25 January 2024
Idox plc
('Idox' or the 'Group' or the 'Company')
FY23
Results
"A strong financial
performance in line with expectations"
Idox plc (AIM: IDOX), a leading
supplier of specialist information management software and
geospatial data solutions to the public and asset intensive
sectors, is pleased to report its financial results for the year
ended 31 October 2023.
Financial highlights
Reconciliations between adjusted and
statutory earnings are contained at the end of this
announcement.
Revenue
· Revenue increased by 11% to £73.3m (2022: £66.2m), driven by
growth in Land, Property & Public Protection (LPPP).
· Recurring revenue1 increased by 8% to £43.6m (2022:
£40.5m), accounting for 60% of the Group's total revenue (2022:
61%).
Profit
· Adjusted2 EBITDA increased by 9% to £24.5m (2022:
£22.5m).
· Adjusted2 EBITDA margin stable at 33% (2022:
34%).
· Statutory operating profit increased by 8% to £9.3m (2022:
£8.7m).
· Statutory operating profit margin unchanged at 13% (2022:
13%).
· Statutory profit before tax increased by 18% to £7.8m (2022:
£6.6m).
· Adjusted3 diluted EPS increased by 7% to 2.62p
(2022: 2.44p).
· Statutory diluted EPS decreased by 1% to 1.23p (2022:
1.24p).
Cash and debt
· Net
debt4 at 31 October 2023 was £14.7m (2022: £6.7m),
following payment of the initial cash consideration (£14.8m) for
the Emapsite acquisition in August 2023.
· Cash
generated from operating activities before taxation represented 82%
of Adjusted EBITDA (2022: 81%).
· Free
cashflow5 generation of £9.1m (2022: £7.2m).
·
Refinancing completed in
October 2023 for a £75m revolving credit facility and £45m
accordion, providing the Group with significantly increased
resources to fund strategic M&A ambitions.
Dividend
· Proposed final dividend increased by 20% to 0.6p per share
(2022: 0.5p), reflecting our strong financial position and our
confidence in the future.
Operational highlights
Another strong performance in line
with expectations despite the backdrop of continued geo-political
and macro-economic uncertainty:
· Record
full year order intake up 10% on FY22 to £82m, reflecting our
high-quality customer base and, providing good visibility into
FY24.
· New
divisional structure has created a much better focus for our
customer engagement, product strategy and marketing, delivering an
improved sales performance.
· Idox's
Geospatial capabilities were further enhanced with the acquisition
of Emapsite and the continued development of thinkWhere &
Landhawk which have continued to onboard new projects and
customers.
· Upscaling and embedding our India operations across the
business continued throughout the year, with colleague growth in
India up over 20% as we build upon our strong capabilities and
future development plan.
·
Customer engagement and
communication has been a key part of our work in 2023 focussing on
our strong customer relationships and market position.
Current trading and outlook
·
With a strong foundation
in property and asset-based solutions and data services we will
continue to invest selectively to enhance and grow our
capabilities, building on the Group's already strong recurring
revenues.
·
Attractive M&A
pipeline with significant financial resources for larger, accretive
and enhancing acquisitions at appropriate valuations.
·
Encouraging start to
FY24, with trading in line with the Board's expectations and we
remain confident about the outlook for the year.
David Meaden, Chief Executive of Idox said:
"We are
pleased that Idox has delivered double-digit revenue growth and
seen an increase in recurring revenue and order intake this year.
Our work in previous years, refocusing Idox as a software business
and improving the quality of the Group, has created a fly-wheel
effect where we continue to deliver consistently strong margins and
cash generation.
The acquisition of Emapsite has
strengthened our geospatial offering, providing opportunities to
cross sell our existing capabilities to new markets and deliver
high quality data services to our existing clients.
We have made an encouraging start to
FY24, trading in line with the Board's expectations. We will
continue to invest selectively to grow our capabilities and support
our customers.
We have increased financial
resources at our disposal for accretive and enhancing acquisitions
and have shown that this can be delivered successfully. Whilst
recognising this is likely to be an election year, we remain
confident about the outlook for the year ahead."
There will be a webcast at
11:00am UK time today for analysts and investors. To register for
the webcast please contact MHP Communications at
idox@mhpgroup.com
For
further information please contact:
Idox
plc
|
+44 (0)
870 333 7101
|
Chris Stone, Non-Executive
Chairman
David Meaden, Chief Executive Officer
Anoop Kang, Chief Financial Officer
|
investorrelations@idoxgroup.com
|
|
|
Peel
Hunt LLP (NOMAD and Broker)
|
+44 (0) 20
7418 8900
|
Paul Gillam Michael Burke
|
|
|
|
MHP
Communications
|
+ 44 (0)
20 3128 8100
|
Reg Hoare
Ollie Hoare
Matthew Taylor
|
idox@mhpgroup.com
|
|
|
About Idox plc
For more information
see www.idoxplc.com
@Idoxgroup
Alternative Performance Measures
The Group uses these APMs, which are
not defined or specified under International Financial Reporting
Standards, as 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.
1 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.
2 Adjusted EBITDA (earnings before interest, tax, depreciation
and amortisation) 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 commonly used measure in
the industry and how management and our shareholders track
performance.
3 Adjusted EPS excludes amortisation on acquired intangibles,
restructuring, financing, impairment, share option and acquisition
costs.
4 Net debt is defined as the aggregation of cash, bank
borrowings and long-term bond. This differs from a similar measure
under IFRS, which would also include lease liabilities as debt. The
definition used is consistent with that used within the Group's
banking arrangements.
5 Free cashflow is defined as net cashflow from operating
activities after taxation less capital expenditure and lease
payments.
Annual financial report announcement
The extracts below are from the
Annual Financial Report 2023. Note references refer to notes
included in this Annual Financial Report Announcement
2023.
Chair's statement
Introduction
I am very pleased to be able to
report another positive set of results to all of our shareholders
and other stakeholders for the financial year ending 31 October
2023. This is the 5th year in a row that we have grown revenues and
Adjusted EBITDA, with very good cash generation. This is an
excellent track record delivered by the whole Idox team. The
business has maintained its trajectory of improving our core,
organic metrics whilst continuing with a very focused acquisition
programme. All the acquisitions that we have made have grown our
addressable market so that we can continue to find new growth
opportunities whilst continuing to benefit from the solid
foundations of our strong core market positions. This strength is
evidenced through our recurring revenue, our margins, and cash
generation.
This has been a year of stability in
the Boardroom, with no changes to our Executive and Non-Executive
Directors. However, we continue to enjoy a healthy level of
challenge and debate. We have made sure that the other
Non-Executive Directors (NEDs) and I engage directly with
shareholders on a regular basis, taking on board their feedback and
ensuring that their views are reflected in the direction of the
business. We have also engaged independent external advisors to
review our Board practices and our remuneration
policies.
2023 has been a quieter year in the
number of acquisitions that we have completed, but we were pleased
to be able to complete the acquisition of Emapsite in August.
Emapsite is an excellent business, and their offerings dovetail
well with those of our previous acquisitions and our original
capabilities in the geospatial data management space. The
acquisitions of Aligned Assets, thinkWhere, exeGesIS, LandHawk and
now Emapsite put Idox in a very strong position to build exciting
new revenue streams around our core assets in property data
management. The market opportunity created by the combination of
these capabilities is large, and it will be a major focus of
investment for the Group in the years to come.
It was also pleasing to see the
continuing impact of our earlier acquisitions, with our Cloud
solution, built on the Tascomi platform that we acquired in 2019
delivering 18 new customer wins and enabling the migration of eight
existing customers from an on-premise solution to our Cloud
offering.
Performance towards achieving our
internal goal of 35% Adjusted EBITDA margin was stable at 33%. We
still have some improvements to come in that area through the
benefits of the integration of our previous acquisitions, which are
not yet fully realised. However, revenue growth of 11%, with
recurring revenue up 8% over the period, delivering a 9% increase
in full year Adjusted EBITDA is a pleasing set of results. To be
able to deliver such a strong core performance whilst at the same
time increasing the addressable market opportunity is an excellent
performance. As we move into the new financial year, we can expect
to see continued growth in our core businesses enhanced by the
acquisitions we have already made. We will also continue to target
further acquisitions to allow us to continue to leverage the
platform that we have created through our operational
investments.
Like nearly every business, Idox is
continuing to work on finding the optimal working pattern for our
colleagues in the post-covid world. We have to make sure that we
have the right blend of home and office work, and essential and
non-essential travel, that allows our colleagues to be efficient
but also continue to benefit from the lifelong development and
learning opportunities that are an important part of corporate,
office life. Employers need to work hard and creatively to enable
appropriate new ways of working that meet all these new
requirements without allowing a drop in the most important thing,
excellent customer service. I have been impressed by the continuing
positive attitudes and behaviours of all our colleagues at Idox,
which have enabled this ongoing strong performance. We will
continue to work to ensure that we maintain the right blend of work
experience that meets our colleagues needs whilst also ensuring the
continuous development of our skills and capabilities.
