TIDMIDOX
RNS Number : 4254J
IDOX PLC
12 June 2014
12 June 2014
IDOX plc
Interim Results for the six months ended 30 April 2014
IDOX plc (AIM: IDOX, "Idox", "the Company" or "the Group"), a
leading supplier of specialist document management collaboration
solutions and services, announces interim results for the six
months ended 30 April 2014.
Financial and Operational Highlights
-- Revenues up 12% to GBP29.6m (H1 2013: GBP26.6m)
-- Significant reduction in net debt to GBP8.7m (H1 2013: GBP17.7m)
-- EIM Division contributed 33% of Group revenues (H1 2013: 31%)
and achieved revenue growth of 20%
-- PSS Division revenue increased to GBP19.7m (H1 2013: GBP18.3m), of which 57% was recurring
-- Adjusted EBITDA* up 36% to GBP7.9m (H1 2013: GBP5.8m)
-- Adjusted profit before tax** up 40% to GBP6.9m (H1 2013: GBP5.0m)
-- Profit before tax up 35% to GBP3.5m (H1 2013: GBP2.6m)
-- Adjusted basic EPS** 1.51p (H1 2013: 1.02p). Basic EPS 0.75p (H1 2013: 0.56p)
-- Comprehensive reorganisation of EIM Division completed
-- Seven new managed service contract wins in PSS Division
Martin Brooks, Chairman of Idox, commented:
"Following the successful completion of our reorganisation and
restructuring in 2013, we are now in a position to deliver improved
solutions which drive reduced risk, quality and efficiencies for
our customers, making Idox the domain expert of choice. We are
offering more complete solutions across both divisions, which has
the added benefit of more predictable and smoother revenue flows
for the Group, and therefore provides us with improving future
visibility. Further, we are increasing our focus on investment in
innovative R&D to ensure that the Company's market leading
position in each division is maintained."
* EBITDA is defined as earnings before interest, tax,
amortisation, depreciation, restructuring, acquisition costs and
share option costs
** Adjusted profit before tax and adjusted EPS excludes
amortisation, restructuring, acquisition costs, share option costs
and impairment costs
Enquiries:
IDOX plc +44 (0) 870 333 7101
Martin Brooks, Chairman
Richard Kellett-Clarke, Chief Executive
Jane Mackie, Chief Financial Officer
N+1 Singer (NOMAD and Broker) +44 (0) 20 7496 3000
Shaun Dobson/ Nick Donovan
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 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 Division 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. It also supplies,
predominantly to the public sector in the UK and internationally,
decision support content such as grants and planning policy
information as well as related specialist services, including
election management solutions.
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 in North America and
around the world.
The Group employs over 500 staff located in the UK, the USA,
Europe, India and Australia.
For more information see www.idoxplc.com.
Chairman's and Chief Executive's Statement
For the six months ended 30 April 2014
Overview
The business has continued to make sound progress across both
divisions as demonstrated by the improvement in first half revenues
and EBITDA. The expansion of the core business away from being
simply a provider of software under the traditional capital
purchase and maintenance revenue model to a provider of more
complete solutions in our chosen domains has continued and looks to
be gathering momentum. This has the added benefit of more
predictable and smoother revenue flows which provides us with
improving future visibility. Further, our recurring revenue levels
have remained stable at around 50% for the Group, which we expect
to continue into 2015.
The Company has been rigorous in its approach to improve its
working practices following a disappointing 2013. We have shifted
the focus of the business towards the generation of revenue,
improving margins, increasing market share and providing add-on
services to existing customers. The business is now also stronger
for its strengthened management team, including the appointment of
Jane Mackie as Group CFO and Peter Russell-Smith as Managing
Director of our Engineering Division, as well as improved systems
and controls, which has led to tighter discipline across all areas
of the Company.
The Group is seeing medium-term growth potential in all targeted
industries and geographies, with a need to streamline and implement
efficiencies in the resources sector, and a greater acceptance of
Business Process Outsourcing (BPO) by public sector and corporates
alike. Idox is gaining a reputation in its chosen markets for being
the domain expert for document control and the benefits of this
broader offering are being felt by both the Company and its
customers.
