TIDMIDOX
RNS Number : 6877N
IDOX PLC
02 February 2021
2 February 2021
Idox plc
( 'Idox' or the 'Group' or the 'Company')
FY20 Results
Idox plc (AIM: IDOX), a leading supplier of specialist
information management software and solutions to the public and
asset intensive sectors, is pleased to report its audited financial
results for the year ended 31 October 2020.
Financial Highlights
-- Revenue increased by 4% to GBP68.0m (2019: GBP65.5m).
-- Recurring revenue* increased by 5% to GBP37.4m (2019: GBP35.7m).
-- Order book for contracted software and services up 31% to GBP15.9m (2019: GBP12.1m).
-- Adjusted EBITDA** increased by 36% to GBP19.6m (2019:
GBP14.4m). Adjusted EBITDA margin improved to 29% (2019: 22%).
-- Cash conversion of Adjusted EBITDA to net cash from operating
activities improved to 109% (2019: 86%). Free cashflow*** of
GBP11.2m (2019: GBP4.4m).
-- Adjusted EPS**** for continuing operations increased by 39% to 1.81p (2019: 1.30p).
-- Net debt***** at 31 October 2020 down 39% at GBP16.1m (2019: GBP26.4m).
-- Final dividend of 0.3p per share (2019: GBPNil) declared, in
line with the stated intention to restore dividend payments.
Statutory Equivalents
Reconciliations between adjusted and statutory earnings are
contained within these financial statements. The statutory
equivalents of the above results are as follows:
-- Profit before tax GBP2.7m (2019: GBP0.03m loss). Loss before
tax on discontinued operations of GBPNil (2019: GBP0.6m).
-- Basic EPS of 0.29p (2019: loss 0.26p) for continuing
operations. Basic EPS of GBPNil (2019: loss 0.14p) on discontinued
operations.
Operational Highlights
Idox has continued to improve all areas of the business within
its Four Pillars framework during FY20, with successful initiatives
including:
-- Fully integrating our 2019 Tascomi acquisition, recently rebranded as 'Idox Cloud';
-- Significant progress in delivering Digital Transformation to
clients with several new wins for Idox Cloud and new software
developments based upon the Idox Cloud development framework;
-- Fully exiting sub-scale operations in Ireland and Malta;
-- Consolidating UK statutory entities, and completing a rebrand;
-- Establishing the first Group-wide CRM, which is already
yielding improved sales performance;
-- Fully integrating our operational processes creating a single Idox Software unit; and
-- Idox has not utilised any government job support schemes to date.
Current Trading and Outlook
-- Confident that our public sector markets, software solutions
and high levels of recurring revenues will continue to be
resilient.
-- We remain cognisant of the ongoing impact of the Covid-19
pandemic and the recurring national lockdowns.
-- Significant improvements in H2 orderbooks compared to H1,
including EIM orderbook, carried into FY21 up over 50% on FY20.
-- Combination of recurring revenue and growing order book
provides good visibility for current year revenue outlook.
-- FY21 year-to-date trading in line with expectations.
David Meaden, Chief Executive of Idox said:
"We have achieved the objectives we set out for our financial
year 2020 and continue to operate within our Four Pillars framework
of revenue expansion, margin improvement, simplicity and
communication. Our financial performance has further strengthened,
as we remained disciplined in managing costs and generating cash
across our Group.
I have been pleased with the progress we have made across
several fronts including reorganising all our software businesses
under a single Idox Software leadership structure, implementing our
first Group-wide CRM to underpin our sales team stratification
efforts; consolidation of our development methodologies; and more
recently, the appointment of our first Head of Professional
Services. We continue to improve management information and
standardise processes throughout our organisation and I would like
to thank all our people for their strong commitment to this change
as we have sought to improve our organisation. We remain well
placed to deliver value and quality products to our customers and
the markets we serve.
The Group remains ambitious to grow its leadership positions in
public sector software for the future. Idox strives to be a trusted
partner of choice for customers, colleagues and suppliers in
addition to our banking partners and shareholders as we continue to
grow revenues, margin, and cash.
We look forward to our financial year 2021 with both ambition
and energy. We have a full programme of continued organic expansion
from the stable platform we have created, and will look to scale
our Group further through carefully selected bolt-on acquisitions
to bring public sector software businesses into our portfolio.
We are excited and confident in the outlook for the
business."
For further information please contact :
Idox plc +44 (0) 870 333 7101
Chris Stone, Non-Executive Chairman
David Meaden, Chief Executive
Rob Grubb, Chief Financial Officer
Peel Hunt LLP (NOMAD and Broker) +44 (0) 20 7418 8900
Edward Knight
Paul Gillam
Nick Prowting
MHP Communications + 44 (0) 203 128 8170
Reg Hoare idox@mhpc.com
James Bavister
Amy O'Sullivan
About Idox plc
For more information see www.idoxplc.com @Idoxgroup
Alternative Performance Measures
These items are excluded from statutory measures of profit to
present a measure of cash earnings from underlying activities on an
ongoing basis. This is in line with the management information
requested and presented to the decision makers in our business; and
is consistent with how the business is assessed by our debt and
equity providers. The alternative performance measures for 2019 do
not include the impact of the adoption of IFRS 16 - Leases which
was adopted on a modified retrospective basis in FY20 without
restatement of comparative amounts. Details are included within the
financial review section of the Strategic Report.
There have been no adjustments to any of our reporting metrics
for any impact of the Covid-19 pandemic.
* Recurring revenue is defined as existing, contracted annuity
revenues that have a high expectation of renewal for a minimum of
twelve months.
** Adjusted EBITDA is defined as earnings before amortisation,
depreciation, restructuring, acquisition costs, impairment,
financing costs and share option costs. Share option costs are
excluded from Adjusted EBITDA as this is a standard measure in the
industry and how management and our shareholders track
performance.
*** Free cashflow is defined as net cashflow excluding:
acquisitions / disposals, debt repayments & drawdowns, and
shareholder placing & dividends.
**** Adjusted profit and adjusted EPS excludes amortisation on
acquired intangibles, restructuring, financing, impairment and
acquisition costs.
***** Net debt is defined as the aggregation of cash, bank
borrowings and long-term bond.
ANNUAL FINANCIAL REPORT ANNOUNCEMENT
The extracts below are from the Annual Financial Report 2020.
Note references refer to notes included in this Annual Financial
Report Announcement 2020.
CHAIRMAN'S STATEMENT
Introduction
My second year as Chairman of Idox has been a very different one
from the first. Where the first year was characterised by dealing
with a large number of significant legacy issues that were getting
in the way of our Group delivering the financial results that we
expected, this second year has been focused on delivering the value
of which our business is capable. I am very pleased to say that our
financial performance is now more in line with what we should
expect from a business with strong positions in well-defined niche
software markets.
Our Chief Executive, David Meaden, has articulated a Walk, Run,
Fly vision for the business, and we are now firmly in the Run
phase. Over the past twelve months we have consistently delivered
performance in line with expectations, and the growth in revenues,
profits, and most importantly, cash, has re-established the
credibility of the business leading to significant increases in the
level of trust shown towards us by all of our stakeholders.
The main driver of this financial improvement has been the
improvement in our operational performance. This started with a
focus on delivering clear, tangible benefits to our customers in
line with their changing needs. The Group has outstanding positions
in the markets we serve, and we now have the processes and
capabilities in place to make sure that we continue to evolve our
offerings to suit our customers evolving requirements. Much of this
has come from organic improvements, where we are seeing the
benefits of an integrated CRM system that identifies all of our
customer needs and helps target opportunities for us to cross-sell
services. However, we have also seen the benefits of well targeted
and executed acquisitions, with the benefits of the Tascomi
acquisition that was completed at the end of the previous financial
year starting to come through very clearly. It was apparent that
one of the evolving needs of our clients was a requirement to be
able to transition to cloud solutions, and whilst we could have
spent a long time and a lot of cash in building this capability
ourselves, the addition of Tascomi to our solution suite has
allowed us to offer this evolution to our customers much more
quickly. It also brought some new end user functionality beyond
just the cloud infrastructure, adding additional solutions that we
can sell to our current customers.
The leaner, simpler organisational model that has been
implemented has allowed us to turn a lot more of this revenue
growth into profits, delivering a significant improvement in
operating profit. As a relatively mature software business we can
expect this trend to continue, with a target for our mature
operations of over 30% Adjusted EBITDA margin.
Lastly, the investments and improvements that we have made in
our Finance operations, both in the team and supporting systems,
has driven a much better convergence of these operating profits
into cash. This enhancement also underlines the major improvement
in the underlying quality of our reported business, in turn the
result of the major improvement to governance and standards across
the Group.
As we move into the new financial year, we expect these
improving trends to continue, but we will also continue to look for
inorganic opportunities to improve and grow our business within our
current markets. We believe that there are a good number of
opportunities for us to continue to make relatively low ticket, low
risk additions to our portfolio. We have established a strong
platform for growth and integration, and our experience with
Tascomi shows that we are ready to make good use of that
platform.
It is impossible for me to review the past year without
discussing the impact of the Covid-19 pandemic and the resulting
national lockdowns. Idox has been very fortunate compared to many
businesses in that underlying demand for our products and services
has not really dropped throughout the period, but I have been
enormously impressed by the resilience and resourcefulness of our
colleagues who have adapted to the new, more remote working
patterns so well. Our senior management team has worked hard to
make sure that our colleagues are supported through these changes,
and in turn that has allowed them to maintain the clear focus on
supporting our customers. It would be foolish to believe that there
have been no negative impacts from such a wholesale change in such
a short period of time, but the evidence is that our business has
continued to grow and improve, and I am pleased to say that our
employee attrition levels have also improved. We have not had to
take advantage of any of the government employment support schemes,
other than taking advantage of the VAT deferral opportunity. As
always, I am hugely grateful to all of our colleagues who choose to
build their careers with Idox. This year has been a real test of
the resourcefulness of our colleagues, but also a test of the
covenant we have with them. I hope that this experience will
strengthen that covenant in both directions.