Cultural development is an essential
part of this value. It is not only important for the employees
themselves that we create a strong and thriving culture, where all
of our colleagues feel valued and appreciated, but it is also an
essential component in delivering value to our customers. It is
clear to me that customers know when they are supported by an
organisation that has a strong and positive culture, and indeed
cultural alignment can be a very strong driver of customer
satisfaction. Idox has a very clear set of shared values, that hold
quality, customer value, owning commitments and "doing the right
thing" as essential and non-negotiable elements of the Idox
experience. It is with these values in mind that we continue to
develop talent within the business creating an environment where
growth and innovation is a natural output of our work
together.
Group Strategy
The Group continued its focus on
providing digital solutions and services to the LPPP public sector
customers in the United Kingdom, complemented by our Assets &
Communities sectors servicing customers across the world. However,
we are increasingly focused on the broader geospatial data market.
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. The
identification of attractive acquisition opportunities that can
enhance the Group's scale and capabilities, and the integration of
completed acquisitions, is a key part of management focus and
effort.
Board
There has been no change to the
Board in FY23, as reported above. I consider the effectiveness of
the Board, which includes the contributions of the individual board
members, throughout the annual governance cycle. The current Board
members continue to collectively function in an efficient and
productive manner.
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.
Dividends
The Board has proposed an increased
final dividend of 0.6p (2022: 0.5p) for FY23. Subject to approval
at the AGM, the final dividend will be paid on 12 April 2024 to
shareholders on the register as at 2 April 2024. This decision was
reached after a full consideration of the continuing growth
opportunities before the business, our strong financial position
and our confidence in the future.
Summary and outlook
The financial results of the last
year reflect the increasing quality of the Idox business. We
operate in attractive markets, with strong market positions and
insights, and we have every confidence that we can continue the
excellent progress we have seen in FY23. The changes that we have
made in the last few years, to the team, our structure, systems,
and processes have delivered a major improvement in our financial
performance. As a result, we have enjoyed improved stability in
performance and confidence for the future, based on strongly
improving orderbooks and levels of recurring revenue. On top of
this, we can now point to exciting growth opportunities in the
geospatial data markets. I am delighted to have had the opportunity
to work with all my Idox colleagues during a period of such
tremendous improvement and I look forward to continuing that work
in delivering growing value to all our stakeholders.
Idox stakeholders are fortunate that
such a talented group of people, including our recently joined
colleagues from Emapsite, have chosen Idox as a place they want to
work. Their expertise and diligence have continued to deliver the
support and value that our customers expect, and I am pleased to
extend my thanks to all of them.
Chris Stone
Chair
Chief Executive's review
Continuing progress
The Chair has reported on the
significant progress at Idox over the past five years. This has
been delivered through a well-defined strategy, articulated through
our Four Pillars and Walk, Run, Fly phases.
By refocussing Idox as a software
business, with leading positions in our chosen markets, we have
substantially improved the overall quality of our business. This
clear focus has delivered strong margins and cash generated by
operations, and a stronger balance sheet.
From this position, it seems obvious
that we would have achieved this substantially improved
performance, but of course, this achievement was not a given. It
has required discipline and years of continuous improvements and
perseverance to create a fly wheel effect, delivering the positive
momentum we now have.
The credit for this improvement
should be given to the teams across Idox that have committed
themselves to the journey and for the high quality of work and
service that they provide each day. In turn, we have supported a
powerful leadership and mentoring programme, alongside a wide range
of development and common interest-based programmes suggested by
our teams, which have focussed on building affinity groups and
supportive allies across the business who are passionate about
championing inclusion and belonging for all our
colleagues.
When I first arrived as CEO, I could
see a tremendous amount of work being undertaken across the
business, but the results did not reflect the dedication or efforts
of our teams. Today, I feel that our efforts are being reflected in
our operational and financial performance and I am grateful to all
our teams that have contributed so positively to our ongoing
success.
We continue to be a 'rule of 40'
business, where the combination of revenue growth rate plus
Adjusted EBITDA margin equates to forty per cent, or more, and I am
pleased that we continued to deliver against this goal with revenue
growth at 11% and Adjusted EBITDA margin at 33%.
We are now at the natural conclusion
of the walk, run and fly strategy and we are excited for the
future, based upon the strong foundations we have established. We
look forward to fortifying the foundations we have built and
cultivating our future trajectory.
Fortifying the foundations: focus on the
future
Over the past 12 months we have
significantly increased our recurring revenue (8%) and sales order
intake (10%), providing greater visibility of future
revenues.
We should acknowledge that the
conditions surrounding several of the markets in which we operate
have been challenging. The higher inflationary environment, along
with the continued uncertainty and disruption from global conflicts
and higher interest rates have impacted confidence and created some
uncertainty over long-term Government taxation and spending
plans.
Several local authorities have
signalled they are finding it more difficult to run operations with
a balanced budget and we have seen a small number of Councils issue
Section 114 notices, indicating their need to restructure
operations and temporarily restrict spending on new projects.
However, faced with these challenges, our clients look to software
and technology solutions to improve automation, insight, and
efficiency in their operations. We take great pride in providing
the software engines that drive our local authority clients forward
and we are delighted that they continue to build their future
software and data strategies around them. As long-term partners in
our markets, retention across all our solutions and clients remains
very high.
In addition to our core markets, we
are focussed on delivering against new software and data
opportunities in associated addressable markets. Despite the
current economic challenges, we believe the next decade will bring
significant opportunities for geospatial software and data as well
as for software and data that connect the wider eco-system of local
authorities, planners, private developers, land agents,
construction companies, estate agents, conveyancers and others who
need to access land and property data and processes.
As such, we were delighted to
acquire the Emapsite business and to welcome the team to Idox where
they add to our substantial geospatial capabilities built through
the acquisition of thinkWhere, LandHawk, Aligned Assets and
exeGesIS. Importantly, the acquisition of Emapsite provides us with
the opportunity to cross sell our existing capabilities to new
markets and deliver high quality data services to our existing
clients.
Cultivating our future trajectory: supporting
growth
During the year, we increased the
capital available to the Group for M&A by entering a new,
larger revolving credit facility and accordion of £75m and £45m
respectively. Following a rigorous process, we are pleased to
continue the positive relationship with our banking partners, HSBC
Innovation Bank, NatWest and Santander. We invest our time in these
relationships and feel that the engagement has helped them
understand our strategic intent, while allowing us to access their
knowledge pools more effectively to the benefit of all parties. We
are grateful for their continued support.
Further scale in our operations
would provide more scope for increasing growth rates and for
further margin improvement, leveraging our sales and marketing,
software development and operations to add real value to
shareholders and the markets we serve. We continue to pursue
several acquisition opportunities that would contribute greater
scale and capabilities to the Group, always mindful of their
alignment with our strategy and at the same time, maintaining a
disciplined approach to valuation.
People
We endeavour to make Idox a great
place to work and a place where team members can meet their career
aspirations. Our collective ambition also demands that we are an
attractive business for new talent that can raise the bar on what
can be expected and delivered. As such, we prioritise communication
and engagement across the Group. The CEO Broadcasts are a
significant part of that pillar and are well attended. Our 'Dare to
be Different' survey, aimed at making Idox an inclusive workplace
allowing everyone to be their best selves has also been well
supported and shaped much of our thinking in areas such as work
support and recruitment practice. Alongside our Workplace Wellbeing
team and Idox Elevate, the networks that have come together to
support Pride@Idox and Neurodiversity@Idox are designed to raise
awareness of the issues faced by these communities, share learning
and understanding of how to be inclusive to those that identify as
such, and to provide a safe space for colleagues to converse
confidentially.
Outlook
We have made an encouraging start to
FY24, trading in line with the Board's expectations. We will
continue to invest selectively to grow our capabilities and support
our customers.
We have increased financial
resources at our disposal for larger, accretive and enhancing
acquisitions and have shown that this can be delivered
successfully. We remain confident about the outlook for the year
ahead.
David Meaden
Chief Executive Officer
Chief Operating Officer's review
Overview
I am pleased to provide an
operational update and to report a successful year of progress at
Idox.
The divisional structure announced
last year has delivered a focussed platform for clear commercial
and strategic ownership for business units. Within each division we
now have strong leadership and a clear market focus, with
responsibility for all sales, marketing, product strategy &
customer engagement. The appointed Divisional Directors have
exceptional domain expertise and experience in each of the
operating areas and have helped provide a focus for the business
throughout the year whilst also building long term strategies to
meet our future growth aspirations.
We have scaled the Group
operationally across service horizontals too, including
engineering, customer success & our offshore operations in
India. This has improved our performance, utilisation levels and
access to shared technologies and resources which is leading to
better outcomes for our customers and improving our overall
customer experience and effectiveness.
