------------------- -------------
Total deferred tax (254) (515) (2,292)
---------------- ------------------- -------------
Total tax charge 634 1,089 201
---------------- ------------------- -------------
Analysed as:
Tax charge from continuing operations 635 1,079 201
Tax charge from discontinued
operations (1) 10 -
Unrecognised trading losses of GBP5,322,000 (H1 2012:
GBP6,061,000), which when calculated at the standard rate of
corporation tax in the United Kingdom of 23%, amounts to
GBP1,224,000 (H1 2012: GBP1,455,000). These remain available to
offset against future taxable trading profits. Unrecognised capital
losses of GBP4,210,000 (H1 2012: GBP4,210,000) remain available to
offset against future capital profits. These deferred tax assets
are not recognised as they are considered to have fair value of
GBPnil.
5. EARNINGS PER SHARE
The earnings per share is calculated by reference to the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during each period, as
follows:
6 months 6 months 12 months
to to to
30 April 30 April 31 October
13 12 12
(unaudited) (unaudited) (audited)
Total operations GBP000 GBP000 GBP000
Profit for the period 1,455 2,385 6,705
Basic earnings per share
Weighted average number of shares
in issue 348,303,384 345,262,291 346,231,724
Basic earnings per share 0.42p 0.69p 1.94p
---------------- ---------------- ---------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 348,303,384 345,262,291 346,231,724
Dilutive share options 18,170,822 16,437,508 18,852,529
---------------- ---------------- ---------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 366,474,206 361,699,799 365,084,253
Diluted earnings per share 0.40p 0.66p 1.84p
---------------- ---------------- ---------------
6 months 6 months 12 months
to to to
30 April 30 April 31 October
13 12 12
(unaudited) (unaudited) (audited)
Continuing operations GBP000 GBP000 GBP000
Profit for the period 1,507 2,326 6,741
Basic earnings per share
Weighted average number of shares
in issue 348,303,384 345,262,291 346,231,724
Basic earnings per share 0.43p 0.67p 1.95p
---------------- ---------------- ---------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 348,303,384 345,262,291 346,231,724
Dilutive share options 18,170,822 16,437,508 18,852,529
---------------- ---------------- ---------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 366,474,206 361,699,799 365,084,253
Diluted earnings per share 0.41p 0.64p 1.85p
---------------- ---------------- ---------------
6 months 6 months 12 months
to to to
30 April 30 April 31 October
13 12 12
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Discontinued operations
(Loss)/profit for the period (52) 58 (36)
Basic earnings per share
Weighted average number of shares
in issue 348,303,384 345,262,291 346,231,724
Basic earnings per share (0.01p) 0.02p (0.01p)
---------------- ---------------- ---------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 348,303,384 345,262,291 346,231,724
Dilutive share options 18,170,822 16,437,508 18,852,529
---------------- ---------------- ---------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 366,474,206 361,699,799 365,084,253
Diluted earnings per share (0.01p) 0.02p (0.01)p
---------------- ---------------- ---------------
Adjusted earnings per
share
6 months 6 months 12 months
to to to
30 April 30 April 31 October
13 12 12
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Profit for the period 1,455 2,385 6,705
Adjusting items:
Share option costs 328 268 731
Restructuring costs 88 318 464
Amortisation 2,728 2,297 4,618
Impairment 457 - 1,018
Corporate finance costs (764) 896 1,109
Taxation on above items (723) (692) (1,395)
-------------------- ---------------- -------------------
Adjusted profit for the period 3,569 5,472 13,250
-------------------- ---------------- -------------------
Adjusted basic earnings per
share 1.02p 1.58p 3.83p
Adjusted diluted earnings per
share 0.97p 1.51p 3.63p
6. DIVIDENDS
During the period a dividend was paid in respect of the year
ended 31 October 2012 of 0.40p per Ordinary share at a total cost
of GBP1,393,000 (2011: 0.36p, GBP1,245,000).
A dividend of 0.30p per ordinary share at a total cost of
GBP1,045,000 has been proposed in respect of the interim period
ended 30 April 2013 (H1 2012: 0.275p, GBP952,000).
7. ACQUISITIONS
Artesys International
On 9 April 2013 the Group acquired the entire share capital of
Artesys International for a total considerationof EUR2.4m (GBP2.1m)
in cash. Artesys International provides engineering document
control solutions and applications supporting the efficient and
safe operation of processing plants. Opidis, an intelligent
P&ID and 3D Plant model navigation tool is used by over 8,000
engineering operations and maintenance professionals to locate
validated plant documents and data. The acquisition of Artesys
International adds extended geographic coverage in Europe, Africa
and the Middle East and a complimentary portfolio of products,
customers, professional services and industry partners to the
Group.
Goodwill arising on the acquisition of Artesys has been
capitalised and consists largely of the workforce value, synergies
and economies of scale expected from combining the operations of
Artesys with Idox. None of the goodwill recognised is expected to
be deductible for income tax purposes. The purchase of Artesys has
been accounted for using the acquisition method of accounting.
Provisional
fair value
Book value adjustments Fair value
GBP000 GBP000 GBP000
Intangible assets 985 (298) 687
Property, plant and equipment 60 - 60
Trade receivables 1,008 - 1,008
Corporation tax 18 - 18
Other receivables 226 - 226
Cash at bank 285 - 285
------------- ------------- -------------
TOTAL ASSETS 2,582 (298) 2,284
Trade payables (149) - (149)
Provisions for liabilities and
charges (89) - (89)
Bank loans (342) - (342)
Other creditors (172) - (172)
Deferred income (274) - (274)
Social security and other taxes (352) - (352)
Deferred tax liability - (156) (156)
------------- -------------
TOTAL LIABILITIES (1,378) (156) (1,534)
------------- -------------
NET ASSETS 750
Purchased goodwill capitalised 1,314
-------------
Total consideration 2,064
-------------
Satisfied by:
Cash to vendor 2,064
Earn out consideration -
------
Total consideration 2,064
------
The fair values stated above are provisional. The fair value
adjustment for the intangible assets relates to customer
relationships, trade names and software. A related deferred tax
liability has also been recorded as a fair value adjustment.