Group Strategy
The Group continued its focus on providing digital solutions and
services to the public sector in the United Kingdom, complemented
by our Content businesses in Europe and Engineering Information
Management (EIM) business servicing customers across the world. The
key to our success is to ensure we deliver better user results and
productivity improvements for customers through focusing on
usability, functionality and application of integrated digital and
increasingly cloud-based technologies and solutions. As mentioned
above, we expect to accelerate the development of this strategy
through the integration of further acquisitions where we identify
businesses that can enhance our progress.
Board
FY20 has seen a number of changes to the Board of Directors:
-- O n 14 April 2020, Alice Cummings was appointed as a
Non-Executive Director, and Chair of the Audit Committee. Alice has
brought strong relevant experience having formerly been Group CFO
at the InHealth Group, the healthcare services and solutions
business for over seven years.
-- On 14 April 2020, Oliver Scott stepped down from the Board. I
would like to thank Oliver for his contribution to Idox since
November 2018.
-- On 28 August 2020, Jeremy Millard stepped down from the Board
following the Group's Annual General Meeting (AGM). I would like to
thank Jeremy for his contribution to Idox since 2013.
Each member of the Board brings different skills and experience
to the Board and the Board Committees and I am pleased with this
balance which has supported the effectiveness of the Board
throughout FY20.
I am satisfied that there is sufficient diversity in the Board
structure to bring a balance of skills, experience, independence
and knowledge to the Group however, I intend to keep this balance
under review and continued assessment.
Corporate Governance
We are cognisant of the important responsibilities we have in
respect of Corporate Governance and shaping our culture to be
consistent with our objectives, strategy and business model which
we set out in our Strategic Report and our description of principal
risks and uncertainties. The Group is committed to conducting its
business fairly, impartially, in an ethical and proper manner, and
in full compliance with all laws and regulations. In conducting our
business, integrity is the foundation of all Company relationships,
including those with customers, suppliers, communities and
employees.
Corporate Simplification
As highlighted above, during the financial year the trade and
assets of Tascomi Limited and McLaren Software Limited were hived
into Idox Software Limited in line with our corporate
simplification strategy.
Dividends
The Board has proposed a final dividend of 0.3p to be paid
(2019: GBPNil) for FY20 bringing the total for the year to 0.3p
(2019: GBPNil). The restoration of the dividend is in line with the
Group's intention as stated in the FY19 results to introduce a
final dividend in respect of FY20, taking into consideration the
pace of recovery in our business.
Summary
The financial results of the last year reflect the quality of
the Idox business. We operate in good markets, with excellent
market positions and insights, and we have every confidence that we
can continue the excellent progress we have seen in FY20. The
changes that we have made to the team, our structure, systems and
processes have delivered a step-change improvement in our financial
performance. However, these results reflect the work that has been
done over a longer period of time than just the last twelve months.
I am pleased to have had the opportunity to work with all of my
Idox colleagues during a period of such tremendous improvement, and
look forward to continuing that work in delivering growing value to
all our stakeholders.
Finally, I would like to extend my thanks to the entire
workforce of the Group, who have maintained their focus on looking
after the most important asset of our business, our customers. Our
colleagues' expertise and diligence have continued to deliver the
support and value that our customers expect, even with all the
challenges of the Covid-19 disruptions, and we are fortunate to
have them choose Idox.
Chris Stone
Chairman
CHIEF EXECUTIVE'S REVIEW
Overview
It has been a successful year at Idox. The business has
performed well and has delivered a strong set of results despite
the obvious impacts of the Covid-19 pandemic. I am very grateful to
the whole team here at Idox for responding so positively to the
uncertainty caused by the pandemic and the subsequent restrictions
on our working lives. All of our teams have shown great resilience
and adaptability in incorporating the necessary changes to our
operational and working practices. It has been a pleasure to see
them performing so effectively.
This strong set of results demonstrates the effectiveness of the
major reforms that we have undertaken as a Group since I arrived in
June 2018. I would like to thank all our teams for the tremendous
efforts over the past two years. Having comprehensively addressed
the issues that had long beset the Group, we are now focussed
completely on the needs of our customers, what they need to get
ahead in their changing markets and in leading the way in
innovative thinking and problem solving.
Today Idox is well placed in a number of markets where we
improve professional and expert processes and support clients in
their transition to modern, agile organisations operating digitally
and through the cloud. We are leaders and experts in software for
the built environment, modern transportation networks, digitisation
(for example digital twins), elections and facilities management.
We empower those that need extra support in special educational
needs and disability and our software also manages the sexual
health of the nation.
Managing our business
Across our organisation we focus on our Four Pillars of Revenue,
Margin, Simplification and Communication. This approach provides
cohesion for the whole Group. The Four Pillars are well-articulated
across the organisation and embedded into our onboarding process
for people joining the organisation. This focus ensures that
everyone in the Group can make a meaningful contribution to our
overall success and has provided the basis on which the
organisation has discovered and articulated its values.
Revenue
We have established strong business controls such that we do not
pursue revenue for the sake of growth, but that we focus upon our
products and the certainty of delivering lasting value to
customers. We make sure that we fully understand the financial and
operational implications for each piece of business that we
contract. We focus on improving the amount of recurring revenue in
the business and this provides a strong foundation for future
growth in both revenues and margins.
During the year we improved revenues by 4% to GBP68.0m. Order
intake across the Group grew significantly, which helped to support
the in-year revenue growth and the development of the future
orderbook for software and services which grew by over 31%.
Some markets and Business Units were more impacted by the
Covid-19 pandemic than others, but our Idox Software Local
Government, Health and Elections businesses all had particularly
strong performances that helped drive the overall Group
performance.
Sales Orders
FY20 Sales order intake in the Local Government area was up 30%
on a year over year basis, with significant wins and customer
extensions to existing contracts. We saw an improved performance in
sales to the existing customer base, where expansion of
functionality and capabilities in our existing solutions and remote
access facilities drove additional sales. Idox Cloud had a
successful year winning new customers at Cheshire East Council, 3C
Shared Services and Wiltshire Council alongside adoptions at Wirral
Council and West Berkshire Council.
Sales orders in the Health Business Unit were up over 60% on a
like for like basis with new wins across the entire portfolio of
iFit, iAssets and our sexual health product Lilie. Significant
contracts included the University Hospitals of North Midlands NHS
Trust, Homerton University Hospital NHS Foundation Trust and
Chelsea & Westminster Hospital NHS Foundation Trust.
In Elections, sales orders were up year over year by 75%. Order
growth included the December 2019 General Election and a
significant contract for the Scottish eCount programme, working in
conjunction with Fujitsu.
Despite the significant challenges of working from home and the
effect of the Covid-19 pandemic on the Dutch market, consultancy
revenues were up by 5%, mainly driven by the growth in WBSO
(R&D) revenues.
In the business areas more impacted by the conditions created by
the pandemic, the CAFM business saw sales orders decline on a year
over year basis by 16%. However, with a new software release
incorporating Covid-19 pandemic functionality, H2 saw improvements
in order intake as customers looked to utilise the solution to
manage return to work policies and processes. H2 FY20 orders versus
H2 FY19 saw a 24% improvement on the previous year's performance
although this was not enough to recover the year fully.
A number of key EIM markets were also affected by the Covid-19
pandemic and the reduction in oil prices. However, order intake
improved H2 on H1 by 39%, with a very strong Q4 performance. EIM
sales operations have benefited from a tighter integration with the
Idox Software Division, leveraging the new sales desk capabilities
and sales leadership. The orderbook in EIM carried into FY21 is up
over 50% on FY20. Key deals in the latter part of the year included
new contracts with existing customers TAQA, CRNL, Cenovus Energy
Inc. & PSEG. In addition, we added several new customers
including Iluka which became our first FusionLive deal in the
Australia and New Zealand region.
Compliance sales were showing signs of recovery throughout Q4,
including a record month for new orders in October 2020. This was
supported by new business activity from Jabil, Smurfit Kappa &
Dosch Holdings alongside existing customer contracts from Bureau
Veritas, Wittur Holdings & RWE AG.
Margins
We have seen an improvement in Adjusted EBITDA margins from 22%
to 29% in the business over the past twelve months and recorded a
statutory profit before tax of GBP2.7m (2019: GBP0.03m loss). We
believe we are well positioned to sustain and improve margins in
the business moving forward as we gain share in our respective
markets with our IP led solutions. As is now commonplace across the
business, we have maintained a sharp focus on cash generation, and
I am pleased to report a further reduction in our ongoing net debt
position to GBP16.1m. We have seen net cash generation and a
reduction in debt over the last two financial years of
GBP15.7m.
Across the Group we have continued to drive initiatives that we
believe will produce improved margins. During the year we fully
automated the existing business approvals process and integrated
this with the Group's CRM tools. We also implemented a Bid to Win
methodology focussed on winning higher value and margin deals
whilst ensuring that we qualify out of opportunities where
appropriate. Formal tender responses are managed through the Idox
Bid Team and we registered a win rate above 60% across the
business. The team also managed the process of having 59 of our
offerings made available through the new Government G-Cloud 12
framework.
Further improvements in how we engage and deploy skills within
our professional services group has resulted in better planned
utilisation of resources, leading to improving timescales and
completion of projects. Overall, we have seen a 12% improvement in
these engagements.
During Q4 we released the new version of the Education, Health
and Care Hub (EHC Hub) to clients. This product set is the first of
the Idox Software products to be re-platformed on the Idox Cloud
(formerly Tascomi) technology framework. FY21 will see the full
rollout of this solution across the client base, improving margins
through resource pooling and infrastructure efficiencies.
Simplification
During the year we have made great strides in our operations. We
have brought the software assets and development activities of all
of our previously separate businesses together into a single Idox
Software operation. This sits alongside similarly combined
professional services and support services groups. The resulting
benefits of these changes have been substantive. As well as
providing our clients with a consistent support and service
experience across product sets, we have enabled our creative
talents across the company to work more collaboratively across
product domains, improving innovation and the agility of our
approach. As a result, we have seen direct improvement in our
performance and team satisfaction.
We continue to ensure that we are using our capital investments
in the most productive way and during the year we consolidated our
elections software onto a single product platform, Eros. This has
brought greater focus and more meaningful investment to a single
product set and helped improve margins in this part of the
operation by over 10%.
I have spoken previously of our efforts to consolidate, simplify
and improve the customer service desk operations at Idox. Over the
last twelve months through a combination of improved focus on KPIs,
better Management Information (MI), collaboration with product
development and improved use of resources, we have reduced our
ticket backlog by 52% and improved our Service Level Agreement
(SLA) performance during this time period.