At Idox, we have successfully
maintained an operating model with colleagues working in a hybrid
capacity which sees our colleagues working from both office
locations and home where roles allow. We also recognise the
significant benefits of working closely with both colleagues and
customers face-to-face, which we have seen much more of throughout
the last 12-month period.
We continue to champion our Four
Pillars strategy to underpin our ongoing operations; it ensures
that our decision making remains correctly balanced when making key
decisions within the business.
Revenue
We continue to focus on long-term
sustainable growth across the business.
The divisional structure has ensured
that we operate with a targeted emphasis on the quality of
revenues, and we have strategic alignment of product strategy with
the needs and requirements of our customers helping to drive
this.
We operate with strong and robust
processes and business controls to ensure that order intake and
subsequent revenues are not only appropriate and in line with our
policy and core values but also build solutions and commercial
approaches to strengthen on our annually recurring revenues and
long-term value.
This approach has helped deliver a
growth rate of 8% for annual recurring revenues across the
Group.
This year we welcomed 177 new
organic customers to the Group and saw our overall order intake
grow to over £82m (+10%), which is ahead of our revenues for FY23;
building orderbook and securing future revenues.
In the Land, Property & Public
Sector Division, we lead the market in the provision of SaaS
platforms for the built environment & public protection
(including Licencing and Trading Standards) through our Idox Cloud
solution, securing 18 New Customers to our service. New customers
to the platform included Harrow Council, Conwy County Borough
Council and Blackburn with Darwen Borough Council. We have also
experienced strong and continued conversion from Idox legacy
platforms, with some long standing customers converting to Idox
Cloud including Rushmoor Borough Council, Royal Borough of Windsor
& Maidenhead and Dorset Council. This all made for a pleasing
performance for Idox Cloud in FY23, with sales order intake up 25%,
revenue up 26% and recurring revenue up over 30% when compared to
FY22.
The provision of cloud services to
our existing customer base also performed strongly in FY23 with
many taking advantage of our private cloud facilities to provide a
secure service for existing platforms, including East Lothian
Council and Norwich City Council.
Other areas of the Land, Property
& Public Protection Division performed well too. Address
Management order intake was up over 29% by securing key deals
across several markets, including Cadent Gas in the utilities
sector. In our specialist Countryside Access Management solution we
saw key wins with Snowdonia National Park Authority and some
significant projects with Natural England and the National Trust
where our specialist solutions and knowledge are bringing together
complex data and GIS capabilities.
In our Geospatial offering, the
acquisition of Emapsite significantly extended our sales
capabilities and market reach, including a significant customer
base. This acquisition also improved our access data and software
experience, adding to our already growing knowledge and Geospatial
expertise.
Progress and sales have remained
strong in Emapsite over the last 10-weeks of the year, with our
largest customer for geospatial data services, CityFibre, agreeing
new contracts for the development of its fibre network planning
insights programme and support for their statutory roadwork
management obligations. We also saw new agreements for Scottish
Power Renewables, Realyse and Wales & West Utilities, who are
leveraging our unique Ordinance Survey data, mapping and addressing
insights.
thinkWhere continued to provide
Geospatial services throughout the year for some of the most
complex and demanding projects, underpinned by our GIS solution
Ground Mapper. This included new and exciting projects at Tillhill
Forestry, Eurogeographics & National Collection of Ariel
Photography.
thinkWhere revenues and order intake
were up significantly on the previous year, with a number of new
projects secured. In addition to the continued maintenance of its
long-term relationships with Savills, British Library and other
customers, this helped build momentum throughout FY23, growing
recurring revenue YoY by 21% and building a strong orderbook for
FY24.
Our Communities Division saw good
progress in our Social Care solutions and services with revenues up
on prior years performance by 15%. New wins to the solutions
included City of Bradford Metropolitan Borough Council and
Doncaster Metropolitan Borough Council as well as strong customer
retention. This strong performance was continued in our Sexual
Health solution 'Lilie', with recurring revenue up 10% on the prior
year, through our partnership work with providers, Virgin Care
Service, Brook and Cambridge Community Services.
In Elections, with the lack of any
major events or elections, we saw our overall revenues reduce by
26%, however, our customer renewal and re-sign strategy was strong,
with order intake up 30% compared to the previous year. We
continued to deliver on our strong relationship with Department for
Levelling Up Housing and Communities (DLUHC) too, for changes to
the overall election management systems, in accordance with
legislative changes. We also saw some strong improvement in the
quality of earnings across the revenues resulting in an increase in
margin despite the lower overall revenue performance.
Our Databases solutions continued to
attract new customers, particularly in higher education where our
ResearchConnect solution provides services, this led to Idox
securing over 136 new customers up 10% on the prior year and SaaS
revenues growing by over 14% across the databases
business.
The formation of the Assets division
has provided a great opportunity for shared technologies and
cross-sell between platforms. EIM revenues were up 4% on the
previous year, and new business sales were up over 16%, with 17 new
customers and the EIM orderbook is up significantly (17%) going
into FY24. New names included impressive projects with Elecnor, VME
Process Inc. and Port Praski, as well as continued support from
long-term customers, Wood Group, Duke Energy Corporation and SNCF.
Our partnership programs in the Middle East, North Africa and parts
of Europe have delivered new customers and programmes which we
expect to continue in FY24.
Late FY23 saw the launch of several
programmes into the NHS markets for specific benefit cases for the
iAssets tracking solution: using the latest technologies,
incorporating IOT, Bluetooth and 4G tracking and targeting specific
equipment. Revenues for iFit were up 6% and recurring revenue
improved 8% on the prior year, helped through a strong retention
strategy, with renewals and re-signs up 9% on FY22.
Despite some of the economic
pressures of the Facilities Management markets as businesses
rationalise their property portfolios, we have seen small but
continued progress with the CAFM solution, with recurring revenue
growing at 3% in FY23. There are high expectations for the
impending release of the new CAFM version 12 with advanced orders
already in the orderbook for completion in the new year.
Margins
In FY23 the Adjusted EBITDA margin
remained similar to the previous year at 33% (2022: 34%) and we
recorded a statutory profit before tax of £7.8m (2022: £6.6m) up
18% on the prior year and representing a statutory profit margin of
11% (2022: 10%).
We continue to invest in our people
and technology at Idox, to help drive improvements in margin and
overall operational performance. We have driven several initiatives
throughout FY23 which have helped improve our productivity and
creative output, with more technology developed and released than
in any of the previous years.
It has been very pleasing to see
that many colleagues who had previously attended our Leading
Together development programmes and mentoring have gone on to take
up new roles and positions across the business; this development of
our own internal talent pool and succession strategy continues to
create value for Idox through retention of our valuable
resources.
We continue to invest in our India
operations in Pune and our team now represents over 11% of Group
colleagues. We also maintain our strategy of extending our
capabilities in India to include all aspects of our back-office
functions.
Our new operational structure
ensures that we are leveraging the entire scale of the Group for
engineering, QA, professional services, customer support and other
back-office functions. This combination maximises value of our cost
base and resources and ensures that we have access to best practice
and technology throughout the Group.
Simplification
We continue with our efforts to
operate the Group as a simple and efficient business, investing in
technology to facilitate automation and streamline
processes.
The divisional structure provides
the leadership required to directly drive revenue growth and
strategic product alignment through bringing the appropriate market
knowledge and domain expertise. This creates an intimacy and
important understanding of the markets that we serve and ensures
that the solutions we are bringing to market meet the operational
needs of our customers, both now and in the future.
Improving and enhancing our overall
customer experience is one of our strategic goals. We have brought
together aspects of our delivery teams to ensure we have a seamless
customer experience from onboarding into our SaaS platforms to
ongoing maintenance and service delivery.
Internal systems are maintained to
help provide automation and enablement, improving our delivery,
consistency, efficiency and revenue predictability.
Collaboration between teams is
promoted and encouraged; this is working well from product
inception, through to development, QA, documentation and delivery.
Technology is used throughout this collaboration to stimulate and
enhance the experience for colleagues and customers
alike.
We have maintained our ongoing
commitment to high quality processes by renewing our ISO 9001
(Quality Management), ISO 14001 (Environmental Management), ISO
45001 (Occupational Health & Safety) and ISO 27001 (Information
Security Management) accreditations as well as achieving
certification for ISO 22301 (Business Continuity). I am also
pleased to report that Idox remains fully accredited with Cyber
Essential Plus, demonstrating our ongoing commitment to cyber
security and protection protocols.
Communication
We operate a communication strategy
across all our teams that takes consideration for the individuality
and needs of our colleagues to ensure that we have an approach that
embraces and reaches everyone. We communicate with openness and
transparency and always look to address any issues and challenges
with understanding and integrity.
We believe an open communication
strategy is a key contributor to a healthy and vibrant business
which actively engages colleagues and where all opinions are aired
and heard. Our CEO broadcasts have continued on a regular basis
this year, with support from other members of the Executive Team,
providing updates on programmes and progress as well as an open
engagement through Q&A.