Operational Review
The Public Sector Software Division ("PSS") again increased its
market share, with wins in Luton, Barnet, Glasgow, Solihull,
Blackpool and Kent, as well as completing seven new managed
services contracts in the first half of the year, more than was
achieved in the whole of 2013. They included Highland, Leeds, South
Norfolk, Birmingham, Aylesbury, Gateshead and Trafford.
UK councils continue to look for solutions which deliver better
services and cost efficiencies, although some have had small relief
through an increase in planning fees caused by an improvement in
construction and economic activity.
PSS continued to offer both managed services and hosted
solutions and to expand its embryonic BPO solutions. The grants
business has shown strong growth in consultancy hours billed and
new client wins; the latter will flow through into future revenues.
The compliance and content businesses have been stabilised and
restructured to drive improvements in margin. All of which will
positively impact the second half of the year and into 2015.
The Engineering Information Management Division ("EIM") has been
substantially restructured to improve its customer service and
account management, in line with the successful public sector
approach, and is now focused on three core markets where it has
domain expertise: Oil & gas, utilities and infrastructure.
The EIM Division has revised and updated its product suites
across its key platforms leading to a better engagement with its
key accounts, while improvements in process and quality have
already been implemented. EIM is now ready to launch its facilities
management ("FM") and SaaS solutions in the US in the second half
of the year and further extend its BPO services, having already
signed two small contracts in the first half.
The Division has also recently introduced a new service to
assist oil & gas corporates in their transfer of assets; a
rising trend which offers the Company a solid opportunity to form
new long-term relationships. In a market where we are seeing the
key players trading assets to balance their capacity and demand,
EIM will offer to capture all documentation around an asset to aid
in the diligence process, and thereby effect the efficient and
seamless handover of the acquired asset in line with the
purchasers' own operating procedures and approach, thus de-risking
the process, where possible, for both parties.
As reported previously, the restructuring of internal systems
and cost base has delivered in excess of the previously announced
GBP1 million of savings and some of this should flow through into
H2. In addition, the final stage of the roll out of the Company's
new Enterprise Resource Planning (ERP) system has been accelerated
to cover all the operations of the business and is delivering
further improvements in management systems and control at a lower
cost.
The increased focus on financial controls has already delivered
improvements, as demonstrated by the strong cash position and
improvements in net debt, which is down GBP11.0m to GBP8.7m, as at
30 April 2014.
Outlook
The Company will continue with this process of improvement in
the second half of the year, with the focus now being turned
towards the more creative development of products and services, in
order to deliver greater innovation for our customers and thus a
greater value added service, thereby reinforcing Idox's leading
market position.
The business enters the second half clearly focused on its areas
of expertise, and is increasingly recognised as leading the market
in the provision of the management of all content, be it
traditional documents and data, or broader consulting, hosting and
BPO services. All of this provides improved customer journeys,
optimal efficiency and compliance.
Chief Financial Officer's Review
For the six months ended 30 April 2014
Financial Review
Group revenues from continuing operations grew by 12% to
GBP29.6m (H1 2013: GBP26.6m) due to organic growth in both the PSS
and EIM divisions and the impact of the Artesys acquisition in
2013. The Group maintained the geographical split of its revenues
with 32% generated outside of the UK (H1 2013: 31%). Gross profit
earned was 13% higher at GBP26.8m (H1 2013: GBP23.9m) and the Group
saw an increase in gross margin from 90% to 91% as a result of an
increased mix of higher margin software business. Earnings before
interest, tax, amortisation, depreciation, restructuring,
acquisition and share option costs ("Adjusted EBITDA") increased by
36% to GBP7.9m (H1 2013: GBP5.8m) with EBITDA margins of 27% (H1
2013: 22%).
Performance by segment
The PSS division, which accounted for 67% of Group revenues (H1
2013: 69%), delivered revenues of GBP19.7m (H1 2013: GBP18.3m).
Product and services revenue grew organically by 9% on the previous
year driven by further market share gains, seven new managed
service contract wins and a focus on add on services to the
existing customer base. Election activity increased on the same
period in 2013 due to Individual Electoral Registration projects
and the European elections.
Recurring revenues within the PSS division were 57% (H1 2013:
58%) excluding election revenue. Divisional Adjusted EBITDA
increased by 25% to GBP5.6m (H1 2013: GBP4.5m), delivering a 29%
margin, a 4% increase on 2013 due to a focus on higher margin
product sales.