Within the software sales organisation, we have continued to
invest in improving our engagement with customers and improving
their experience in dealing with Idox. We have reorganised our
customer engagement to create a superior and more efficient
customer experience, incorporating marketing tools alongside our
CRM implementation to ensure we have end to end visibility of
client engagements and the effectiveness of our efforts. We have
also analysed and stratified our sales activity, incorporating a
sales desk that improves regular and consistent engagement with
customers and manages the volume of activities on a day to day
basis. Across Idox over 80% of order volume and 20% of order value
falls below GBP25k. By focussing the skills and teams into the
relevant activities we have been able to improve the intake of
orders above GBP100k, which were up over 60% in both terms of value
and volume.
We have maintained and expanded our commitment to high quality
processes by renewing our ISO 9001 (Quality Management), ISO 14001
(Environmental Management), BS OHSAS 18001 (Occupational Health
& Safety) and ISO 27001 (Information Security Management) as
well as achieving certification for ISO 22301 (Business
Continuity).
Communication
Communication across the Group plays a pivotal role in our
collective success and this has been particularly true during a
year in which our home and work lives have been challenged by the
Covid-19 pandemic.
We have embraced more flexibility in our working patterns across
the Group and have listened carefully to our teams about what works
for them and is practical. Whilst the majority of the teams at Idox
worked from home for at least some part of the week prior to the
Covid-19 pandemic, we have seen the benefits for the Group and our
teams of having greater flexibility in how and where we work, and
we will continue to embrace and experiment with further flexible
working initiatives as the pandemic subsides. We have also enhanced
existing initiatives such as the Idox Workplace Wellbeing program
during this period, inviting external speakers to share knowledge
with the workforce. This in particular has been welcomed and
appreciated by our teams and came from a program initiated by a
small collaboration of people across the Group. We all benefit from
their engagement and are grateful for the time and care they put
into this undertaking.
I mentioned earlier that we have taken time to discover the
Group's core values. The values encapsulated in Idox DRIVE were
defined by our teams across the Group and set the tone for how we
work together and aspire to be better. We have also established
Idox Voice, an employee engagement forum where individuals working
at Idox can help shape our future and culture.
Supporting our initiatives, we have also invested in a
leadership development programme with 15 high potential individuals
embarking on an eighteen month leadership course leading to a Level
5 qualification in Operations and Departmental Management. We have
a further 35 who will attend a twelve month development course on
'Leading Together' ensuring we are developing our future Idox
leaders.
We have also taken the opportunity to bring our corporate
branding up to date with the strategic thinking, integrated
capabilities and the progress prevalent across the business. This
has been appreciated by all our stakeholders and we now have a
clear brand and messaging across internal and external channels,
including social media that more accurately reflects our integrated
approach, values and ethos.
Outlook
The Chairman referred to the Walk, Run, Fly phases that describe
and define our progress at Idox. We have been firmly in the Run
phase during FY20 with good progress in customer acquisition,
improved service and more efficient operations. We have seen
positive improvements in revenue, margins, order book, recurring
revenue and cash generation. Importantly, we have built the
governance, processes and infrastructure that will support
continued success and we have the resources at our disposal for
accretive and enhancing acquisitions to further improve shareholder
value moving forward.
We will continue to invest selectively to grow our capabilities
and support our customers. The business has a strong foundation in
property and asset-based solutions and this, along with our focus
on digital transformation and Cloud provision, will underpin our
future strategy and growth. Our FY21 has started well and in line
with our plan, and we continue to trade in line with
expectations.
David Meaden
Chief Executive Officer
Financial Review
The financial year ended 31 October 2020 has built upon the
changes that were enacted in FY19, including the acquisition of
Tascomi which was rebranded Idox Cloud during the period. A strong
focus on sales and commercial governance has enabled us to pursue
only earnings-enhancing revenues. This approach has resulted in
improving Adjusted EBITDA and improved cash generation compared to
prior periods.
During the year ended 31 October 2020, our UK Databases
businesses, encompassing our GRANTfinder and RESEARCHconnect
products, were transferred from our Idox Content division to Idox
Software (Public Sector Software) division as the customers of
these products are largely public sector.
The following table sets out the revenues and Adjusted EBITDA
for each of the Group's segments from its continuing activities,
with our UK Databases reclassified from Idox Content to Idox
Software (Public Sector Software) in FY19 to enable appropriate
year-on-year comparison:
FY20 FY19 Variance
--------------
GBP000 GBP000 GBP000 %
Revenue
- Public Sector Software 48,426 44,925 3,501 8%
- Engineering Information
Management 8,858 9,170 (312) (3%)
------- ---------- -------
- Idox Software 57,284 54,095 3,189 6%
- Idox Content 10,733 11,397 (664) (6%)
------- ---------- -------
- Total 68,017 65,492 2,525 4%
Revenue Split
- Public Sector Software 71% 69%
- Engineering Information
Management 13% 14%
------- ----------
- Idox Software 84% 83%
- Idox Content 16% 17%
Adjusted EBITDA*
- Public Sector Software 16,599 12,391 4,208 34%
- Engineering Information
Management 1,988 1,410 578 41%
------- ---------- -------
- Idox Software 18,587 13,801 4,786 35%
- Idox Content 997 560 437 78%
------- ---------- -------
- Total 19,584 14,361 5,223 36%
Adjusted EBITDA Margin
Split
- Public Sector Software 34% 28%
- Engineering Information
Management 22% 15%
------- ----------
- Idox Software 32% 26%
- Idox Content 9% 5%
------- ----------
- Total 29% 22%
* Adjusted EBITDA is defined as earnings before amortisation,
depreciation, restructuring, acquisition costs, impairment,
financing costs and share option costs.
Idox Software
During the year we brought together our PSS and EIM divisions to
form a new Idox Software division under a single operational
management structure and shared technical resources. This Idox
Software division, accounting for 84% of Group revenues (2019:
83%), delivered revenues of GBP57.3m (2019: GBP54.1m).
FY20 FY19 Variance
--------------
GBP000 GBP000 GBP000 %
Idox Software Revenues
- Recurring (PSS) 28,863 27,427 1,436 5%
- Recurring (EIM) 6,886 7,100 (214) (3%)
- Non-Recurring (PSS) 19,563 17,498 2,065 12%
- Non-Recurring (EIM) 1,972 2,070 (98) (5%)
------- ---------- -------
57,284 54,095 3,189 6%
- Recurring* 62% 64%
- Non-Recurring** 38% 36%
* Recurring revenue is defined as revenues associated with
access to a specific ongoing service, with invoicing that typically
recurs on an annual basis and underpinned by either a multi-year or
rolling contract. These services include Support & Maintenance,
SaaS fees, Hosting services, and some Managed Service arrangements
which involve a fixed fee irrespective of consumption.
** Non-Recurring revenue is defined as revenues without any
formal commitment from the customer to recur on an annual
basis.
Recurring revenues have increased due to the first full year of
revenues from the Idox Cloud business purchased in August 2019, and
improved sales governance and strategic focus on recurring and
cloud revenues across the remainder of the Idox Software division.
The proportion of recurring revenues has decreased slightly due to
non-recurring revenues growth slightly outpacing our recurring
revenues.
Non-recurring revenues have increased also due to the impact of
the improved sales governance resulting in higher recoveries, and
the impact of the transformations in the PSS business in the first
half of FY19 which had resulted in lower revenues in that
period.
Adjusted EBITDA increased by 35% to GBP18.6m (2019: GBP13.8m),
delivering a significantly improved EBITDA margin of 32% (2019:
26%). Of this increase in adjusted EBITDA, GBP0.8m was attributable
to the adoption of IFRS 16 - Leases which changed the accounting
treatment of certain leases from operating expenses to depreciation
and interest associated with recognition of property assets and
liabilities, thereby directly improving our adjusted EBITDA measure
for FY20, without a corresponding change required in FY19.
Excluding the impact of adopting IFRS 16, the balance of the
increase of GBP4.0m in adjusted EBITDA was due to the increased
revenues converting strongly to margin, and the full-year benefit
of the transformation in FY19 taking effect in FY20.
We continue with our efforts to improve efficiencies through
marginal gains across our sales, development, professional services
and support activities, and leverage our common resources to drive
higher margins through improved economies of scale.
Idox Content
The Content division recorded a revenue reduction of 6% to
GBP10.7m (2019: GBP11.4m), due to lower revenues in our German and
Belgium Compliance business due to the impact of the Covid-19
pandemic which lengthened buying cycles in this part of our
business, and the general slow-down in the German economy which
preceded it.
FY20 FY19 Variance
----------------
GBP000 GBP000 GBP000 %
Idox Content Revenues
- Recurring 1,626 1,209 417 34%
- Non-Recurring 9,107 10,188 (1,081) (11%)
------- -------- --------
10,733 11,397 (664) (6%)
- Recurring 15% 11%
- Non-Recurring 85% 89%
Adjusted EBITDA increased by 78% to GBP1.0m (2019: GBP0.6m),
delivering an increased EBITDA margin of 9% (2019: 5%). Of this
increase in adjusted EBITDA, GBP0.6m was attributable to the
adoption of IFRS 16 - Leases.
Excluding the impact of adopting IFRS 16 - Leases, the Idox
Content division saw a decrease of GBP0.2m in adjusted EBITDA due
to the decreased revenues from our Compliance business for the
reasons noted above, offset with cost reductions given the lower
levels of activity.
We continue to explore ways to improve EBITDA margin, both
through targeting higher-margin revenue activities, and also
actively managing cost.
Profit / (Loss) Before Tax
The following table provides a reconciliation between adjusted
EBITDA and statutory profit / (loss) before taxation.
FY20 FY19 Variance
----------------
GBP000 GBP000 GBP000 %
Adjusted EBITDA 19,584 14,361 5,223 36%
Depreciation and Amortisation (11,339) (9,128) (2,211) 24%
Restructuring costs (1,838) (2,155) 317 (15%)
Acquisition costs (125) (174) 49 (28%)
Financing costs (306) (368) 62 (17%)
Share option costs (1,057) (859) (198) 23%
Net finance costs (2,217) (1,702) (515) 30%
--------- --------------
Profit / (loss) before
taxation 2,702 (25) 2,727 109%
--------- -------------- --------
The reported profit before tax was GBP2.7m (2019: GBP0.03m
loss).