Internal technology led "show &
tell" sessions have been well attended across the business,
providing insights and updates on the very latest technical
knowhow, including AI, Cyber Security and UX/UI evolution. We have
also led communication programmes across the divisional structure,
engaging and focussing on product strategy, market analysis and
customer successes stories.
We provide all colleagues with time
and resources to support charities and good causes, which we
believe allows people to reflect their own interests whilst
supporting Idox values to be a socially responsible and sustainable
business. Initiatives, though our Workplace Wellbeing programme,
provide support to our colleagues and help create support and
connectivity, we also encourage colleagues to initiate and drive
engagement across the business through shared interest. These have
continued to be very popular with colleagues again in FY23 and have
included photography groups, walking, cycling, knitting and other
hobbies and pastimes.
Customer engagement and
communication has been a key part of our work in 2023 focussing on
our strong customer relationships and market position. We use
technology to streamline our information about product strategies
and software roadmap and we have leveraged AI technologies to
improve learning and training services for our solutions. We
continue to invest in our direct people engagement and
communication strategy through our customer success and account
management teams, which we believe adds significant value to our
overall customer relationships.
Given our market position we are
regularly engaged with specific Government and industry groups,
where we can influence, inform and actively engage in future
changes and developments; this participation provides good early
insights and an advanced understanding of changes affecting the
industry and our customers.
The start to the new year has
progressed as expected and we see good opportunities for our
continued growth throughout FY24.
Jonathan Legdon
Chief Operating Officer
Financial review
In FY23 the Group delivered a strong
performance with double digit revenue growth coupled with solid
adjusted EBITDA growth and cash generation.
The Group established a new
divisional structure, effective from 1 November 2022. The new
structure comprising, Land, Property & Public Protection
(LPPP), Assets and Communities provides better market focus,
customer service and sharper sales execution. In accordance with
IFRS 8 Operating Segments, information is provided to the chief
operating decision maker, the Board of Directors, on this basis.
Accordingly, the Group has prepared its segmental disclosures in
the same manner. In addition, the Group has re-presented
comparative information in line with the new divisional
structure.
The following table sets out the
revenues and Adjusted EBITDA for each of the Group's segments from
its continuing activities:
|
|
2023
|
2022
|
Variance
|
|
|
£000
|
£000
|
£000
|
%
|
Revenue
|
|
|
|
|
|
- LPPP
|
|
43,413
|
35,073
|
8,340
|
24%
|
- Assets
|
|
14,845
|
14,835
|
10
|
0%
|
- Communities
|
|
15,019
|
16,276
|
(1,257)
|
(8%)
|
- Total
|
|
73,277
|
66,184
|
7,093
|
11%
|
|
|
|
|
|
|
Revenue split
|
|
|
|
|
|
- LPPP
|
|
59%
|
53%
|
|
|
- Assets
|
|
20%
|
22%
|
|
|
- Communities
|
|
21%
|
25%
|
|
|
- Total
|
|
100%
|
100%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
|
|
- LPPP
|
|
13,885
|
13,235
|
650
|
5%
|
- Assets
|
|
4,199
|
4,450
|
(251)
|
(6%)
|
- Communities
|
|
6,366
|
4,824
|
1,542
|
32%
|
- Total
|
|
24,450
|
22,509
|
1,941
|
9%
|
|
|
|
|
|
|
Adjusted EBITDA margin split
|
|
|
|
|
|
- LPPP
|
|
32%
|
38%
|
|
|
- Assets
|
|
28%
|
30%
|
|
|
- Communities
|
|
42%
|
30%
|
|
|
- Total
|
|
33%
|
34%
|
|
|
* Adjusted EBITDA is defined as
earnings before amortisation, depreciation, restructuring,
acquisition costs, impairment, financing costs and share option
costs.
Revenues
|
|
2023
|
2022
|
Variance
|
|
|
£000
|
£000
|
£000
|
%
|
Revenues
|
|
|
|
|
|
- Recurring (LPPP)
|
|
24,305
|
21,918
|
2,387
|
11%
|
- Recurring (Assets)
|
|
9,692
|
9,730
|
(38)
|
0%
|
- Recurring (Communities)
|
|
9,622
|
8,898
|
724
|
8%
|
- Total recurring
|
|
43,619
|
40,546
|
3,073
|
8%
|
|
|
|
|
|
|
- Non-recurring (LPPP)
|
|
19,108
|
13,155
|
5,953
|
45%
|
- Non-recurring (Assets)
|
|
5,153
|
5,105
|
48
|
1%
|
- Non-recurring
(Communities)
|
|
5,397
|
7,378
|
(1,981)
|
(27%)
|
- Total non-recurring
|
|
29,658
|
25,638
|
4,020
|
16%
|
|
|
|
|
|
|
- Total continuing revenue
|
|
73,277
|
66,184
|
7,093
|
11%
|
- Recurring*
|
|
60%
|
61%
|
|
|
- Non-recurring**
|
|
40%
|
39%
|
|
|
* 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.
Revenue from continuing operations
for the Group increased 11% in the year to £73.3m (2022: £66.2m).
LPPP was up 24% for the year at £43.4m (2022: £35.1m), Assets has
remained broadly flat with revenue of £14.8m (2022: £14.8m) and
Communities has decreased 8% to £15.0m (2022: £16.3m) as a result
of the cyclical nature of Elections related revenue.
Recurring revenues for the year
increased 8% from £40.5m to £43.6m and represented 60% (2022: 61%)
of the total continuing revenue. Within LPPP, recurring revenue
increased 11% to £24.3m (2022: £21.9m). Good growth in recurring
revenue across all areas was supported by a combination of new
customers, new services to existing customers and the impact of
inflation across Idox legacy platforms, cloud transitions and
address management solutions. The recurring revenues in Assets
remained stable at £9.7m (2022: £9.7m) with growth in our
facilities management and asset tracking solutions offsetting a
small reduction in our EIM solutions. Recurring revenues in
Communities improved 8% to £9.6m (2022: £8.9m), driven by growth in
the Databases solution.
Non-recurring revenues for the year
increased 16% to £29.7m (2022: £25.6m). Non-recurring revenue in
LPPP increased by 45% to £19.1m (2022: £13.2m), primarily driven by
a strong in year customer contract renewals and cloud transitions
in the year. In Assets, non-recurring revenue was up 1% to £5.2m
(2022: £5.1m) where growth in EIM solutions was offset by a
reduction in transport revenue. As expected, non-recurring revenue
in Communities was down 27% to £5.4m (2022: £7.4m) and driven by
the absence of any major election events in the UK and Malta in
2023.
Adjusted EBITDA increased by 9% to
£24.5m (2022: £22.5m), delivering a stable Adjusted EBITDA margin
of 33% (2022: 34%), despite the impact of a high inflationary
environment throughout 2023.
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.
Profit before taxation
The statutory profit before tax was
£7.8m (2022: £6.6m). The following table provides a reconciliation
between Adjusted EBITDA and statutory profit before taxation for
continuing operations.
|
|
2023
|
2022
|
Variance
|
|
|
£000
|
£000
|
£000
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
24,450
|
22,509
|
1,941
|
9%
|
|
|
|
|
|
|
Depreciation
|
|
(1,636)
|
(1,597)
|
(39)
|
2%
|
Amortisation - software licences and
R&D
|
|
(5,697)
|
(5,317)
|
(380)
|
7%
|
Amortisation - acquired
intangibles
|
|
(3,622)
|
(3,670)
|
48
|
(1%)
|
Restructuring costs
|
|
(378)
|
(470)
|
92
|
(20%)
|
Acquisition costs
|
|
(746)
|
(183)
|
(563)
|
308%
|
Financing costs
|
|
(396)
|
(30)
|
(366)
|
1,220%
|
Share option costs
|
|
(2,631)
|
(2,584)
|
(47)
|
2%
|
Net finance costs
|
|
(1,524)
|
(2,056)
|
532
|
(26%)
|
Profit before taxation
|
|
7,820
|
6,602
|
1,218
|
18%
|
Restructuring costs were £0.4m
(2022: £0.5m). The restructuring costs in the year are associated
with further simplifications of the Group structure and office
rationalisation initiatives.
Acquisition costs of £0.7m (2022:
£0.2m) relates to the acquisition of Emapsite during the year and
finalisation fees associated with the acquisition of Aligned Assets
and exeGesIS, with all payments associated with the acquisitions
now having been completed. The prior year were in relation to the
acquisition of LandHawk and finalisation fees associated with the
acquisition of Aligned Assets, thinkWhere and exeGesIS.
Financing costs of £396k (2022:
£30k) relate to the refinancing of the Group's revolving credit
facility (RCF). The prior year costs incurred were in relation to
annuals fee incurred as part of the RCF.
Share option costs of £2.6m (2022:
£2.6m) relate to the accounting charge for awards made under the
Group's Long-term Incentive Plan, in accordance with IFRS 2 -
Share-based Payments.