The EIM division accounted for 33% of Group revenues (H1 2013:
31%) and achieved revenue growth of 20% to GBP9.9m (H1 2013:
GBP8.2m). Revenue grew organically by 13% and there was a full six
months contribution from Artesys acquired on 9 April 2013. Revenue
growth has been driven by improved levels of service in the core
market sectors of oil and gas, infrastructure and utilities and a
focus on account management.
Adjusted EBITDA for the EIM business increased to GBP2.2m (H1
2013: GBP1.3m), 29% of the Group total. Margins increased to 23%
(H1 2013: 16%) reflecting a stronger performance in licence sales
compared to the same period in 2013.
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, restructuring, acquisition, share option costs and
impairment costs.
Adjusted profit before tax increased 40% to GBP6.9m (H1 2013:
GBP5.0m). Administrative expenses increased 5% to GBP19.0m (H1
2013: GBP18.1m) with 4% of this increase due to a full six months
contribution in the period of Artesys. Staff costs increased by 2%
on a like for like basis and other overheads remained stable on the
prior period.
Financing costs remained stable at GBP0.6m and includes interest
payable of GBP0.4m (H1 2013: GBP0.4m) and amortisation of the loan
facility fees of GBP0.07m (H1 2013: GBP0.09m).
Reported profit before tax increased 33% to GBP3.4m (H1 2013:
GBP2.6m). Amortisation of intangibles increased from GBP2.7m to
GBP2.8m as a result of a full year of Artesys. Restructuring
charges of GBP0.2m (H1 2013: GBP0.09m) relate to the internal
reorganisation of the EIM division and streamlining of corporate
functions between London and Newbury into the combined Theale
office which will result in cost savings going forward. There was a
one off benefit of GBP0.8m included in acquisition costs in H1 2013
related to the release of earn-out obligations on the Opt2Vote
acquisition which did not become payable. Excluding this GBP0.8m
benefit acquisition costs reduced to GBP0.01m (H1 2013:
GBP0.08m).
The Group continues to invest in developing innovative
technology solutions and has incurred capitalised Research and
Development costs of GBP0.52m (H1 2013: GBP0.56m). Research and
Development costs expensed in the period were GBP2.8m (H1 2013:
GBP2.5m).
Taxation
The Group's effective tax rate for the period was 23% compared
to -13% for 2013. The rate of 23% is the estimated annualised rate,
representing the Group's longer term effective rate of tax, taking
into account the effects of rate changes and share scheme
deductions in the period. The increase in the effective rate of tax
is also the result of recognition of a deferred tax asset in the
prior year in relation to previously unrecognised losses within the
EIM business and recognition of a deferred tax asset in respect of
share options. Unrelieved trading losses of GBP1.0m in the UK and
GBP2.6m overseas remain available to offset against future taxable
trading profits. The Board believes the Group will benefit from
these tax losses in the future.
Earnings per share and dividends
Adjusted earnings per share improved by 48% to 1.51p (H1 2013:
1.02p). Diluted adjusted earnings per share increased 52% to 1.47p
(H1 2013: 0.97p).
Basic earnings per share improved by 34% to 0.75p (H1 2013:
0.56p). Diluted earnings per share increased by 35% to 0.73p (H1
2013: 0.54p).
The Board proposes an interim dividend of 0.325p, an increase of
8% on the 2013 interim dividend. The interim dividend will be paid
on 15 October 2014 to shareholders on the register at 3 October
2014.
Balance sheet and cashflows
Idox's balance sheet continued to strengthen during the period
and at 30 April 2014 net assets were GBP47.4m compared to GBP39.3m
at 30 April 2013.
Cash generated from operating activities before tax as a
percentage of Adjusted EBITDA was 185%, up from 176% in the
previous year. The high percentage in both periods reflects the
seasonality of maintenance cash flows within the Public Sector
Software division.