Restructuring costs were GBP1.8m (2019: GBP2.2m) as the Group
continued to restructure business units, office locations and Group
processes to improve the Group's current and future financial
performance and prospects. Restructuring costs are analysed as
follows:
FY20 FY19 Variance
---------------
GBP000 GBP000 GBP000 %
Redundancies 327 285 42 15%
Disposal of Malta and Ireland
businesses 397 - 397 n/a
Litigation 42 697 (655) (94%)
Property 1,072 1,173 (101) (9%)
------- -------
Total restructuring costs 1,838 2,155 (317) (15%)
------- ------- -------
Acquisition costs of GBP0.1m (2019: GBP0.2m) relates to the
final settlements in relation to the acquisition of Idox Cloud
(formerly Tascomi) in August 2019.
There were no impairments in the year (2019: GBPNil).
Financing costs of GBP0.3m (2019: GBP0.4m) relate to
professional fees incurred as part of the refinancing in December
2019, and prior to that in February 2019.
Share option costs of GBP1.1m (2019: GBP0.9m) relate to the
accounting charge for awards made under the Group's Long-term
Incentive Plan.
Net finance costs have increased to GBP2.2m (2019: GBP1.7m) as a
result of more interest being payable in respect of the Group's
enlarged banking facilities which were fully drawn in the second
half of the year as part of our Covid-19 pandemic defensive
actions; and as a result of increased effective interest rate
accounting adjustments and lease liability interest as a
consequence of the Group adopting IFRS 16 - Leases in the year.
The Group continues to invest in developing innovative
technology solutions across the Idox Software portfolio and has
incurred capitalised development costs of GBP4.7m (2019:
GBP4.4m).
Taxation
The effective tax rate (ETR) for the period was (52.78%) (2019:
(190.07%)).
The main factors for the reduction in the volatility in the ETR
on the profit before tax position was the significant increase in
the profit before tax in the year meaning permanent and other
differences giving rise to ETR effects were proportionately lower.
These differences included routine non-allowable amounts in
addition to international losses not recognised in the period and
higher overseas tax rates.
There are substantial carried-forward losses not recognised for
deferred tax purposes to date, owing to adoption of a prudent loss
recognition position. The gross value of these losses not
recognised to date totals GBP12.6m, split across Malta (GBP9.1m),
the UK (GBP0.7m), Germany (GBP1.4m) and France (GBP1.4m). The Board
is hopeful that the Group will benefit from these unrecognised tax
losses, with the exception of Malta and Germany, in future and
these will be recognised at the point where utilisation becomes
more certain.
Earnings Per Share and Dividends
Basic earnings per share for continuing and discontinued
operations improved to 0.29p (2019: loss of 0.41p) as a result of
the Group reporting a profit after tax compared to a loss in FY19.
Diluted earnings per share improved to 0.29p (2019: loss of
0.41p).
Adjusted earnings per share for continuing operations increased
to 1.81p (2019: 1.30p) as a result of the Group reporting a profit
after tax compared to a loss in FY19, as well as reduced
restructuring costs in the year. Adjusted diluted earnings per
share increased to 1.78p (2019: 1.29p).
The Board proposes a final dividend of 0.3p per share (2019:
GBPNil), in line with stated intention to restore dividend
payments, which represents a total dividend for the year of 0.3p
per share (2019: GBPNil), at a total cost of GBP1.3m.
Balance Sheet and Cash Flows
The Group's net assets have increased to GBP47.0m compared to
GBP44.6m at 31 October 2019. The constituent movements are detailed
in the Group's consolidated Statement of Changes in Equity: which
are summarised as follows:
12 months
to
31 October
2020 GBP000
Total Equity as per FY19 Financial Report 44,611
Transactions with owners (credit to share-based
payments reserve) 1,058
Profit for the year 1,276
Disposal of Non-controlling interest 110
Exchange gains on translation of foreign operations (97)
Total Equity as per FY20 Financial Report 46,958
-------------
This movement of GBP2.4m is reflected in the changes in the
Group's assets and liabilities as follows:
12 months
to
31 October
2020 GBP000
Total Equity as per FY19 Financial Report 44,611
Intangible assets (4,352)
Trade and other receivables & payables, and
Other liabilities 447
Provisions (1,374)
Corporate taxes, Social security and other
taxes payable (2,982)
Change in net debt items 10,282
Other items 326
Total Equity as per FY20 Financial Report 46,958
-------------
The increase in the Group's net assets is principally due to the
profit for the year, with a significant improvement in net debt in
the year as the Group targeted cash generative revenues and margins
across its business. This is partially offset by the reduction of
intangible assets due to in year amortisation, the recognition of
provisions in respect of employee holiday pay, obligations we have
in respect of our previous London property, and an increased VAT
liability due to the deferrals offered by HMRC in light of the
Covid-19 pandemic. The Group has deferred VAT of GBP3.9m as at 31
October 2020 (2019: GBPNil), of which it is anticipated GBP2.8m
will be repaid in the year ended 31 October 2021, and GBP1.1m in
the year ended 31 October 2022.
Cash generated from operating activities after tax as a
percentage of Adjusted EBITDA was 94% (2019: 86%). This increase
was due primarily to the VAT liability deferrals the Group took
advantage of as part of its early Covid-19 pandemic defensive
actions which will be settled across FY21 and FY22. The Group
generally continues to have high levels of adjusted EBITDA to cash
conversion.
Free cashflow at 31 October 2020 was GBP11.2m (2019: GBP4.4m).
Free cashflow has improved in the year due to improvements in
underlying profitable trading, working capital management and the
VAT liability deferral referred to previously.
FY20 FY19
GBP000 GBP000
Net cashflow 23,683 1,360
Add back:
Acquisitions / disposals 200 6,394
Debt repayments 25,762 12,039
Drawdowns (38,575) (8,000)
Net cost of staff share schemes
/ (Issue of shares) 118 (7,350)
--------- --------
Free cashflow 11,188 4,443
--------- --------
The Group ended the year with net debt of GBP16.1m (2019:
GBP26.4m), a significant improvement on the previous year. Net debt
comprised cash of GBP30.8m less bank borrowings of GBP35.1m and the
Maltese listed bond of GBP11.8m.
The Group's total signed debt facilities at 31 October 2020
consisted of a revolving credit facility of GBP35m and GBP10m
accordion facility with the Royal Bank of Scotland plc, Silicon
Valley Bank and Santander UK plc (the "Lenders").
The Group has carefully assessed the likely impact of the
Covid-19 pandemic on the business and our customers. Idox is
fundamentally resilient due to the Group's high recurring revenue
base, its focus on public sector markets and the high proportion of
staff that routinely work from home. The Group retains significant
liquidity with cash and available committed bank facilities and has
strong headroom against financial covenants. We continue to monitor
the situation and adapt our approach as required.
Rob Grubb
Chief Financial Officer
Stakeholder Engagement
Introduction
The Directors confirm that during the year, they have conducted
themselves in a manner which promotes the long-term success of the
Idox Group and of the key stakeholders. The Group considers the
interests of these stakeholders when long-term decisions are made
as set out in Section 172 of the Companies Act 2006. The key
stakeholders are considered to be; the shareholders, the employees,
the customers, the suppliers, local communities and our banking
partners.
The methods in which the Group engages with the key stakeholders
in order to understand any issues they have are noted in the
following table:
Key stakeholder Method of engagement
Shareholders Direct meetings
Supporting equity research
Market communications
------------------------------------------------------
Employees All staff annual events
Regular senior broadcasts
Appraisal cycle
HR sponsored team leader engagement
------------------------------------------------------
Customers Marketing
Account management
Technical services and on-going support
------------------------------------------------------
Suppliers Account management
------------------------------------------------------
Local communities Indirect individual staff interaction via charity
work and events
------------------------------------------------------
Banking partners Regular direct meetings with existing and prospective
providers of finance
------------------------------------------------------
The Group continues to engage with its Key stakeholders, and the
Board incorporates the outcomes of these engagements in its
principal decision making. The following table details this for the
main operational and strategic topics facing the Group:
Stakeholder Outcome of
Topic Engagement engagement Principal decisions
Long-term Shareholders, A desire for The Board continues to assess
strategy employees, a Corporate the best strategic direction
of the Group customers strategy that of the Group to build overall
and local is focused, value and establish a credible
communities clear and path to continued growth in recurring
regularly revenues, EBITDA and cash generation.
articulated The Board has concluded in the
and year our current strategy remains
re-enforced. sound and well supported by our
This should business model and the markets
be supported we address.
by a meaningful In addition, the Board has reviewed
capital the budget in respect of the
allocation year ended 31 October 2021 in
to support detail and debated which investment
strategic and spending decisions will have
goals. the biggest impact on our strategy.
--------------- ---------------- -----------------------------------------------------------------
Performance Shareholders, The Group The performance of the Group
of the Group employees should continue is reviewed in detail by the
and banking to set itself senior management team on a monthly
partners stretching basis and further reviewed by
but realistic the Board at every Board meeting.
financial These financial and operational
targets, and reviews typically involve presentation
adjust pace of management report with extensive
and quantum qualitative and quantitative
of investment detail, analysis through to discussion
if required to understand any variances to
to meet these forecast performance, and agreeing
targets. of adaptive actions as the situation
dictates.
--------------- ---------------- -----------------------------------------------------------------
Financing Shareholders, The Group The capital structure is regularly
and capital employees, should utilise considered as a standing agenda
customers, debt facilities item included in the finance
suppliers where available section of the Board's regular
and banking to maximise meetings. The CEO and CFO regularly
partners earnings meet existing and prospective
potential, investors and banking partners
but be cautious to gauge likely sources and costs
where leverage of funding and associated longer-term
(Net debt trends.
/ adj. EBITDA) The Group's levels of financing,
exceed 1.5. and its capital allocation policy
Beyond this, are regularly discussed at the
either equity Board's regular meetings.
financing During the year ended 31 October
or reducing 2020 the Board formally approved
investment new financing facilities for
plans should the Group and re-established
be considered. its dividend policy. This policy
is to intend to pay a final dividend
Cash generation of 0.3 pence in respect of the
should remain year ended 31 October 2020 and
a priority to continue to progress incrementally
of the beyond that depending on cash
business, and earnings affordability.
and declaration
of a dividend
is a sign
of financial
health in
addition to
providing
shareholders
a return.