Net finance costs have decreased to
£1.5m (2022: £2.1m). Increased bank interest payable due to an
increased interest environment was more than offset by the impact
of a £0.3m positive foreign exchange movement (non-cash) on the
Euro denominated bond and other non-cash movements.
The Group continues to invest in
developing innovative technology solutions across the portfolio and
has capitalised development costs of £7.6m (2022: £6.6m). The
increase in the year is due to the full year impact of the FY22
acquisitions (£0.2m), with the remaining £0.8m being driven by an
increase in development work across the portfolio.
Taxation
The effective tax rate (ETR) on a
statutory basis for the year was 28.6% (2022: 16.4%).
Following the change in the statutory
corporation tax rate from April 2023 to 25%, the rate applicable to
the Group in FY23 was 22.5% due to the change occurring during the
financial year. The difference between the statutory rate of 22.5%
and the ETR of 28.6% is due to international losses arising in the
period and not recognised and expenses not
deductible for tax purposes. As a result, the ETR on an adjusted
basis moved from 22.5% to 24.4%.
Earnings per share and dividends
Adjusted basic earnings per share
for continuing operations increased 7% to 2.65p (2022: 2.48p) and
adjusted diluted earnings per share increased 7% to 2.62p (2022:
2.44p). Basic earnings per share for the year was down 2% at 1.24p
(FY22: 1.27p) and diluted earnings per share was down 1% at 1.23p
(FY22: 1.24p).
The Board proposes a final dividend
of 0.6p per share (2022: 0.5p), which represents a total dividend
for the year of 0.6p per share (2022: 0.5p), at a total cost of
£2.7m (2022: £2.3m).
Balance sheet and cash flows
The Group's net assets have
increased to £73.3m compared to £67.4m as at 31 October 2022. 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 2023
£000
|
|
|
Total Equity as per FY22 Financial
Report
|
67,416
|
Share option movements
|
2,592
|
Equity dividends paid
|
(2,268)
|
Profit for the year
|
5,582
|
Exchange gains on translation of
foreign operations
|
(45)
|
Total Equity as per FY23 Financial
Report
|
73,277
|
The Group continued to have good
cash generation in the year. Cash generated from operating
activities before taxation was £20.1m (FY22: £18.3m) and as a
percentage of Adjusted EBITDA was 82% (2022: 81%). The Group
generally continues to have high levels of adjusted EBITDA to cash
conversion.
Free cashflow for the year was £9.1m
(2022: £7.2m). Free cashflow has increased in the year due to the
improved profitability.
|
|
2023
|
2022
|
|
|
£000
|
£000
|
|
|
|
|
Net cashflow from operating
activities after taxation
|
|
18,599
|
15,647
|
Capitalisation and purchase of
tangible and intangible assets
|
|
(8,522)
|
(7,558)
|
Lease payments
|
|
(936)
|
(927)
|
Free cashflow
|
|
9,141
|
7,162
|
The Group ended the year with net
debt of £14.7m (2022: £6.7m), following payment of the initial
consideration of £14.8m in connection with the Emapsite
acquisition. Net debt comprised cash of £14.8m less bank borrowings
of £18.3m and the Maltese listed bond of £11.2m, which is due in
June 2025. We ended the year with a net debt to Adjusted EBITDA
ratio of 0.6 times (2022: 0.3 times) with significant headroom
against the Group's financial covenants.
In October 2023 the Group refinanced
with the National Westminster Bank plc, HSBC Innovation Bank
Limited and Santander UK plc. The facility comprises a revolving
credit facility of £75m and a £45m accordion and is committed until
October 2026, and represents a significant
increase on the previous facilities which consisted of a revolving
credit facility of £35m and £10m accordion, respectively.
The new facilities, which are on improved terms,
are for a three-year period with two extension options of one year
each. The Group retains significant
liquidity with cash and available committed bank facilities and
significant financial resources to pursue its M&A
strategy.
Anoop Kang
Chief Financial Officer
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share
capital
£000
|
Capital
redemption
reserve
£000
|
Share
premium
account
£000
|
Treasury
reserve
£000
|
Share
option
reserve
£000
|
Other
reserves
£000
|
ESOP
trust
£000
|
Foreign currency translation
reserve
£000
|
Retained
earnings
£000
|
Total
£000
|
Balance at 1 November 2021
|
4,469
|
1,112
|
41,556
|
(594)
|
3,962
|
8,789
|
(417)
|
(189)
|
2,122
|
60,810
|
Issue of share capital
|
56
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
56
|
Share option costs
|
-
|
-
|
-
|
-
|
2,535
|
-
|
-
|
-
|
-
|
2,535
|
Exercise / lapses of share
options
|
-
|
-
|
-
|
-
|
(1,681)
|
-
|
-
|
-
|
1,681
|
-
|
ESOP trust
|
-
|
-
|
-
|
-
|
-
|
-
|
(49)
|
-
|
-
|
(49)
|
Exercise of deferred consideration
shares
|
-
|
-
|
-
|
-
|
-
|
(420)
|
-
|
-
|
420
|
-
|
Fair value of deferred consideration
shares on purchase of subsidiary
|
-
|
-
|
-
|
-
|
-
|
376
|
-
|
-
|
-
|
376
|
Equity dividends paid
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,784)
|
(1,784)
|
Transactions with owners
|
56
|
-
|
-
|
-
|
854
|
(44)
|
(49)
|
-
|
317
|
1,134
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5,044
|
5,044
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Exchange movement on translation of
foreign operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
428
|
-
|
428
|
Total comprehensive income for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
428
|
5,044
|
5,472
|
Balance at 31 October 2022
|
4,525
|
1,112
|
41,556
|
(594)
|
4,816
|
8,745
|
(466)
|
239
|
7,483
|
67,416
|
Issue of share capital
|
37
|
-
|
2
|
-
|
|
-
|
-
|
-
|
-
|
39
|
Share option costs
|
-
|
-
|
-
|
-
|
2,611
|
-
|
-
|
-
|
-
|
2,611
|
Exercise / lapses of share
options
|
-
|
-
|
-
|
594
|
(1,586)
|
-
|
-
|
-
|
994
|
2
|
ESOP trust
|
-
|
-
|
-
|
-
|
-
|
-
|
(60)
|
-
|
-
|
(60)
|
Reallocation of deferred
consideration share exercise costs
|
-
|
-
|
-
|
-
|
-
|
420
|
-
|
-
|
(420)
|
-
|
Equity dividends paid
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,268)
|
(2,268)
|
Transactions with owners
|
37
|
-
|
2
|
594
|
1,025
|
420
|
(60)
|
-
|
(1,694)
|
324
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5,582
|
5,582
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
Exchange movement on translation of
foreign operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(45)
|
-
|
(45)
|
Total comprehensive (loss) / income for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(45)
|
5,582
|
5,537
|
Balance at 31 October 2023
|
4,562
|
1,112
|
41,558
|
-
|
5,841
|
9,165
|
(526)
|
194
|
11,371
|
73,277
|
The accompanying accounting policies
and notes form an integral part of these financial
statements.
Consolidated cashflow statement
|
Note
|
|
2023
|
|
2022
|
|
|
|
£000
|
|
£000
|
Cash flows from operating activities
|
|
|
|
|
|
Profit for the year before
taxation
|
|
|
7,820
|
|
6,035
|
Adjustments for:
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
|
957
|
|
848
|
Depreciation of right-of-use
assets
|
|
|
679
|
|
749
|
Amortisation of intangible
assets
|
|
|
9,319
|
|
8,987
|
Acquisition / disposal finalisation
costs
|
|
|
379
|
|
657
|
Finance income
|
|
|
(216)
|
|
(73)
|
Finance costs
|
|
|
1,532
|
|
2,034
|
Movement on debt issue
costs
|
|
|
(238)
|
|
119
|
Research and development tax
credit
|
|
|
(522)
|
|
(449)
|
Share option costs
|
|
|
2,631
|
|
2,584
|
Profit on disposal of fixed
assets
|
|
|
-
|
|
(15)
|
Increase in receivables
|
|
|
(3,325)
|
|
(1,316)
|
Increase / (decrease) in
payables
|
|
|
1,048
|
|
(1,896)
|
Cash generated by operations
|
|
|
20,064
|
|
18,264
|
|
|
|
|
|
|
Tax paid
|
|
|
(1,465)
|
|
(2,617)
|
Net
cash from operating activities
|
|
|
18,599
|
|
15,647
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Acquisition of subsidiaries net of
cash acquired
|
|
|
(14,105)
|
|
(2,219)
|
Disposal of subsidiaries
|
|
|
-
|
|
(146)
|
Proceeds on sale of fixed
assets
|
|
|
-
|
|
15
|
Purchase of property, plant and
equipment
|
|
|
(895)
|
|
(911)
|
Purchase / capitalisation of
intangible assets
|
|
|
(7,627)
|
|
(6,647)
|
Finance income
|
|
|
80
|
|
73
|
Net
cash used in investing activities
|
|
|
(22,547)
|
|
(9,835)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Interest paid
|
|
|
(1,439)
|
|
(997)
|
Loan drawdowns
|
|
|
39,706
|
|
2,500
|
Loan related costs
|
|
|
(169)
|
|
(183)
|
Loan repayments
|
|
|
(30,000)
|
|
(9,100)
|
Principal lease payments
|
|
|
(936)
|
|
(927)
|
Equity dividends paid
|
|
|
(2,268)
|
|
(1,784)
|
Issue of own shares
|
|
|
(185)
|
|
(133)
|
Net
cash inflows / (outflows) from financing
activities
|
|
|
4,709
|
|
(10,624)
|
|
|
|
|
|
|
Net
movement in cash and cash equivalents
|
|
|
761
|
|
(4,812)
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the
year
|
|
|
13,864
|
|
18,283
|
Exchange gains on cash and cash
equivalents
|
|
|
199
|
|
393
|
Cash and cash equivalents at the end of the
year
|
|
|
14,824
|
|
13,864
|
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 2022 and 31 October 2023 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 2023.