The Group ended the period with net debt of GBP8.7m (H1 2013:
GBP17.7m) after total dividends of GBP2.4m. The Group's total
signed debt facilities at 30 April 2014 stood at GBP30.4m, a
combination of a term loan and flexible working capital and
acquisition revolving credit facilities. The working capital
facility of GBP8m and acquisition facility of GBP15m are due to
expire during the next 12 months, however this is expected to be
renegotiated with the bank on similar terms. The Board has
considered the headroom in the bank facilities and are comfortable
that unless there was a substantial deterioration in trading, Group
budgets do not indicate any covenant breaches on the bank
facilities currently in place.
Deferred income, representing invoiced maintenance and SaaS
contracts yet to be recognised in revenue stood at GBP21.4m at 30
April 2014 (H1 2013: GBP21.7m), giving good visibility of revenue
in the new financial year. Accrued income, representing future cash
flows from managed service contracts was GBP7.6m (H1 2013:
GBP4.1m).
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 April 2014
As restated
6 months 6 months 12 months
to to to
30 April 30 April 31 October
14 13 13
(unaudited) (unaudited) (audited)
Continuing operations Note GBP000 GBP000 GBP000
Revenue 3 29,633 26,569 57,319
Cost of sales (2,736) (2,713) (5,298)
-------------- ------------- -------------
Gross margin 26,897 23,856 52,021
Administrative expenses (19,032) (18,065) (36,967)
-------------- ------------- -------------
Earnings before amortisation, depreciation,
restructuring, acquisition costs and
share option costs 7,865 5,791 15,054
Depreciation (371) (347) (722)
Amortisation (2,871) (2,728) (5,388)
Restructuring costs (225) (88) (525)
Acquisition costs (16) 764 664
Share option costs (375) (315) (499)
-------------- ------------- -------------
Operating profit 4,007 3,077 8,584
Finance income 36 68 138
Finance costs (599) (546) (1,209)
Share of profit of joint venture 10 - -
-------------- ------------- -------------
Profit before taxation 3,454 2,599 7,513
---------------------------------------------- ----- -------------- ------------- -------------
Analysed as:
Adjusted profit before tax 6,941 4,966 13,261
Amortisation of intangibles (2,871) (2,728) (5,388)
Restructuring costs (225) (88) (525)
Acquisition costs (16) 764 664
Share option costs (375) (315) (499)
---------------------------------------------- ----- -------------- ------------- -------------
Income tax expense 4 (809) (635) 851
-------------- ------------- -------------
Profit for the period from continuing
operations 2,645 1,964 8,364
Discontinued operations
Net results for the period from discontinued
operations - (509) (519)
Loss on disposal of discontinued operations - - (322)
-------------- ------------- -------------
Net result for the period from discontinued
operations - (509) (841)
Total operations
-------------- ------------- -------------
Net result for the period attributable
to the owners of the parent 2,645 1,455 7,523
-------------- ------------- -------------
Other comprehensive income for the
period
Items that will be reclassified subsequently
to profit or loss:
Exchange gains on retranslation of
foreign operations - - 43
-------------- ------------- -------------
Other comprehensive income for the
period, net of tax - - 43
-------------- ------------- -------------
Total comprehensive income for the
period attributable to owners of the
parent from continuing operations 2,645 1,455 7,566
============== ============= =============
Earnings per share from continuing
and discontinued operations attributable
to owners of the parent during the
period
Basic earnings per share
From continuing operations 0.75p 0.56p 2.41p
From discontinued operations - (0.15p) (0.24p)
-------------- ------------- -------------
From total operations 0.75p 0.41p 2.17p
-------------- ------------- -------------
Diluted earnings per share
From continuing operations 0.73p 0.54p 2.30p
From discontinued operations - (0.14p) (0.23p)
-------------- ------------- -------------
From total operations 0.73p 0.40p 2.07p
-------------- ------------- -------------
The accompanying notes form an integral part of these financial
statements.