The fair value of trade debtors is equal to the gross
contractual amounts receivable. All debts have been reviewed and
are considered recoverable.
The revenue included in the consolidated interim statement of
comprehensive income since 9 April 2013, contributed by Artesys was
GBP79k. Artesys also made a loss of GBP51k for the same period. If
Artesys had been included from 1 November, it would have
contributed revenue of GBP1,081k and a loss after tax of
GBP177k.
Acquisition costs of GBP24k have been written off in the
consolidated interim statement of comprehensive income.
Innovation Connect (formerly trading as Currency Connect)
There has been an additional fair value adjustment in respect of
the acquisition of Innovation Connect on 3 May 2012. Since 31
October 2012, management have aligned the company's revenue
recognition policy with those of the Group. This change has meant
that accrued income is now only recognised when performance
obligations have been met and the right to receive the revenue can
be measured reliably dependent upon the nature of the individual
grant applications. This has resulted in an additional fair value
adjustment which has reduced accrued income by GBP446k and
increased goodwill by a corresponding amount. There will be no
further fair value adjustments and all opening balances for
Innovation Connect are now final.
Acquisition cash flows
Acquisition cash flows in the period are as follows:
Deferred consideration paid on previous year Net cash outflow
acquisitions GBP000
Grantfinder Limited 6
Interactive Dialogues BV 162
---------------------------------------------- -----------------
168
---------------------------------------------- -----------------
Deferred consideration released on previous
year acquisitions
Opt2Vote Limited 800
Lalpac Limited 50
---------------------------------------------- -----------------
850
---------------------------------------------- -----------------
Deferred consideration released on previous year acquisitions is
disclosed within Corporate finance costs in the Consolidated
Interim Statement of Comprehensive Income.
8. DISCONTINUED OPERATIONS
Discontinued operations relate to the recruitment business TFPL.
The Board determined that TFPL would be actively sold and as a
result the business has been reclassified as held for sale. TFPL is
a separately identifiable operating segment and therefore has been
reclassified as a discontinued operation for the period ended 30
April 2013 with assets and liabilities reallocated to be disclosed
as held for sale.
Revenue and expenses, and gains and losses relating to the
discontinuation of this activity have been removed from the results
of continuing operations and are shown as a single line item on the
face of the statement of comprehensive income ("net results from
discontinued operations"). The operating results of the
discontinued operation are as follows:
6 months 6 months 12 months
Operating activities of discontinued to 30 April to 30 April to 31 October
operations 2013 2012 2012
GBP000 GBP000 GBP000
Revenue 965 1,420 2,521
Costs of sale (483) (648) (1,210)
Depreciation and amortisation (1) (9) (16)
Other operating expenses (534) (696) (1,327)
---------------------- --------------- ----------------
Operating result (53) 67 (32)
Finance costs - - (4)
---------------------- --------------- ----------------
Result from discontinued operations
before taxation (53) 67 (36)
Tax expense 1 (9) -
Net operating result from
discontinued operations (52) 58 (36)
---------------------- --------------- ----------------
9. DISPOSAL GROUP
The Directors have made the decision to sell the TFPL business,
and the assets and liabilities relating to this business have been
classified as a disposal group on the balance sheet.
The carrying amount of assets and liabilities in the disposal
group may be analysed as follows:
6 months
to 30 April
Assets 2013
GBP000
Goodwill 500
PPE 1
Trade and other receivables 347
Deferred tax asset 7
Cash & cash equivalents 135
Total assets of the disposal
group 990
---------------
6 months
to 30 April
Liabilities 2013
GBP000
Trade and other payables 83
Other liabilities 366
Current tax -
Intercompany liabilities 369
Total liabilities of the disposal
group 818
-------------
10. POST BALANCE SHEET EVENTS
The Board has agreed the terms of a sale of its recruitment
business, TFPL, to ILX Group plc (AIM : ILX) for an initial
consideration of GBP0.3m with potential additional consideration of
up to GBP0.3m dependent on the business achieving certain
performance targets in the 12 months following disposal. The sale
is expected to complete in the near future on satisfaction of
various completion conditions.
Independent Review Report to IDOX plc
For the six months ended 30 April 2013
Introduction
We have been engaged by the company to review the financial
information in the half-yearly financial report for the six months
ended 30 April 2013 which comprises the Consolidated Interim
Statement of Comprehensive Income, the Consolidated Interim Balance
Sheet, the Consolidated Interim Statement of Changes in Equity, the
Consolidated Interim Statement of Cash Flows and the related notes.
We have read the other information contained in the half yearly
financial report which comprises only the highlights, Chairman's
and Chief Executive's Statement and Chief Financial Officer's
Review and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the company 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, for our review work, for this
report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in Note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The financial information in the half-yearly
financial report has been prepared in accordance with the basis of
preparation in Note 2.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the financial information in the half-yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months ended 30 April 2013
is not prepared, in all material respects, in accordance with the
basis of accounting described in Note 2.
GRANT THORNTON UK LLP
AUDITOR
London
25 June 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEMEFLFDSELM
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