--------------- ---------------- -----------------------------------------------------------------
Employees Local Idox should The Senior Management team have
and culture communities, strive to initiated a number of employee-support
shareholders be an employer programmes during the year ended
and employees of choice 31 October 2020, which the Board
to attract has actively discussed and endorsed
and retain as part of its wider considerations
the best staff of the wellbeing of our staff,
that will particularly given the impact
help scale of the Covid-19 pandemic.
the business These initiatives have included:
in a profitable * Idox Voice - regular employee communications
and
cash-generative
way. * Idox Elevate - gender equality
Investment
in Idox's * Idox Drive - establishing agreed values
people should
go beyond
financial * Idox Leads - managers support programme
rewards, and
the Group
should engender * Workplace Wellbeing - mental health support for our
a fair, people
culturally
strong and
socially-aware * CEO Broadcasts - ensuring our leadership is regularly
ethos that visible and communicating to our people
existing and
prospective
employees * Leadership Together - leadership programme for our
will be excited top performers
to be part
of.
During the year ended 31 October
2020 the Group recorded an employee
engagement net promoter score
increase of 33 points on the
prior year's results. While the
NPS is now at 0, we are confident
that as we embed our employee
engagement programme we will
continue to see this score improve
over time. The Board continues
to monitor these initiatives,
the impact on our people and
employee churn metrics more generally.
--------------- ---------------- -----------------------------------------------------------------
Risk, Shareholders, As a PLC with The Board actively monitors and
governance employees, a public-sector discusses the risks facing the
and internal customers, customer base Group, risk appetite for such
control suppliers, and banking risks, and the measures in place
environments local partners, to manage these risks.
communities Idox should During the year the Board appointed
and banking strive for a new Audit Committee Chair,
partners the best risk Alice Cummings. Following this,
management the Board and Senior Management
and governance Team have put in place additional
framework risk management documentation
commensurate to encapsulate all of the material
with its scale. aspects of the risk management
that occurs throughout the Group.
This material has been prepared
at the specific request of the
Board.
The Group has considered whether
the addition of internal audit
would strengthen the Group's
processes for risk identification
and management and concluded
whilst such an appointment for
the FY20 is not appropriate,
this maybe something the Group
embarks on in FY21, particularly
if Idox continues to grow and
further acquires new operations
into the Group.
--------------- ---------------- -----------------------------------------------------------------
Local Communities
Environmental
Idox Group recognises the importance of environmental protection
and is committed to operating its business responsibly and in
compliance with all legal requirements. It is the Group's declared
policy to operate with and to maintain good relations with all
regulatory bodies. In support of this policy, the Group operates an
Environmental Management System which is included in the
accreditation to BS EN ISO 14001:2015. The Group participates in
the Energy Saving Opportunities Scheme (ESOS) and meets the
requirements of the Streamlined Energy and Carbon Reporting (SECR)
regulations.
It is the Group's objective to carry out all measures reasonably
and practicable to meet, exceed or develop all necessary or
desirable requirements and to continually improve environmental
performance through the implementation of the following:
-- Assess and regularly re-assess the environmental effects of the Group's activities.
-- Training of employees in environmental issues.
-- Minimise the production of waste.
-- Minimise material wastage.
-- Minimise energy wastage.
-- Promote the use of recyclable and renewable materials.
-- Reduce and / or limit the production of pollutants to water, land and air.
-- Control noise emissions from operations.
-- Minimise the risk to the general public and employees from
operations and activities undertaken by the Group.
Whilst our business model of software development and deployment
is significantly lower-consumption than most other industries which
require creation of physical product or require regular transport
of either goods or staff; we nonetheless recognise we as a business
have our part to play in reducing carbon emissions in all our
communities.
Due to the low environmental impact of Idox activities, there is
no supplier training, but we prefer to work with suppliers and
other parties who have ISO 14001 accreditation which inherently
encompasses this.
We pro-actively manage office-based consumption, and seek to
minimise the impact on the environment by limiting travel of our
people. The limitations arising from the Covid-19 pandemic have
accelerated our pace with these changes in the way of working. As a
result, we are now considering a more balanced approach to home and
office working, and continue to keep our office footprint under
review. We also are cognisant that managing our impact on the
environment is a collective effort and therefore seek to promote
climate change awareness through our management teams and staff
body more generally.
Given the low environmental impact of our activities, whilst we
do continue to actively monitor our consumption and impact on the
environment, these actions do not currently have a material impact
on our Group's strategy, business model or risk management
processes. We continue to consider this on an ongoing basis.
We recognise there is always more to do and we are considering
on an ongoing basis how to improve the effectiveness of our efforts
and monitoring of this via reporting as part of our wider ESG
improvement efforts.
Social
As noted above, the Senior Management team have initiated a
number of employee-support programmes to improve people
development, wellbeing and diversity in our Group.
We encourage our people to get involved in charitable events in
their communities, and support their causes by matching financial
support with their own fundraising efforts, and communicating
individual and team successes throughout our wider Group using our
monthly Idox Voice newsletter
This report was approved by the Board of Directors and
authorised for issue. Signed on its behalf by:
David Meaden
Chief Executive Officer
Note 2020 2019
GBP000 GBP000
Continuing operations
Revenue 4 68,017 65,492
Cost of sales (18,806) (19,481)
-------- --------
Gross profit 49,211 46,011
Administrative expenses (44,292) (44,334)
Operating profit 4,919 1,677
Analysed as:
Earnings before depreciation, amortisation,
restructuring, acquisition costs, impairment,
financing costs and share option costs 4 19,584 14,361
Depreciation (2,057) (839)
Amortisation (9,282) (8,289)
Restructuring costs (1,838) (2,155)
Acquisition costs (125) (174)
Financing costs (306) (368)
Share option costs (1,057) (859)
----------------------------------------------- ---- -------- --------
Finance income 181 172
Finance costs (2,398) (1,874)
Profit / (loss) before taxation 2,702 (25)
Income tax charge (1,426) (1,192)
Profit / (loss) for the year from continuing
operations 1,276 (1,217)
Discontinued operations
Loss for the year from discontinued
operations 5 - (602)
Profit / (loss) for the year 1,276 (1,819)
Non-controlling interest - 113
Profit / (loss) for the year attributable
to the owners of the parent 1,276 (1,706)
Other comprehensive loss for the year
Items that will be reclassified subsequently
to profit or loss:
Exchange movements on translation of
foreign operations net of tax (97) (180)
-------- --------
Other comprehensive loss for the year,
net of tax (97) (180)
-------- --------
Total comprehensive profit / (loss)
for the year 1,179 (1,999)
======== ========
Total comprehensive profit / (loss)
for the year attributable to owners
of the parent 1,179 (1,886)
======== ========
Earnings per share attributable to owners of the parent during
the year
From continuing operations
Basic 6 0.29p (0.26)p
Diluted 6 0.29p (0.26)p
From continuing and discontinued operations
Basic 6 0.29p (0.41)p
Diluted 6 0.29p (0.41)p
The comparative figures for FY19 have not been restated as a
result of the adoption of IFRS 16.
The accompanying accounting policies and notes form an integral
part of these financial statements.
Note 2020 2019
GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 1,183 1,162
Intangible assets 7 81,652 86,004
Right-of-use-assets 3,726 -
Investment 18 18
Deferred tax assets 1,111 1,368
Total non-current assets 87,690 88,552
------- --------
Current assets
Stock - 77
Trade and other receivables 18,700 19,972
Current tax receivable 1,117 251
Cash and cash equivalents 30,812 7,023
Total current assets 50,629 27,323
------- --------
Total assets 138,319 115,875
------- --------
LIABILITIES
Current liabilities
Trade and other payables 6,084 7,136
Deferred consideration 57 381
Other liabilities 26,839 23,892
Provisions 1,261 384
Lease liabilities 1,188 -
Borrowings - 21,809
Total current liabilities 35,429 53,602
------- --------
Non-current liabilities
Deferred tax liabilities 3,907 4,015
Deferred consideration 27 74
Lease liabilities 2,695 -
Other liabilities 1,791 1,878
Provisions 612 111
Bonds in issue 11,848 11,584
Borrowings 35,052 -
------- --------
Total non-current liabilities 55,932 17,662
------- --------
Total liabilities 91,361 71,264
------- --------
Net assets 46,958 44,611
======= ========
EQUITY
Called up share capital 4,450 4,446
Capital redemption reserve 1,112 1,112
Share premium account 41,356 41,348
Treasury reserve (621) (621)
Share option reserve 2,618 1,837
Other reserves 7,528 7,528
ESOP trust (373) (365)
Foreign currency translation
reserve (161) (64)
Accumulated losses (8,951) (10,500)
------- --------
Issued capital and reserves attributable to
the owners of the parent 46,958 44,721
Non-controlling interest - (110)
------- --------
Total equity 46,958 44,611
======= ========
The comparative figures for FY19 have not been restated as a
result of the adoption of IFRS 16.