Consolidated Interim Balance Sheet
At 30 April 2014
At At At
30 April 30 April 31 October
14 13 13
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
ASSETS Note
Non-current assets
Property, plant and equipment 953 979 850
Intangible assets 67,574 71,196 69,484
Investment in joint venture 10 - -
Deferred tax assets 2,141 1,254 2,509
Other receivables 1,883 322 1,723
Total non-current assets 72,561 73,751 74,566
Current assets
Trade and other receivables 23,653 22,204 17,344
Cash and cash equivalents 12,620 9,147 3,399
Disposal group 8 - 990 -
------------- ------------- ------------
Total current assets 36,273 32,341 20,743
------------- ------------- ------------
Total assets 108,834 106,092 95,309
------------- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 6,722 4,446 4,662
Other liabilities 27,883 27,263 16,790
Provisions 121 193 56
Current tax 1,192 1,296 985
Derivative financial instruments 37 113 66
Borrowings 17,547 2,639 3,732
Disposal group 8 - 818 -
------------- ------------- ------------
Total current liabilities 53,502 36,768 26,291
Non-current liabilities
Deferred tax liabilities 4,242 5,784 4,870
Borrowings 3,711 24,221 19,462
------------- ------------- ------------
Total non-current liabilities 7,953 30,005 24,332
------------- ------------- ------------
Total liabilities 61,455 66,773 50,623
------------- ------------- ------------
Net assets 47,379 39,319 44,686
============= ============= ============
EQUITY
Called up share capital 3,573 3,485 3,493
Capital redemption reserve 1,112 1,112 1,112
Share premium account 11,445 10,197 10,355
Treasury reserve (4) (83) (12)
Shares options reserve 1,699 1,948 1,955
Merger reserve 1,294 1,294 1,294
ESOP trust (183) (102) (142)
Foreign currency translation reserve 145 117 145
Retained earnings 28,298 21,351 26,486
------------- ------------- ------------
Total equity 47,379 39,319 44,686
============= ============= ============
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 2014
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 2012
(audited) 3,485 1,112 10,197 (107) 1,825 1,294 (95) 102 21,087 38,900
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Share award
granted - - - - - - - - 205 205
Transfer on
exercise of
share
options - - - 24 (8) - - - (3) 13
Share options
granted - - - - 131 - - - - 131
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
Other
comprehensive
income
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
======== =========== ======== ========= ======== ======== ======= ============== ========= ========
Issue of share
capital 8 - 158 - - - - - - 166
Transfer on
exercise of
share
options - - - 71 (75) - - - 34 30
Share options
granted - - - - 159 - - - 1 160
Disposal of
share options - - - - (77) - - - 77 -
ESOP trust - - - - - - (40) - - (40)
Equity
dividends
paid - - - - - - - - (1,045) (1,045)
Transactions
with owners 8 - 158 71 7 - (40) - (933) (729)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Profit for the
period - - - - - - - - 6,068 6,068
Other
comprehensive
income
Exchange
gains on
retranslation
of foreign
operations - - - - - - - 28 - 28
Total
comprehensive
income
for the
period - - - - - - - 28 6,068 6,096
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Balance at 31
October 2013
(audited) 3,493 1,112 10,355 (12) 1,955 1,294 (142) 145 26,486 44,686
======== =========== ======== ========= ======== ======== ======= ============== ========= ========
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 April 2014
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
Issue of share
capital 80 - 1,090 - - - - - - 1,170
Share options
granted - - - - 272 - - - - 272
Transfer on
exercise of
share
options - - - 8 (528) - - - 507 (13)
Equity
dividends
paid - - - - - - - - (1,417) (1,417)
ESOP trust - - - - - - (41) - - (41)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Transactions
with owners 80 - 1,090 8 (256) - (41) - (910) (29)
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
Profit for the
period - - - - - - - - 2,645 2,645
Deferred tax
movement on
share options 77 77
Total
comprehensive
income
for the
period - - - - - - - - 2,722 2,722
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
At 30 April
2014
(unaudited) 3,573 1,112 11,445 (4) 1,699 1,294 (183) 145 28,298 47,379
-------- ----------- -------- --------- -------- -------- ------- -------------- --------- --------
The accompanying notes form an integral part of these financial
statements.