Statutory accounts for the year
ended 31 October 2022 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 October
2023, 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
2022 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, the Directors have considered
the Group's budget, cash flow forecasts, available banking facility
with appropriate headroom in facilities and financial covenants,
and levels of recurring revenue.
In October 2023 the Group refinanced
with the National Westminster Bank plc, HSBC Innovation Bank
Limited and Santander UK plc. The facilities comprise a revolving
credit facility of £75m and a £45m accordion and are committed
until October 2026. The Group retains significant liquidity with
cash and available committed bank facilities and has strong
headroom against financial covenants.
As part of the preparation of our
FY23 results, the Group has 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 of financial modelling to identify what circumstances
could lead to liquidity challenges. This forecasting has
demonstrated that the Group would only breach its banking covenants
in the most severe of circumstances which are not considered
credible.
Therefore, this supports the going
concern assessment for the business.
The Annual Financial Report
Announcement was approved by the Board of Directors on 24 January
2024 and signed on its behalf by David Meaden and Anoop
Kang.
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 2023 are set out in the
Annual Financial Report 2023.
3 SEGMENTAL ANALYSIS
During the year ended 31 October
2023, the Group was organised into three operating segments, which
are detailed below.
To provide a more targeted focus on
the markets that we serve, and to ensure closer alignment to our
customers, effective from 1 November 2022, the Group have
implemented a divisional structure that consolidates Business Units
delivering comparable technical solutions or serving similar
markets: Land, Property & Public Protection, Communities and
Assets. Each business unit is deemed an operating
segment.
IFRS 8 Operating Segments requires
the disclosure of reported segments in accordance with internal
reports provided to the Group's chief operating decision maker. The
Group considers its Board of Directors to be the chief operating
decision maker and therefore has aligned the segmental disclosures
with the monthly reports provided to the Board of
Directors.
· Land,
Property & Public Protection (LPPP) - delivering specialist
information management solutions and services to the public
sector.
· Assets
- delivering engineering document management and control solutions
to asset intensive industry sectors.
· Communities (COMM) - delivering software solutions to clients
with social value running through their core.
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.
With the continued expansion of our
Geospatial offering, from 1 November 2023 we have split this out of
the LPPP segment and will be reporting it as a fourth operating
segment in FY24.
The segment revenues by geographic
location are as follows:
|
|
|
|
2023
£000
|
|
2022
£000
|
Revenues from external
customers
|
|
|
|
|
|
|
United
Kingdom
|
|
|
|
64,905
|
|
58,053
|
USA
|
|
|
|
4,926
|
|
4,834
|
Rest of
Europe
|
|
|
|
2,481
|
|
2,781
|
Rest of
World
|
|
|
|
965
|
|
516
|
|
|
|
|
73,277
|
|
66,184
|
Revenues are attributed to individual
countries on the basis of the location of the customer.
The segment revenues by type are as
follows:
|
|
|
|
|
2023
£000
|
|
2022
£000
|
Revenues by
type
|
|
|
|
|
|
|
|
Recurring
revenues - LPPP
|
|
|
|
24,305
|
|
21,918
|
Recurring
revenues - Assets
|
|
|
|
9,692
|
|
9,730
|
Recurring
revenues - Communities
|
|
|
|
9,622
|
|
8,898
|
Recurring
revenues
|
|
|
|
43,619
|
|
40,546
|
|
|
|
|
|
|
|
Non-recurring revenues - LPPP
|
|
|
|
19,108
|
|
13,155
|
Non-recurring revenues - Assets
|
|
|
|
5,153
|
|
5,105
|
Non-recurring revenues - Communities
|
|
|
|
5,397
|
|
7,378
|
Non-recurring revenues
|
|
|
|
29,658
|
|
25,638
|
|
|
|
|
|
|
|
|
|
|
|
73,277
|
|
66,184
|
|
|
|
|
|
|
|
|
Revenue
from sale of goods
|
|
|
|
|
43,190
|
|
41,023
|
Revenue
from rendering of services
|
|
|
|
|
30,087
|
|
25,161
|
|
|
|
|
|
73,277
|
|
66,184
|
Recurring revenue is income
generated from customers on an annual contractual basis. Recurring
revenue amounts to 60% (2022: 61%) of revenue from continued
operations, which is revenue generated annually from sales to
existing customers.
All revenues are recognised over the
period of the contract, unless the only performance obligation is
to licence or re-licence 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 2023 was
£68,198,000 and it is anticipated that 65% of this will be
recognised as revenue in FY24 and 23% in FY25.
The segment results by business unit
for the year ended 31 October 2023:
|
LPPP
£000
|
Assets
£000
|
Communities
£000
|
Total
£000
|
Revenue
|
43,413
|
14,845
|
15,019
|
73,277
|
|
|
|
|
|
Earnings before depreciation,
amortisation, restructuring, acquisition costs, impairment,
financing costs and share option costs
|
13,885
|
4,199
|
6,366
|
24,450
|
Depreciation
|
(574)
|
(191)
|
(192)
|
(957)
|
Depreciation -
right-of-use-assets
|
(394)
|
(153)
|
(132)
|
(679)
|
Amortisation - software licences and
R&D
|
(3,353)
|
(1,218)
|
(1,126)
|
(5,697)
|
Amortisation - acquired
intangibles
|
(2,699)
|
(252)
|
(671)
|
(3,622)
|
Restructuring costs
|
(142)
|
(192)
|
(44)
|
(378)
|
Acquisition costs
|
(712)
|
(16)
|
(18)
|
(746)
|
Share option costs
|
(1,637)
|
(397)
|
(597)
|
(2,631)
|
|
|
|
|
|
Segment operating profit
|
4,374
|
1,780
|
3,586
|
9,740
|
Financing costs
|
|
|
|
(396)
|
Operating profit
|
|
|
|
9,344
|
Finance income
|
|
|
|
219
|
Finance costs
|
|
|
|
(1,743)
|
Profit before taxation
|
|
|
|
7,820
|
The corporate recharge to the
business unit EBITDA is allocated on a head count basis.
Following the establishment of the
new divisional structure from 1 November 2022 as described above,
the re-presented segment results by business unit for the year
ended 31 October 2022:
|
LPPP
£000
|
Assets
£000
|
Communities
£000
|
Continuing
Operations
Total
£000
|
Discontinued
Operations
Content
£000
|
Total
£000
|
Revenue
|
35,073
|
14,835
|
16,276
|
66,184
|
-
|
66,184
|
|
|
|
|
|
|
|
Earnings before depreciation,
amortisation, restructuring, acquisition costs, impairment,
financing costs and share option costs
|
13,235
|
4,450
|
4,824
|
22,509
|
-
|
22,509
|
Depreciation
|
(457)
|
(172)
|
(2199)
|
(848)
|
-
|
(848)
|
Depreciation -
right-of-use-assets
|
(391)
|
(170)
|
(188)
|
(749)
|
-
|
(749)
|
Amortisation - software licences and
R&D
|
(2,494)
|
(1,529)
|
(1,294)
|
(5,317)
|
-
|
(5,317)
|
Amortisation - acquired
intangibles
|
(2,374)
|
(117)
|
(1,179)
|
(3,670)
|
-
|
(3,670)
|
Restructuring costs
|
(39)
|
(412)
|
(19)
|
(470)
|
-
|
(470)
|
Acquisition costs
|
(183)
|
-
|
-
|
(183)
|
-
|
(183)
|
Share option costs
|
(1,501)
|
(467)
|
(616)
|
(2,584)
|
-
|
(2,584)
|
|
|
|
|
|
|
|
Segment operating profit /
(loss)
|
5,796
|
1,583
|
1,309
|
8,688
|
-
|
8,688
|
Financing costs
|
|
|
|
(30)
|
-
|
(30)
|
Operating profit
|
|
|
|
8,658
|
-
|
8,658
|
Loss from sale of discontinued
operations
|
|
|
|
-
|
(567)
|
(567)
|
Finance income
|
|
|
|
97
|
-
|
97
|
Finance costs
|
|
|
|
(2,153)
|
-
|
(2,153)
|
Profit before taxation
|
|
|
|
6,602
|
(567)
|
6,035
|
The corporate recharge to the
business unit EBITDA is allocated on a head count basis.