The financial statements were approved by the Board of Directors
and authorised for issue on 1 February 2021 and are signed on its
behalf by:
David Meaden Rob Grubb
Chief Executive Officer Chief Financial Officer
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company name: Idox plc Company number: 03984070
Foreign
Called Capital Share Share currency Restated
up redemption premium Treasury option Other ESOP translation retained
share reserve account reserve reserve reserves trust reserve earnings Non-controlling Total
capital GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 interest* GBP000
GBP000 GBP000
Balance at
1 November
2018 4,169 1,112 34,188 (621) 1,232 7,528 (399) 116 540 3 47,868
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
IFRS 15 opening
adjustment - - - - - - - - (11,532) - (11,532)
IFRS 15 deferred
tax opening
adjustment - - - - - - - - 1,944 - 1,944
Issue of
share capital 277 - 7,160 - - - - - - - 7,437
Share option
costs - - - - 859 - - - - - 859
Exercise
/ lapses
of share
options - - - - (254) - - - 254 - -
ESOP trust - - - - - - 34 - - - 34
Transactions
with owners 277 - 7,160 - 605 - 34 - 254 - 8,330
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Loss for
the year - - - - - - - - (1,706) - (1,706)
Non-controlling
interest - - - - - - - - - (113) (113)
Other
comprehensive
loss
Exchange
movement
on translation
of foreign
operations - - - - - - - (180) - - (180)
Total
comprehensive
loss for
the year - - - - - - - (180) (1,706) (113) (1,999)
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Balance at
31 October
2019 4,446 1,112 41,348 (621) 1,837 7,528 (365) (64) (10,500) (110) 44,611
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Issue of
share capital 4 - 8 - - - - - - - 12
Share option
costs - - - - 1,054 - - - - - 1,054
Exercise
/ lapses
of share
options - - - - (273) - - - 273 - -
ESOP trust - - - - - - (8) - - - (8)
Disposal
of investment - - - - - - - - - 110 110
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Transactions
with owners
and
non-controlling
interests 4 - 8 - 781 - (8) - 273 110 1,168
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Profit for
the year - - - - - - - - 1,276 - 1,276
Other
comprehensive
loss
Exchange
movement
on translation
of foreign
operations - - - - - - - (97) - - (97)
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Total
comprehensive
(loss) /
profit for
the year - - - - - - - (97) 1,276 - 1,179
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
Balance at
31 October
2020 4,450 1,112 41,356 (621) 2,618 7,528 (373) (161) (8,951) - 46,958
--------- ------------ --------- ---------- --------- ---------- -------- ------------ ---------- ---------------- ---------
The comparative figures for FY19 have not been restated as a
result of the adoption of IFRS 16.
The accompanying accounting policies and notes form an integral
part of these financial statements.
*relates to a 30% non-controlling interest in Six-PM Health
Solutions (Ireland) Ltd, a subsidiary of 6PM Holdings plc.
Note 2020 2019
GBP000 GBP000
Cash flows from operating activities
Profit / (loss) for the year before
taxation 2,702 (627)
Adjustments for:
Depreciation of property, plant and
equipment 817 839
Depreciation of right-of-use assets 1,240 -
Amortisation of intangible assets 9,282 8,289
Acquisition credits - release of deferred
consideration - (750)
Loss on disposal of subsidiary 380 -
Finance income (5) (172)
Finance costs 2,210 1,629
Debt issue costs amortisation 189 (54)
Research and development tax credit (134) (182)
Share option costs 1,057 859
Loss on disposal of leases 36 -
Movement in stock 54 38
Movement in receivables 1,192 4,923
Movement in payables 4,329 (3,595)
-------- --------
Cash generated by operations 23,349 11,197
(Tax on profit paid) / tax on loss
refunded (2,000) 1,185
-------- --------
Net cash from operating activities 21,349 12,382
-------- --------
Cash flows from investing activities
Acquisition of subsidiaries - (6,394)
Disposal of subsidiaries (200) -
Net cash arising on disposal of discontinued
operations - 44
Purchase of property, plant and equipment (931) (780)
Purchase of intangible assets (5,998) (5,871)
Finance income 5 172
-------- --------
Net cash used in investing activities (7,124) (12,829)
-------- --------
Cash flows from financing activities
Interest paid (1,644) (1,423)
New loans 38,575 8,000
Loan related costs (48) (81)
Loan repayments (25,762) (12,039)
Principal lease payments (1,545) -
Issue of own shares (118) 7,350
-------- --------
Net cash flows from financing activities 9,458 1,807
Net movement in cash and cash equivalents 23,683 1,360
Cash and cash equivalents at the beginning
of the year 7,023 5,534
Exchange gains on cash and cash equivalents 106 129
-------- --------
Cash and cash equivalents at the end
of the year 30,812 7,023
======== ========
The comparative figures for FY19 have not been restated as a
result of the adoption of IFRS 16 .
The accompanying accounting policies and notes form an integral
part of these financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
The financial information contained in these condensed financial
statements does not constitute the Group's statutory accounts
within the meaning of the Companies Act 2006.
Statutory accounts for the year ended 31 October 2019 and 31
October 2020 have been reported on, with an unqualified
opinion.
Whilst the financial information included in this Annual
Financial Report Announcement has been computed in accordance with
International Financial Reporting Standards (IFRS) this
announcement, due to its condensed nature, does not itself contain
sufficient information to comply with IFRS.
This Annual Financial Report Announcement includes note
references that refer to notes in this Annual Financial Report
Announcement 2020.
Statutory accounts for the year ended 31 October 2019 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 31 October 2020, prepared under IFRS, are available
on the Group's website:
https://www.idoxgroup.com/investors/financial-reporting/ and will
be delivered to the Registrar in due course. The Group's principal
accounting policies as set out in the 2019 statutory accounts have
been applied consistently in all material respects.
Going Concern
The Directors, having made suitable enquiries and analysis of
the accounts, consider that the Group has adequate resources to
continue in business for the foreseeable future. In making this
assessment, which covers a minimum period of twelve months from
approval of these accounts, the Directors have considered the
Group's trading budget, cash flow forecasts, available headroom and
projected financial covenants on the banking facility, and levels
of recurring revenue.
In December 2019 the Group had refinanced with the Royal Bank of
Scotland plc, Silicon Valley Bank and Santander UK plc. The
facilities, which comprise a single revolving credit facility of
GBP35,000,000, are committed until December 2022, with an option to
extend this commitment for a further two years.
Covid-19 pandemic impact on Going Concern assessment
Idox along with most companies has been impacted by the Covid-19
pandemic and recurring national lockdowns, however the impact on
our Group has in the main been limited to the initial disruption of
the early stages of the emerging challenges, including restrictions
on physical movement. We have largely seen our operations return to
their pre-Covid-19 pandemic levels across our Group.
We remain cautious in respect of the ongoing impact of the
Covid-19 pandemic and the recurring national lockdowns. From our
experience of the impact of the Covid-19 pandemic since March 2020,
we are confident we are fundamentally resilient to the challenges
of the Covid-19 pandemic due to the Group's high recurring revenue
base, its focus on public sector markets and the high proportion of
staff that routinely work from home. The Group retains significant
liquidity with cash and available committed bank facilities, and
has significant projected headroom on financial covenants which has
improved considerably throughout FY20 and the duration of the
Covid-19 pandemic as anticipated.
We continue to assess the impact of the Covid-19 pandemic on the
business, taking actions to mitigate or limit the impacts on our
organisation where we can and supporting our staff, customers and
partners in dealing with the ongoing impacts.
As part of the preparation of our FY20 results, the Group has
carefully assessed if any ongoing impact of the Covid-19 pandemic
creates any material uncertainty in our going concern assessment.
We have performed detailed financial forecasting, as well as severe
stress-testing in our financial modelling, but have not identified
any credible scenarios that would cast doubt on our ability to
continue as a going concern.
The Group has performed sensitivity analysis to identify what
circumstances could lead to liquidity shortfalls. This analysis has
demonstrated that the Group would only breach the projected
financial covenants in the most severe of circumstances which are
not considered reasonably possible. Under this sensitivity
analysis, recurring revenues were assumed to be 19% lower than plan
and non-recurring revenues lower by 39% for each of FY21 and FY22,
with no corresponding action on costs to address these shortfalls.
Under this scenario, the Group would be in compliance with all
financial covenants for the next twelve months but likely to be in
breach of its leverage banking covenants during Q4 of FY22 although
the Group would still retain significant liquidity and be able to
continue to make debt servicing payments at this point. This
scenario is not considered credible given:
-- Idox typically starts its financial year with strong
visibility of 85% to 90% over revenues for the following year given
its high proportion of recurring revenues and its opening orderbook
of non-recurring revenues. Specifically, the Group enters FY21 with
total outstanding contracted performance obligations of GBP60.5m,
of which 75% of this will be recognised as revenue in FY21, in
addition to an expectation of a high rate of renewal of existing
revenues;
-- in the unlikely event that revenue does begin to deteriorate
to this extreme level, we anticipate reducing costs in the Group to
avoid a covenant breach that is otherwise anticipated to arise in
Q4 of FY22 in this scenario. These actions could include reducing
any operations that may have become severely loss-making due to the
Covid-19 pandemic, either through further reduction in operational
spend, restructuring of business units, or utilising available
government financial support with job retention schemes; and
-- the Group has, and continues to have, strong liquidity as a
result of its committed banking facilities in place. Available
liquidity at year end of GBP30.8m, and available liquidity at the
end of January 2021 of GBP29.2m. If the described extreme scenario
does begin to emerge, Idox anticipates having sufficient financial
resources and sufficient notice as the situation emerges to take
action and reduce costs as described previously to avoid any
covenant breach.
Therefore, this supports the going concern assessment for the
business .
The Annual Financial Report Announcement was approved by the
Board of Directors on 1 February 2021 and signed on its behalf by
David Meaden and Rob Grubb.
2 RESPONSIBILITY STATEMENTS UNDER THE DISCLOSURE AND
TRANSPARENCY RULES
The Directors confirm that:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the company and the undertakings included in the consolidation
taken as a whole;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
-- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the company's position and
performance, business model and strategy.
The name and function of each of the Directors for the year
ended 31 October 2020 are set out in the Annual Financial Report
2020.
3 IFRS 16 'leases'
In the current year, the Group, has applied IFRS 16 - Leases (as
issued by the IASB in January 2016) that is effective for annual
periods that begin on or after 1 January 2019.
IFRS 16 introduces new or amended requirements with respect to
lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and
finance leases and requiring the recognition of a right-of-use
asset and a lease liability at commencement for all leases, except
for short-term leases and leases of low value assets when such
recognition exemptions are adopted. The impact of the adoption of
IFRS 16 on the Group's consolidated financial statements is
described below.
The date of initial application of IFRS 16 for the Group is 1
November 2019.
The Group has applied IFRS 16 using the modified retrospective
basis which:
-- Requires the Group to recognise the cumulative effect of
initially applying IFRS 16 as an adjustment to the opening balance
of retained earnings / (accumulated losses) at the date of initial
application.
-- Does not permit restatement of comparatives, which continue
to be presented under IAS 17 and IFRIC 4.
(a) Impact on the new definition of a lease
The Group has made use of the practical expedient available on
transition to IFRS 16 not to reassess whether a contract is or
contains a lease. Accordingly, the definition of a lease in
accordance with IAS 17 and IFRIC 4 will continue to be applied to
those leases entered or changed before 1 November 2019. The change
in definition of a lease mainly relates to the concept of control.