Consolidated Interim Statement of Cash Flows
For the six months ended 30 April 2014
6 months 6 months 12 months
to to to
30 April 30 April 31 October
2014 (unaudited) 2013 (unaudited) 2013 (audited)
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period before taxation 3,454 2,599 7,513
Adjustments for:
Depreciation 371 347 723
Amortisation 2,871 2,728 5,388
Finance income (7) (6) (33)
Finance costs 436 454 973
Interest rate swap liability (29) (23) (70)
Debt issue costs amortisation 79 95 159
Exchange (gain)/loss - (38) 42
Share option costs 273 324 499
Share of profit of joint venture (10) - -
Movement in receivables (6,469) (5,120) (1,675)
Movement in payables 13,544 8,856 (1,663)
------------------- ------------------- -----------------
Cash generated by operations 14,513 10,216 11,856
Tax on profit paid (773) (728) (1,728)
Cash generated from discontinued
operations - 61 (285)
Net cash from operating activities 13,740 9,549 9,843
Cash flows from investing activities
Acquisition of subsidiaries net of
cash acquired - (1,779) (1,779)
Deferred consideration paid relating
to subsidiaries acquired in prior
period - (182) (585)
Purchase of property, plant & equipment (474) (500) (774)
Purchase of intangible assets (961) (745) (1,696)
Finance income 7 6 33
Disposal of discontinued operation - - 312
Net cash used in investing activities (1,428) (3,200) (4,489)
Cash flows from financing activities
Interest paid (620) (454) (853)
New loans 1,000 6,900 8,900
Loan related costs (43) 24 (123)
Loan repayments (3,016) (5,800) (11,322)
Equity dividends paid (1,417) (1,393) (2,438)
Sale of own shares 1,005 15 241
------------------- ------------------- -----------------
Net cash flows used in financing
activities (3,091) (708) (5,595)
------------------- ------------------- -----------------
Net movement on cash and cash equivalents 9,221 5,641 (241)
Cash and cash equivalents at the
beginning of the period 3,399 3,640 3,640
Cash and cash equivalents at the
end of the period 12,620 9,281 3,399
=================== =================== =================
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 2014
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 Waterside 1310, Arlington Business Park, Theale, Reading,
RG7 4SA. The registered number of the company is 03984070.
2. BASIS OF PREPARATION
The financial information for the period ended 30 April 2014 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 2013
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 2014. The Group financial statements for the year ended 31
October 2013 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.
3. SEGMENTAL ANALYSIS
As at 30 April 2014, the Group is primarily organised into two
main operating segments, which are detailed below. On 1 July 2013
the recruitment segment was sold. As Recruitment was a separately
identifiable operating segment the results for the period ended 30
April 2013, and comparative periods, have been reclassified as a
discontinued operation. On 1(st) September 2013 following an
internal reorganisation, the Information Solutions segment was
combined with Public Sector Software. The results for the period
are included within the Public Sector Software segment and the
comparative periods have been restated.
Financial information is reported to the chief operating
decision maker, which comprises the Chief Executive Officer and the
Chief Financial Officer, monthly on a business unit basis with
revenue and operating profits split by business unit. Each business
unit is deemed an operating segment as each offers different
products and services.
-- Public Sector Software - delivering software and information
service solutions to local government customers and public sector
organisations across a broad range of departments
-- Engineering Information Management - delivering engineering
document management and control solutions to asset intensive
industry sectors
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 acquisition costs. The assets and
liabilities of the Group are not reviewed by the chief operating
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 2014 are as follows:
Continuing Discontinued Total operations
operations operations (unaudited)