4
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
|
|
2023
|
2022
|
|
|
£000
|
£000
|
|
|
|
|
Profit for the year
|
|
5,582
|
5,611
|
|
|
|
|
Basic earnings per share
|
|
|
|
Weighted average number of shares in
issue
|
|
449,016,841
|
443,413,006
|
|
|
|
|
Basic earnings per share
|
|
1.24p
|
1.27p
|
|
|
|
|
Weighted average number of shares in
issue
|
|
449,016,841
|
443,413,006
|
Add back:
|
|
|
|
Dilutive share options
|
|
6,563,834
|
8,636,936
|
Weighted average allotted, called up
and fully paid share capital
|
|
455,580,675
|
452,049,942
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
1.23p
|
1.24p
|
|
|
|
| |
Adjusted earnings per share
|
|
2023
£000
|
2022
£000
|
|
|
|
|
Profit for the year
|
|
5,582
|
5,611
|
Add back:
|
|
|
|
Amortisation on acquired
intangibles
|
|
3,622
|
3,670
|
Impairment
|
|
168
|
-
|
Acquisition costs
|
|
746
|
183
|
Restructuring costs
|
|
378
|
470
|
Financing costs
|
|
396
|
30
|
Share option costs
|
|
2,631
|
2,584
|
Tax effect
|
|
(1,606)
|
(1,533)
|
Adjusted profit for year
|
|
11,917
|
11,015
|
|
|
|
|
Weighted average number of shares in
issue - basic
|
|
449,016,841
|
443,413,006
|
Weighted average number of shares in
issue - diluted
|
|
455,580,675
|
452,049,942
|
|
|
|
|
Adjusted earnings per
share
|
|
2.65p
|
2.48p
|
|
|
|
|
Adjusted diluted earnings per
share
|
|
2.62p
|
2.44p
|
Total Operations
|
|
2023
|
2022
|
|
|
£000
|
£000
|
|
|
|
|
Profit for the year
|
|
5,582
|
5,044
|
|
|
|
|
Basic earnings per share
|
|
|
|
Weighted average number of shares in
issue
|
|
449,016,841
|
443,413,006
|
|
|
|
|
Basic earnings per share
|
|
1.24p
|
1.14p
|
|
|
|
|
Weighted average number of shares in
issue
|
|
449,016,841
|
443,413,006
|
Add back:
|
|
|
|
Dilutive share options
|
|
6,563,834
|
8,636,936
|
Weighted average allotted, called up
and fully paid share capital
|
|
455,580,675
|
452,049,942
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
1.23p
|
1.11p
|
|
|
|
| |
5 INTANGIBLE
ASSETS
|
Goodwill
|
Customer relation-
Ships
|
Trade names
|
Software
|
Develop-ment costs
|
Order backlog
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Cost
|
|
|
|
|
|
|
|
At 1 November 2021
|
82,610
|
34,846
|
11,716
|
28,399
|
28,039
|
302
|
185,912
|
Foreign exchange
|
-
|
-
|
-
|
-
|
11
|
31
|
42
|
Additions
|
-
|
-
|
-
|
144
|
6,503
|
-
|
6,647
|
Additions on acquisition
|
756
|
-
|
-
|
987
|
-
|
-
|
1,743
|
Fair value adjustment
|
982
|
-
|
-
|
-
|
-
|
-
|
982
|
At
31 October 2022
|
84,348
|
34,846
|
11,716
|
29,530
|
34,553
|
333
|
195,326
|
Foreign exchange
|
-
|
-
|
-
|
-
|
(5)
|
(14)
|
(19)
|
Additions
|
-
|
-
|
-
|
12
|
7,616
|
-
|
7,628
|
Additions on acquisition
|
8,894
|
7,650
|
-
|
1,500
|
-
|
-
|
18,044
|
Impairment
|
-
|
-
|
-
|
-
|
(667)
|
-
|
(667)
|
Fair value adjustment
|
22
|
-
|
-
|
-
|
-
|
-
|
22
|
At
31 October 2023
|
93,264
|
42,496
|
11,716
|
31,042
|
41,497
|
319
|
220,334
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
|
At 1 November 2021
|
31,709
|
19,618
|
9,090
|
17,454
|
15,714
|
302
|
93,887
|
Foreign exchange
|
-
|
-
|
-
|
-
|
11
|
31
|
42
|
Amortisation for the year
|
-
|
1,513
|
423
|
2,285
|
4,766
|
-
|
8,987
|
At 31 October 2022
|
31,709
|
21,131
|
9,513
|
19,739
|
20,491
|
333
|
102,916
|
Foreign exchange
|
-
|
-
|
-
|
-
|
(5)
|
(14)
|
(19)
|
Amortisation for the year
|
-
|
1,673
|
363
|
1,702
|
5,413
|
-
|
9,151
|
Impairment
|
-
|
-
|
-
|
-
|
(499)
|
-
|
(499)
|
At
31 October 2023
|
31,709
|
22,804
|
9,876
|
21,441
|
25,400
|
319
|
111,549
|
|
|
|
|
|
|
|
|
Carrying amount at 31 October 2023
|
61,555
|
19,692
|
1,840
|
9,601
|
16,097
|
-
|
108,785
|
|
|
|
|
|
|
|
|
Carrying amount at 31 October
2022
|
52,639
|
13,715
|
2,203
|
9,791
|
14,062
|
-
|
92,410
|
|
|
|
|
|
|
|
|
Average remaining amortisation period
(years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
October 2023
|
n/a
|
11.8
|
5.1
|
5.6
|
2.9
|
-
|
|
|
|
|
|
|
|
|
|
31 October 2022
|
n/a
|
9.1
|
5.2
|
4.3
|
3.0
|
-
|
|
During the year, goodwill and
intangibles were reviewed for impairment in accordance with IAS 36,
'Impairment of Assets'. An impairment charge of £168,000 (2022:
£Nil) was processed in the year and is included in the amortisation
line of the statement of comprehensive income.
Fair value adjustments are in
relation to the finalisation of acquisition accounting in respect
of LandHawk Software Services Limited.
Impairment test for goodwill
For this review, goodwill was
allocated to the Group's divisional business units on the basis of
the Group's operations which represent the Group's operating
segments 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 operating segment is as follows:
|
2023
|
2022
|
Operating segments
|
£000
|
£000
|
|
|
|
Land, Property & Public
Protection (LPPP)
|
39,091
|
30,175
|
Assets
|
14,196
|
14,196
|
Communities
|
8,268
|
8,268
|
|
61,555
|
52,639
|
The recoverable amount of goodwill
in each operating segment 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
three financial years. The key assumptions used in the financial
budgets relate to revenue and Adjusted 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 forecasts (as described above) 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 2023, the Weighted Average Cost of
Capital for each operating segment has been used as an appropriate
discount rate to apply to cash flows. The same basis was used in
the year to 31 October 2022.
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
operating segment:
Operating segments
|
Discount rate
current year
|
Annualised EBITDA growth rate over
three years
|
Long term growth rate
current year
|
Discount rate
prior year
|
Growth rate prior year
|
LPPP
|
16.1%
|
15.7%
|
3.0%
|
15.9%
|
2.2%
|
Assets
|
16.7%
|
6.5%
|
3.0%
|
16.9%
|
2.2%
|
Communities
|
16.1%
|
3.3%
|
3.0%
|
15.9%
|
2.2%
|
Individual Weighted Average Costs of
Capital were calculated for each operating segment and adjusted for
the market's assessment of the risks attaching to each operating
segment's cash flows. The Weighted Average Cost of Capital is
recalculated at each period end.
Management considered the carrying
value of goodwill within the Group in comparison to the future
budgets and have processed an impairment charge of £Nil within the
year in relation to the Group's goodwill (2022: £Nil).
The Group has conducted sensitivity
analysis on the impairment test of each operating segments 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 operating
segment exceeding the recoverable amount.
Sensitivities have been conducted on
cash flow forecasts for all operating segments EBITDA by 10%.
Management are satisfied that this change would not lead to the
carrying amount of each operating segment exceeding the recoverable
amount. Sensitivities have also been conducted on cash flow
forecasts for all operating segments reducing the growth rate to
0%. Management are satisfied that this change would not lead to the
carrying amount of each operating segment exceeding the recoverable
amount.
Management have not identified any
individual assumption within the estimate where a reasonably
possibly change in estimate could result in all goodwill headroom
being eroded.