IFRS 16 determines whether a contract contains a lease on the basis
of whether the customer has the right to control the use of an
identified asset for a period of time in exchange for
consideration. This is in contrast to the focus on 'risks and
rewards' in IAS 17 and IFRIC 4. The Group applies the definition of
a lease and related guidance set out in IFRS 16 to all lease
contracts entered into or changed on or after 1 November 2019
(whether it is a lessor or a lessee in the lease contract). In
preparation for the first-time application of IFRS 16, the Group
has carried out an implementation project. The project has shown
that the new definition in IFRS 16 will not significantly change
the scope of contracts that meet the definition of a lease for the
Group.
(b) Impact on lessee accounting
(i) Former operating leases
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off-balance
sheet.
Applying IFRS 16, for all leases, (except as noted below), the
Group:
-- recognises right-of-use assets and lease liabilities in the
consolidated statement of financial position, initially measured at
the present value of the future lease payments, with the
right-of-use asset adjusted by the amount of any prepaid or accrued
lease payments in accordance with IFRS 16:C8(b)(ii);
-- recognises depreciation of right-of-use assets and interest
on lease liabilities in the Consolidated statement of profit or
loss; and
-- separates the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within financing activities) in the consolidated
statement of cash flows.
Lease incentives (e.g. rent free period) are recognised as part
of the measurement of the right-of-use assets and lease liabilities
whereas under IAS 17 they resulted in the recognition of a lease
incentive, amortised as a reduction of rental expenses on a
straight line basis.
Under IFRS 16, right-of-use assets are tested for impairment in
accordance with IAS 36.
For short-term leases (lease term of twelve months or less) and
leases of low-value assets the Group has opted to recognise a lease
expense on a straight-line basis as permitted by IFRS 16. This
expense is presented within administration expenses in the
statement of comprehensive income.
The Group has used the following practical expedients when
applying the modified retrospective basis to leases previously
classified as operating leases applying IAS 17:
-- The Group has applied a single discount rate to a portfolio
of leases with reasonably similar characteristics.
-- The Group has elected not to recognise right-of-use assets
and lease liabilities to leases for which the lease term ends
within twelve months of the date of initial application.
-- The Group has excluded initial direct costs from the
measurement of the right-of-use asset at the date of initial
application.
-- The Group has used hindsight when determining the lease term
when the contract contains options to extend or terminate the
lease.
(ii) Former finance leases
For leases that were classified as finance leases applying IAS
17, the carrying amount of the leased assets and obligations under
finance leases measured applying IAS 17 immediately before the date
of initial application is reclassified to right-of-use assets and
lease liabilities respectively without any adjustments, except in
cases where the Group has elected to apply the low-value lease
recognition exemption.
The right-of-use asset and the lease liability are accounted for
applying IFRS 16 from 1 November 2019.
(c) Financial impact of initial application of IFRS 16
The weighted average lessees incremental borrowing rate applied
to lease liabilities recognised in the statement of financial
position on 1 November 2019 is 3.73%.
The following table shows the operating lease commitments
disclosed applying IAS 17 at 31 October 2019, discounted using the
incremental borrowing rate at the date of initial application and
the lease liabilities recognised in the statement of financial
position at the date of initial application.
GBP000
Operating lease commitments at 31 October 2019 3,497
Short-term leases and leases of low-value assets (892)
Effect of discounting the above amounts (466)
Present value of lease payments due in periods not previously
included in operating lease commitments 2,686
Lease liabilities recognised at 1 November 2019 4,825
======
The Group has recognised GBP4,825,000 of right-of-use assets and
GBP4,825,000 of lease liabilities upon transition to IFRS 16. The
difference of GBPNil is recognised in retained earnings /
(accumulated losses). There has been an reduction of GBP285,000 to
the opening right-of-use asset in relation to release of prepaid
and accrued rent free periods and capital contributions which were
previously offset against the rental costs.
4 SEGMENTAL ANALYSIS
During the year ended 31 October 2020, the Group was organised
into three operating segments, which are detailed below.
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 (PSS) - delivering specialist
information management solutions and services to the public
sector.
-- Engineering Information Management (EIM) - delivering
engineering document management and control solutions to asset
intensive industry sectors.
-- Content (CONT) - delivering funding and compliance solutions
to corporate, public and commercial customers.
As part of the Group's continued work on corporate
simplification, PSS and EIM have been combined into a single
business unit named Idox Software during the latter part of the
year ended 31 October 2020. As a result of the timing of this
combination of PSS and EIM, the individual business units have been
shown separately in this segmental analysis with sub-totals showing
the combined position.
Also, during the year ended 31 October 2020, our UK Databases
businesses, encompassing our GRANTfinder and RESEARCHconnect
products, were transferred from our Idox Content division to Idox
Software (Public Sector Software) division given as the customers
of these products are largely public sector. UK Databases has
therefore been reclassified from Idox Content to Idox Software
(Public Sector Software) in 2019 in the below disclosures to enable
appropriate year-on-year comparison.
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 are as follows:
2020 2019
GBP000 GBP000
Revenues from external
customers
United Kingdom 47,900 43,416
USA 6,106 5,448
Europe 12,801 14,948
Australia 408 315
Rest of World 802 1,365
------- ---------
68,017 65,492
======= =========
Revenues are attributed to individual countries on the basis of
the location of the customer.
The segment revenues by type are as follows:
2020 2019
GBP000 GBP000
Revenues by type
Recurring revenues - PSS** 28,863 27,427
Recurring revenues - EIM 6,886 7,100
------- -------
Recurring revenues - Software* 35,749 34,527
Recurring revenues - Content** 1,626 1,209
------- -------
Recurring revenues 37,375 35,736
------- -------
Non-recurring revenues -
PSS** 19,563 17,498
Non-recurring revenues -
EIM 1,972 2,070
------- -------
Non-recurring revenues -
Software* 21,535 19,568
Non-recurring revenues -
Content** 9,107 10,188
------- -------
Non-recurring revenues 30,642 29,756
------- -------
68,017 65,492
======= =======
Revenue from sale of
goods 22,302 23,247
Revenue from rendering
of services 45,715 42,245
------- -------
68,017 65,492
======= =======
Recurring revenue is income generated from customers on an
annual contractual basis. Recurring revenue amounts to
approximately 55% (2019: 55%) of continuing revenue, which is
revenue generated annually from sales to existing customers.
All revenues are recognised over the period of the contract,
unless our only performance obligation is to license or re-license
a customer's existing user without any further obligations, in
which case the revenue is recognised upon completion of the
obligation.
All contracts are issued with commercial payment terms without
any unusual financial or deferred arrangements and do not include
any amounts of variable consideration that are constrained.
The Group's total outstanding contracted performance obligations
at 31 October 2020 was GBP60,506,000 and it is anticipated that 75%
of this will be recognised as revenue in FY21 and 15% in FY22.
*The Software BU sub-total has been included within the FY19
figures in order to provide a comparison to the FY20 figures. No
figures have been restated as a result of this categorisation.
** UK Databases has been reclassified from Idox Content to Idox
Software (Public Sector Software) in 2019 to enable appropriate
year-on-year comparison.
The segment results by business unit for the year ended 31
October 2020:
PSS EIM SOFTWARE CONTENT Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 48,426 8,858 57,284 10,733 68,017
-------- -------- --------- -------- --------
Earnings before depreciation,
amortisation, restructuring,
acquisition costs, impairment,
financing costs and share
option costs 16,599 1,988 18,587 997 19,584
-------- -------- --------- -------- --------
Depreciation (708) (83) (791) (26) (817)
Depreciation - right-of-use
assets (617) (89) (706) (534) (1,240)
Amortisation - software
licences, customer lists,
order backlog and R&D (3,803) (753) (4,556) (269) (4,825)
Amortisation - acquired
intangibles (3,570) (440) (4,010) (447) (4,457)
Restructuring costs (1,652) (96) (1,748) (90) (1,838)
Acquisition costs (125) - (125) - (125)
Share option costs (1,004) - (1,004) (53) (1,057)
-------- -------- --------- -------- --------
Adjusted segment operating
profit / (loss) 5,120 527 5,647 (422) 5,225
-------- -------- --------- -------- --------
Financing costs (306)
Finance income 181
Finance costs (2,398)
--------
Profit before taxation 2,702
--------
The corporate recharge to the business unit EBITDA is allocated
on a head count basis.
The segment results by business unit for the year ended 31
October 2019:
Continuing Discontinued
Operations Operations
PSS** EIM SOFTWARE* CONTENT** Total Digital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 44,925 9,170 54,095 11,397 65,492 - 65,492
--------- --------- ------------ ------------ ------------ ------------- ---------
Earnings
before depreciation,
amortisation,
restructuring,
acquisition
costs, impairment,
financing
costs and
share option
costs 12,391 1,410 13,801 560 14,361 - 14,361
--------- --------- ------------ ------------ ------------ ------------- ---------
Depreciation (720) (93) (813) (26) (839) - (839)
Amortisation
- software
licences,
customer
lists, order
backlog and
R&D (2,991) (772) (3,763) (340) (4,103) - (4,103)
Amortisation
- acquired
intangibles (3,270) (440) (3,710) (476) (4,186) - (4,186)
Restructuring
costs (1,613) (30) (1,643) (512) (2,155) - (2,155)
Acquisition
costs (174) - (174) - (174) - (174)
Share option
costs (850) - (850) (9) (859) - (859)
--------- --------- ------------ ------------ ------------ ------------- ---------
Adjusted
segment operating
profit 2,773 75 2,848 (803) 2,045 - 2,045
--------- --------- ------------ ------------ ------------ ------------- ---------
Financing
costs (368) - (368)
Loss from
the sale
of discontinued
operations - (602) (602)
Finance income 172 - 172
Finance costs (1,874) - (1,874)
------------ ------------- ---------
Loss before
taxation (25) (602) (627)
------------ ------------- ---------
*The Software BU sub-total has been included within the FY19
figures in order to provide a comparison to the FY20 figures. No
figures have been restated as a result of this categorisation.
** UK Databases has been reclassified from Idox Content to Idox
Software (Public Sector Software) in 2019 to enable appropriate
year-on-year comparison.