(unaudited) (unaudited) GBP000
6 months to 30 April 2014 GBP000 GBP000
Revenues from external customers:
United Kingdom 20,028 - 20,028
USA/Canada 5,256 - 5,256
Europe 3,692 - 3,692
Australia/Rest
of World 657 - 657
------------------ ------------- -----------------
29,633 - 29,633
================== ============= =================
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 results for the 6 months to 30 April 2014 were:
Engineering
Public Sector Information
Software Management Total
GBP000 GBP000 GBP000
Revenues from external customers 19,714 9,919 29,633
Cost of sales (1,874) (862) (2,736)
---------------- -------------- ---------
Gross profit 17,840 9,057 26,897
Operating costs (12,217) (6,815) (19,032)
---------------- -------------- ---------
Profit before interest, tax, depreciation,
amortisation, share option, acquisition
costs and restructuring costs 5,623 2,242 7,865
---------------- -------------- ---------
Depreciation (305) (66) (371)
Amortisation (2,249) (622) (2,871)
Restructuring costs (89) (136) (225)
Share options costs (243) (132) (375)
Profit/(loss) before interest and
tax 2,737 1,286 4,023
Finance income 4 3 7
Finance costs net 64 (160) (96)
Share of profit of joint venture 10 - 10
---------------- -------------- ---------
Segment profit (see reconciliation
below) 2,815 1,129 3,944
================ ============== =========
The segment results for the 6 months to 30 April 2013 are as
follows:
Engineering Recruitment
Public Sector Information (discontinued
Software Management operation) Total
GBP000 GBP000 GBP000 GBP000
Revenues from external customers 18,325 8,244 965 27,534
Cost of sales (2,051) (662) (482) (3,195)
---------------- ------------- --------------- ---------
Gross profit 16,274 7,582 483 24,339
Operating costs (11,776) (6,289) (522) (18,587)
---------------- ------------- --------------- ---------
Profit before interest, tax,
impairment, depreciation, amortisation,
share option and restructuring
costs 4,498 1,293 (39) 5,752
---------------- ------------- --------------- ---------
Depreciation (284) (63) (1) (348)
Amortisation (2,061) (667) - (2,728)
Restructuring costs (37) (51) - (88)
Acquisition costs 850 (49) (37) 764
Share options costs (280) (36) (12) (328)
Impairment of goodwill - - (457) (457)
Profit before interest and
tax 2,686 427 (546) 2,567
Finance income - 1 - 1
Finance costs net (76) 126 - 50
---------------- ------------- --------------- ---------
Segment profit/(loss) (see
reconciliation below) 2,610 554 (546) 2,618
================ ============= =============== =========
Reconciliations of reportable profit:
6 months 6 months
to to
30 April 30 April
2014 (unaudited) 2013 (unaudited)
GBP000 GBP000
Total profit for reportable segments 3,944 2,618
Acquisition costs (16) -
Net financial costs (474) (528)
Discontinued operations loss* - 509
---------------------- ------------------
Profit before taxation from continuing
operations 3,454 2,599
====================== ==================
Acquisition 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 excludes Group costs allocated to
the segment relating to impairment of goodwill and acquisition
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
2014 (unaudited) 2013 (unaudited) 2013
GBP000 GBP000 (audited)
GBP000
Current tax
Corporation tax on profits for
the period 770 820 1,611
Foreign tax on overseas companies 270 191 624
Over provision in respect of
prior periods (49) (123) (652)
---------------- ------------------- -------------
Total current tax 991 888 1,583
---------------- ------------------- -------------
Deferred tax
Origination and reversal of
timing differences (89) (254) (2,199)
Adjustment for rate change (97) - (164)
Adjustments in respect of prior
periods 4 - (74)
---------------- ------------------- -------------
Total deferred tax (182) (254) (2,437)
---------------- ------------------- -------------
Total tax charge 809 634 (854)
---------------- ------------------- -------------
Analysed as:
Tax charge from continuing operations 809 635 (851)
Tax charge from discontinued
operations - (1) (3)
Unrelieved trading losses of GBP1,067,000 in the UK and
GBP2,773,000 overseas remain available to offset against future
taxable trading profits.