Management have further considered
the operating segments for which prior period impairments were
recorded to reduce the value-in-use of those operating segments to
their recoverable amount, and how such carrying values are subject
to the current year sensitivities noted above.
6 ACQUISITIONS
Emapsite
On 18 August 2023, the Group
acquired the entire share capital of Emapsite.com
Limited.
Emapsite is a successful provider of
Geospatial data to the UK market for customers associated with land
and property across a wide range of vertical industries including
energy, infrastructure, environmental, telecommunications, and
construction sectors. Emapsite will add significant scale and data
capabilities to the existing Idox Geospatial offering.
Goodwill arising on the acquisition
of Emapsite has been capitalised and consists largely of the value
of the synergies and economies of scale expected from combining the
operations of Emapsite with Idox. None of the goodwill recognised
is expected to be deductible for income tax purposes. The purchase
of Emapsite has been accounted for using the acquisition method of
accounting.
|
Book value
£000
|
|
Fair value
£000
|
|
|
|
|
Property, plant and
equipment
|
31
|
|
31
|
Trade receivables
|
1,282
|
|
1,282
|
Other receivables
|
237
|
|
237
|
Cash at bank
|
3,329
|
|
3,329
|
Total Assets
|
4,879
|
|
4,879
|
|
|
|
|
Trade payables
|
(787)
|
|
(787)
|
Other liabilities
|
(2,098)
|
|
(3,829)
|
Contract liabilities
|
(324)
|
|
(324)
|
Social security and other
taxes
|
(309)
|
|
(269)
|
Deferred tax liability
|
(9)
|
|
(2,095)
|
Total Liabilities
|
(3,527)
|
|
(7,304)
|
Net Assets
|
|
|
(2,425)
|
|
|
|
|
Goodwill arising on
acquisition
|
|
|
8,894
|
Purchased customer relationships
capitalised
|
|
|
7,650
|
Purchased software
capitalised
|
|
|
1,500
|
Total consideration
|
|
|
15,619
|
|
|
|
|
Satisfied by:
|
|
|
|
Cash to vendor
|
|
|
14,750
|
Deferred consideration
|
|
|
869
|
|
|
|
15,619
|
|
|
|
|
The revenue included in the
consolidated statement of comprehensive income since 18 August 2023
contributed by Emapsite was £2.7m. Emapsite also made a profit
after tax of £0.2m for the same period. If Emapsite had been
included from 1 November 2022, it would have contributed £13.0m to
Group revenue and a profit after tax of £1.1m.
Acquisition costs of £264,000 have
been written off in the consolidated statement of comprehensive
income.
LandHawk
During the year there has been
further fair value adjustment in respect of the acquisition of
LandHawk Software Services Limited. The adjustment totalled
£22,000.
Adjustments were processed to ensure
pre-acquisition related costs were recognised in the correct
period. This resulted in a decrease of £22,000 in respect of
working capital movements.
Acquisition of subsidiaries net of
cash acquired
|
|
£000
|
|
|
|
Acquisition of subsidiaries net of
cash acquired per cashflow statement
|
|
(14,105)
|
Deferred consideration payment made
in relation to exeGesIS
|
|
1,650
|
Deferred consideration payment made
in relation to Aligned Assets
|
|
1,000
|
LandHawk consideration completion
adjustment
|
|
34
|
Cash acquired as part of the
Emapsite acquisition
|
|
(3,329)
|
|
|
(14,750)
|
|
|
|
Cash to vendor per Emapsite
acquisition note
|
|
14,750
|
7 POST BALANCE SHEET EVENTS
There have been no post balance
sheet events which had a material impact on the Group.
8
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
2023.
9
ALTERNATIVE PERFORMANCE MEASURES
Following the issuance of the
Guidelines on Alternative Performance Measures (APMs) by the
European Securities and Markets Authority (ESMA) in June 2015, the
Group has included this section in its Annual Report and Accounts
with the aim of providing transparency and clarity on the measures
adopted internally to assess performance. Throughout this report,
the Group has presented financial performance measures which are
considered most relevant to Idox and are used to manage the Group's
performance. These financial performance measures are chosen to
provide a balanced view of the Group's operations and are
considered useful to investors as these measures provide relevant
information on the Group's past or future performance, position, or
cash flows. The APMs, which are not defined or specified under
International Financial Reporting Standards, adopted by the Group
are also commonly used in the sectors it operates in and therefore
serve as a useful aid for investors to compare Idox's performance
to its peers. The Board believes that disclosing these performance
measures enhances investors' ability to evaluate and assess the
underlying financial performance of the Group's operations and the
related key business drivers. These financial performance measures
are also aligned to measures used internally to assess business
performance in the Group's budgeting process and when determining
compensation. They are also consistent with how the business is
assessed by our debt and equity providers. Details are included
within the financial review section of the Strategic
Report.
We believe that these measures
provide a user of the accounts with important additional
information. The following table reconciles these APMs to statutory
equivalents for continuing operations:
|
|
2023
£000
|
2022
£000
|
|
|
|
|
Adjusted EBITDA:
|
|
|
|
Profit before taxation
|
|
7,820
|
6,602
|
Depreciation and
Amortisation
|
|
10,955
|
10,584
|
Restructuring costs
|
|
378
|
470
|
Acquisition costs
|
|
746
|
183
|
Financing costs
|
|
396
|
30
|
Share option costs
|
|
2,631
|
2,584
|
Net finance costs
|
|
1,524
|
2,056
|
Adjusted EBITDA
|
|
24,450
|
22,509
|
|
|
|
|
Free cashflow:
|
|
|
|
Net cashflow from operating
activities after taxation
|
|
18,599
|
15,647
|
Capex
|
|
(8,522)
|
(7,558)
|
Lease payments
|
|
(936)
|
(927)
|
Free cashflow
|
|
9,141
|
7,162
|
|
|
|
|
Net
debt:
|
|
|
|
Cash
|
|
(14,824)
|
(13,864)
|
Bank borrowings
|
|
18,291
|
9,201
|
Bonds in issue
|
|
11,207
|
11,325
|
Net Debt
|
|
14,674
|
6,662
|
|
|
|
|
Adjusted profit for the year and adjusted earnings per
share:
|
|
|
|
Profit for the year
|
|
5,582
|
5,611
|
Add back:
|
|
|
|
Amortisation on acquired
intangibles
|
|
3,622
|
3,670
|
Impairment
|
|
168
|
-
|
Acquisition costs
|
|
746
|
183
|
Restructuring costs
|
|
378
|
470
|
Financing costs
|
|
396
|
30
|
Share option costs
|
|
2,631
|
2,584
|
Tax effect
|
|
(1,606)
|
(1,533)
|
Adjusted profit for year
|
|
11,917
|
11,015
|
|
|
|
|
Weighted average number of shares in
issue - basic
|
|
449,016,841
|
443,413,006
|
Weighted average number of shares in
issue - diluted
|
|
455,580,675
|
452,049,942
|
|
|
|
|
Adjusted earnings per
share
|
|
2.65p
|
2.48p
|
|
|
|
|
Adjusted diluted earnings per
share
|
|
2.62p
|
2.44p
|
The Group adjusts for certain
non-underlying items which the Board believes assists in
understanding the performance achieved by the Group. These are
non-underlying items as they do not relate to the underlying
performance of the Group. Profit before taxation is adjusted for
depreciation, amortisation, restructuring costs, acquisition costs,
financing costs, share option costs and net finance costs to
calculate a figure for EBITDA which is commonly quoted by our peer
group and allows users to compare our performance with those of our
peers. This also provides the users of the accounts with a view of
the underlying performance of the Group which is comparable year on
year.
Depreciation and amortisation are
omitted as they relate to assets acquired by the Group which may be
subject to differing treatment within the peer group and so this
allows meaningful comparisons to be made.
Amortisation on acquired intangibles
omitted in order to improve the comparability between acquired and
organic operations as the latter does not recognise internally
generated intangible assets. Adjusting for amortisation provides a
more consistent basis for comparison between the two.
Restructuring costs, acquisition
costs, financing costs and net finance costs are omitted as they
are considered to be one off in nature or do not represent the
underlying trade of the Group. The items within these categories
are assessed on a regular basis to ensure that they do not contain
items which would be deemed to represent the underlying trade of
the business.
Share option costs are excluded as
they do not represent the underlying trade of the business and
fluctuate subject to external market conditions and number of
shares. This would distort year-on-year comparison of the
figures.
Profit after taxation is adjusted
for amortisation from acquired intangibles, restructuring costs,
acquisition costs, financing costs and share option costs, as well
as considering the tax impact of these items. To exclude the items
without excluding the tax impact would not give the complete
picture. This enables the user of the accounts to compare the core
operational performance of the Group. Adjusted earnings per share
takes into account all of the factors above and provides users of
the Annual Report and Accounts information on the performance of
the business that management is more directly able to influence and
on a comparable basis for year to year. Readers of the Annual
Report and Accounts are encouraged to review the financial
statements in their entirety.