5 DISCONTINUED OPERATIONS
On 12 September 2018 the Group resolved to seek to dispose of
the Digital division which carried out the Groups digital
consultancy operations. The disposal was effected in order to limit
the Group's exposure to future losses and liabilities and improve
the working capital position. The disposal was completed on 2nd
November 2018, on which date control of the Digital division was
passed to the acquirer.
The results of the discontinued operations, which have been
excluded in the consolidated statement of comprehensive income,
were as follows:
2020 2019
GBP000 GBP000
Revenue - -
Expenses - -
Loss on Disposal - (602)
Loss before tax - (602)
Attributable tax credit - -
Net loss attributable to discontinued operations - (602)
======= =======
6 EARNINGS PER SHARE
The earnings per ordinary 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:
Continuing Operations 2020 2019
GBP000 GBP000
Profit / (loss) for the year 1,276 (1,104)
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 439,245,132 420,788,528
----------- -----------
Basic earnings per share 0.29p (0.26)p
=========== ===========
Weighted average number of shares in issue 439,245,132 420,788,528
Add back:
Dilutive share options 7,279,721 2,215,726
ESOP shares - 1,316,142
----------- -----------
Weighted average allotted, called up and
fully paid share capital 446,524,853 424,320,396
----------- -----------
Diluted earnings per share
Diluted earnings per share 0.29p (0.26)p
=========== ===========
Diluted earnings per share cannot further dilute the loss
attributable to the owners, therefore, diluted earnings per share
during a loss making period is the same as basic earnings per
share.
2020 2019
Adjusted earnings per share GBP000 GBP000
Profit / (loss) for the year 1,276 (1,104)
Add back:
Amortisation on acquired intangibles 4,457 4,215
Acquisition costs 125 174
Restructuring costs 1,838 2,155
Financing costs 306 368
Share option costs 1,057 859
Tax effect (1,122) (1,210)
------------ ------------
Adjusted profit for year 7,937 5,457
============ ============
Weighted average number of shares in issue
- basic 439,245,132 420,788,528
Weighted average number of shares in issue
- diluted 446,524,853 424,320,396
Adjusted earnings per share 1.81p 1.30p
Adjusted diluted earnings per share 1.78p 1.29p
Discontinued Operations 2020 2019
GBP000 GBP000
Loss for the year - (602)
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 439,245,132 420,788,528
----------- -----------
Basic earnings per share - (0.14)p
=========== ===========
Weighted average number of shares in issue 439,245,132 420,788,528
Add back:
Dilutive share options 7,279,721 2,215,726
ESOP shares - 1,316,142
----------- -----------
Weighted average allotted, called up and
fully paid share capital 446,524,853 424,320,396
----------- -----------
Diluted earnings per share
Diluted earnings per share - (0.14)p
=========== ===========
Total Operations 2020 2019
GBP000 GBP000
Profit / (loss) for the year 1,276 (1,706)
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 439,245,132 420,788,528
----------- -----------
Basic earnings per share 0.29p (0.41)p
=========== ===========
Weighted average number of shares in issue 439,245,132 420,788,528
Add back:
Dilutive share options 7,279,721 2,215,726
ESOP shares - 1,316,142
----------- -----------
Weighted average allotted, called up and
fully paid share capital 446,524,853 424,320,396
----------- -----------
Diluted earnings per share
Diluted earnings per share 0.29p (0.41)p
=========== ===========
2020 2019
Adjusted earnings per share GBP000 GBP000
Profit / (loss) for the year 1,276 (1,706)
Add back:
Amortisation on acquired intangibles 4,457 4,215
Acquisition costs 125 174
Restructuring costs 1,838 2,155
Financing costs 306 368
Share option costs 1,057 859
Tax effect (1,122) (1,210)
------------ ------------
Adjusted profit for year 7,937 4,855
============ ============
Weighted average number of shares in issue
- basic 439,245,132 420,788,528
Weighted average number of shares in issue
- diluted 446,524,853 424,320,396
Adjusted earnings per share 1.81p 1.15p
Adjusted diluted earnings per share 1.78p 1.14p
7 INTANGIBLE ASSETS
Customer
relation- Trade Develop-ment Order Customer
Goodwill ships names Software costs backlog lists Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 November 2018 77,564 30,807 12,593 16,038 14,116 311 - 151,429
Foreign exchange - - - - 22 9 - 31
Additions 8 - - 2,206 4,351 - 273 6,838
Additions on acquisition 2,269 1,151 - 4,448 799 - - 8,667
Disposals - - - (5) - - - (5)
At 31 October 2019 79,841 31,958 12,593 22,687 19,288 320 273 166,960
Foreign exchange - - - (9) 27 (8) 5 15
Additions - - - 380 4,672 - - 5,052
Fair Value (113) - - - - - - (113)
At 31 October 2020 79,728 31,958 12,593 23,058 23,987 312 278 171,914
======== ========== ====== ======== ============ ======== ======== =======
Amortisation
At 1 November 2018 31,709 17,477 7,868 10,053 5,369 166 - 72,642
Foreign exchange - 2 - - 17 7 (1) 25
Amortisation for the
year - 1,663 697 2,512 3,172 85 160 8,289
At 31 October 2019 31,709 19,142 8,565 12,565 8,558 258 159 80,956
Foreign exchange - - - (9) 29 (7) 11 24
Amortisation for the
year - 1,685 675 2,998 3,755 61 108 9,282
At 31 October 2020 31,709 20,827 9,240 15,554 12,342 312 278 90,262
======== ========== ====== ======== ============ ======== ======== =======
Carrying amount at
31 October 2020 48,019 11,131 3,353 7,504 11,645 - - 81,652
======== ========== ====== ======== ============ ======== ======== =======
Carrying amount at
31 October 2019 48,132 12,816 4,028 10,122 10,730 62 114 86,004
======== ========== ====== ======== ============ ======== ======== =======
Average remaining amortisation
period (years)
31 October 2020 n/a 6.6 5.0 2.5 3.1 - -
31 October 2019 n/a 7.7 5.8 4.0 3.4 0.7 0.7
During the year, goodwill and intangibles were reviewed for
impairment in accordance with IAS 36, 'Impairment of Assets'. An
impairment charge of GBPNil (2019: GBPNil) was processed in the
year.
Fair value adjustments are in relation to the finalisation of
acquisition accounting in respect of Tascomi Limited.
Impairment test for goodwill
For this review, goodwill was allocated to individual Cash
Generating Units (CGUs) on the basis of the Group's operations as
disclosed in the segmental analysis. As the Board reviews results
on a segmental level, the Group monitors goodwill on the same
basis.
The carrying value of goodwill by each CGU is as follows:
2020 2019
Cash Generating Units GBP000 GBP000
- Public Sector 30,624 30,737
- Engineering Information Management 9,974 9,974
------ ------
Idox Software 40,598 40,711
------ ------
Idox Content 7,421 7,421
------ ------
48,019 48,132
====== ======
The recoverable amount of all CGUs has been determined using
value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management
covering the next five financial years. The key assumptions used in
the financial budgets relate to revenue and EBITDA growth targets.
Cash flows beyond this period are extrapolated using the estimated
growth rates stated below. Growth rates are reviewed in line with
historic actuals to ensure reasonableness and are based on an
increase in market share.
For value-in-use calculations, the growth rates and margins used
to estimate future performance are based on financial year 2021
budgets (as approved by the Board) which is management's best
estimate of short-term performance based on an assessment of market
opportunities and macro-economic conditions. In the year to 31
October 2020, the Weighted Average Cost of Capital for each CGU has
been used as an appropriate discount rate to apply to cash flows.
The same basis was used in the year to 31 October 2019.
The assumptions used for the value-in-use calculations are as
follows and are considered appropriate for each of the risk
profiles of the respective CGUs:
Discount Compound Long term Discount Growth
Cash Generating rate Annual Growth growth rate rate rate Prior
Units Current year Rate Current year Prior year year
Idox Software
(excluding EIM) 11.8% 10.9% 1.5% 12.4% 1.5%
Idox Software
(EIM only) 12.7% 21.2% 1.5% 13.1% 1.5%
Idox Content 12.7% 6.3% 1.5% 11.8% 1.5%
Individual Weighted Average Costs of Capital were calculated for
each CGU and adjusted for the market's assessment of the risks
attaching to each CGUs cash flows. The Weighted Average Cost of
Capital is recalculated at each period end.
Management considered the level of intangible assets within the
Group in comparison to the future budgets and have processed an
impairment charge of GBPNil within the year (2019: GBPNil).
The Group has conducted sensitivity analysis on the impairment
test of each CGU and the group of units carrying value.
Sensitivities have been run on the discount rate applied and
management are satisfied that a reasonable increase in the discount
rate used would not lead to the carrying amount of each CGU
exceeding the recoverable amount.
Sensitivities have also been run on cash flow forecasts for all
CGUs EBITDA by 10%. Management are satisfied that this change would
not lead to the carrying amount of each CGU exceeding the
recoverable amount.
Sensitivities have also been run on cash flow forecasts for all
CGUs reducing the growth rate to 0%. Management are satisfied that
this change would not lead to the carrying amount of each CGU
exceeding the recoverable amount.
Management have further considered the CGUs for which prior
period impairments were recorded to reduce the value-in-use of
those CGUs to their recoverable amount, and how such carrying
values are subject to the current year sensitivities noted
above.
Whilst the current year impairment reviews and sensitivities
have not provided any indicators of further impairment on these
assets, management have considered whether a reversal of the prior
period impairment is required and concluded this is not appropriate
at this time due to the ongoing transformation and improvement of
those businesses.
8 POST BALANCE SHEET EVENTS
The national lockdowns that occurred in January 2021 as a result
of the Covid-19 pandemic and the finalisation of the Brexit deal
have had no material impact on the Group.
9 ADDITIONAL INFORMATION
Related Party Transactions
No related party transactions have taken place during the year
that have materially affected the financial position or performance
of the Company.
Principal Risks and Uncertainties
The principal risk and uncertainties facing the Group together
with the actions being taken to mitigate them and future potential
items for consideration are set out in the Strategic Report section
of the Annual Financial Report 2020.
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END
FR TTMFTMTAMMJB
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February 02, 2021 02:00 ET (07:00 GMT)
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