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
14 13 13
(unaudited) (unaudited) (audited)
Continuing operations GBP000 GBP000 GBP000
Profit for the period 2,645 1,964 8,364
Basic earnings per share
Weighted average number of shares
in issue 351,772,662 348,303,384 347,231,721
Basic earnings per share 0.75p 0.56p 2.41p
---------------- ---------------- -----------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 351,772,662 348,303,384 347,231,721
Dilutive share options 9,464,795 18,170,822 16,020,147
---------------- ---------------- -----------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 361,237,457 366,474,206 363,251,868
Diluted earnings per share 0.73p 0.54p 2.30p
---------------- ---------------- -----------------
6 months 6 months 12 months
to to to
30 April 30 April 31 October
14 13 13
(unaudited) (unaudited) (audited)
Discontinued operations GBP000 GBP000 GBP000
Loss for the period - (509) (841)
Basic earnings per share
Weighted average number of shares
in issue 351,772,662 348,303,384 347,231,721
Basic earnings per share - (0.15p) (0.24p)
---------------- ---------------- -----------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 351,772,662 348,303,384 347,231,721
Dilutive share options 9,464,795 18,170,822 16,020,147
---------------- ---------------- -----------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 361,237,457 366,474,206 363,251,868
Diluted earnings per share - (0.14p) (0.23p)
---------------- ---------------- -----------------
6 months 6 months 12 months
to to to
30 April 30 April 31 October
14 13 13 (audited)
(unaudited) (unaudited) GBP000
GBP000 GBP000
Total operations
7,523
Profit for the period 2,645 1,455
Basic earnings per share
Weighted average number of shares
in issue 351,772,662 348,303,384 347,231,721
Basic earnings per share 0.75p 0.41p 2.17p
---------------- ---------------- -----------------
Diluted earnings per share
Weighted average number of shares
in issue used in basic earnings
per share calculation 351,772,662 348,303,384 347,231,721
Dilutive share options 9,464,795 18,170,822 16,020,147
---------------- ---------------- -----------------
Weighted average number of shares
in issue used in dilutive earnings
per share calculation 361,237,457 366,474,206 363,251,868
Diluted earnings per share 0.73p 0.40p 2.07p
---------------- ---------------- -----------------
Adjusted earnings per
share
6 months 6 months 12 months
to to to
30 April 30 April 31 October
14 13 13
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Profit for the period 2,645 1,455 7,523
Adjusting items:
Amortisation 2,871 2,728 5,388
Restructuring costs 225 88 525
Acquisition costs 16 (764) (664)
Share option costs 375 328 511
Impairment - 457 457
Taxation on above items (813) (723) (1,477)
-------------------- ---------------- -----------------
Adjusted profit for the period 5,319 3,569 12,263
-------------------- ---------------- -----------------
Adjusted basic earnings per
share 1.51p 1.02p 3.53p
Adjusted diluted earnings per
share 1.47p 0.97p 3.38p
6. DIVIDENDS
During the period a dividend was paid in respect of the year
ended 31 October 2013 of 0.40p per ordinary share at a total cost
of GBP1,417,000 (2012: 0.40p, GBP1,393,000).
A dividend of 0.325p per ordinary share at a total cost of
GBP1,158,000 has been proposed in respect of the interim period
ended 30 April 2014 (H1 2013: 0.30p, GBP1,045,000).
7. DISCONTINUED OPERATIONS
The Group announced on 1 July 2013 the sale of the recruitment
business, TFPL Limited. The TFPL business represented an
identifiable division of the Group and as such has been disclosed
as a discontinued operation for the period ended 30 April 2013 and
the year ended 31 October 2013. A single amount is shown on the
consolidated statement of comprehensive income representing the
post-tax result of the discontinued operation for the period until
disposal. Additionally the post-tax loss arising from the disposal
of the operation has been recognised within the discontinued
operations section of the consolidated statement of comprehensive
income.
6 months
to 30 6 months 12 months
Operating activities of discontinued April to 30 April to 31 October
operations 2014 2013 2013
GBP000 GBP000 GBP000
Revenue - 965 1,307
Costs of sale - (482) (717)
Depreciation and amortisation - (1) (1)
Impairment - (457) (457)
Other operating expenses - (535) (655)
---------- ------------- -----------------
Operating result - (510) (523)
Finance costs - - -
---------- ------------- -----------------
Result from discontinued operations before
taxation - (510) (523)
Tax expense - 1 4
Net operating result from discontinued
operations - (509) (519)
---------- ------------- -----------------
8. DISPOSAL GROUP
The Group announced on 1 July 2013 the sale of the recruitment
business, TFPL Limited. The assets and liabilities relating to this
business have been classified as a disposal group on the balance
sheet for the 6 months to April 2013.
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
Property, plant and
equipment 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
-------------
9. GOING CONCERN
The working capital facility of GBP8m and acquisition facility
of GBP15m are due to expire during the next 12 months, however this
is expected to be renegotiated with the bank on similar terms. The
Board has considered the headroom in the bank facilities and are
comfortable that unless there was a substantial deterioration in
trading, Group budgets do not indicate any covenant breaches on the
bank facilities currently in place.
10. POST BALANCE SHEET EVENTS
On 1 May 2014, Idox plc purchased 1,000,000 of its own ordinary
shares of 1 pence each at a price of 40.47 pence per share. All of
these shares will be held as treasury shares.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DBGDLIUBBGSB
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