RNS Number:9492S
i-documentsystems Group PLC
08 December 2003
FOR IMMEDIATE RELEASE 8 December 2003
i-documentsystems group plc
Results for the year ended 31 October 2003
Highlights
* Turnover up 48% to #4.47 million (2002: #3.02 million), in line with
expectations
* Cash of #2.65 million as at 31 October 2003 (2002: #2.54 million)
* Three consecutive months of profitable trading, consistent with projection
* Loss lower than expected at #0.59 million (2002: loss of #1.48 million)
* Annualised recurring revenue of #2.25 million (2002: #1.20 million)
* Successful acquisition and integration of Mandoforms
* Raised #1.22 million from new and existing investors
* Strengthened market position by winning both new customers and expanding
within local authorities
* Pipeline opportunities continue to increase both in quantity and quality
For further information please contact:
John Wisbey, Chairman 020 7353 5330
Andrew Fraser, CEO 020 7427 0660
Tim Bowen, CFO and COO 020 7427 0660
Richard Fallowfield / Nadja Vetter, Cardew Chancery 020 7930 0777
Notes to editors:
i-documentsystems group plc (IDOX) is a fast-growing information services
company, specialising in the development of products and services for
information management and content provision. The Group has three key business
areas - software, information and managed services. Provided separately, or as a
joint offering, these areas of expertise allow IDOX to provide for the majority
of the information provision and information management needs of Local
Government.
IDOX Software is a sophisticated web-based software package delivering
platform-independent solutions for document management and workflow with proven
information and knowledge management capabilities.
The Group maintains the most comprehensive collection of information in the UK
on all aspects of best practice and governance in the public sector. This
library is available to clients through membership of the IDOX Information
Service. Information projects are also undertaken for public sector clients.
The Group has a leading position in putting the Local Government Planning
process online (its flagship Managed Services solution) and has developed the
first true end-to-end e-Planning solution for Local Authorities and their
citizens - UKPlanning.
i-documentsystems group plc
Chairman's Statement
For the year ended 31 October 2003
The year 2003 represents an important milestone for i-documentsystems group plc
(IDOX). The Group has not only met its targets but, for the first time, has also
recorded three consecutive months of profitable trading, consistent with our
stated aim of becoming a profitable and cash generative company. The Board feels
that the Group is now close to achieving critical mass in the Local Government
sector, in line with its chosen strategy.
Revenues, in line with market expectations, have risen 48% from #3.02 million to
#4.47 million. As a result of tight cost controls, losses for the full year are
lower than expected at #0.59 million (2002: loss of #1.48 million). The loss for
the second half of the financial year was #0.13 million. Cash reserves stand at
approximately #2.65 million.
We are particularly pleased that we have increased our recurring revenue from
software maintenance, longer term managed service contracts and information
subscriptions. Some #2.25 million of annualised recurring revenues were achieved
by the end of the year compared with #1.20 million at the end of 2002 and #1.51
million at the interim stage this year. This underpins our long term growth and
will help to improve our quality of earnings.
During the period under review, IDOX acquired Nettgain Solutions Limited, the
online forms specialist, trading as Mandoforms. The acquisition has provided
IDOX with market-leading electronic forms technology enabling the Group to offer
significantly enhanced services to existing and potential customers. This
acquisition has proved highly successful and is already earnings enhancing.
We were pleased to welcome Peter Lilley MP to the IDOX Board at the start of the
year. His experience of government has given us breadth of understanding of the
marketplace and is of significant benefit in assisting with our future strategic
direction.
IDOX is now successfully positioned as an important provider of software,
information and managed services to Local Government. The Group's offering is
unparalleled in the sector and would be exceedingly difficult to replicate. The
Group has increased its portfolio of local authority software implementations to
over 100 through both organic growth and the acquisition of Mandoforms. The
overall number of local authority clients exceeds 160 as of today. IDOX is now
winning an increasing number of contracts to supply software into multiple
departments, even across entire councils and by moving outside its traditional
heartland of the Planning department, thus increasing its share of existing
customers' business.
This year's results continue the successful implementation of our strategy as
outlined at the time of our AIM flotation in 2000. Our adherence to this
strategy, coupled with a robust business pipeline, heralds a solid platform for
expansion, both organically and through acquisitions.
In line with stated policy, earnings for the foreseeable future will be
re-invested to finance the growth of the Group's business. The Directors do not
recommend the payment of a dividend.
The Group has increasingly become known as IDOX, its core product brand as well
as its AIM stock symbol, and accordingly the Board intends to recommend to
shareholders at the next AGM that the Group change its name to IDOX plc during
2004. In anticipation of this event, the Group's web site has become
www.idoxplc.com.
Finally, I would like to extend my gratitude to our employees, customers,
suppliers and shareholders whose respective commitments to IDOX represent an
integral aspect of our continued success. The staff at IDOX, in London and
Glasgow as well as those in our recently acquired Manchester office, have all
worked hard to maintain the Group's high reputation in the marketplace and
deserve considerable recognition and thanks for their excellent achievements.
John Wisbey
Chairman
5 December 2003
i-documentsystems group plc
Chief Executive's Report
For the year ended 31 October 2003
Financial Review
The Group's revenues rose from #3.02 million to #4.47 million, a 48% gain, for
the year ended 31 October 2003. The Group reduced its losses from #1.48 million
in 2002 to #0.59 million, with the majority of the loss incurred in the first
half of the year. This equates to a loss per share of 0.42 pence (2002: loss per
share of 1.11 pence). The gross margin improved to 86% (2002: 78%) for the
period. Net cash as at 31 October 2003 amounted to #2.65 million (2002: #2.54
million) following the acquisition of Mandoforms.
I am delighted to report that, for the last three months of the financial year,
the Group has been trading profitably as forecast at this time last year.
Throughout the year, we greatly increased our annualised recurring revenue,
giving the Group a solid base of long term contracts on which to build.
Annualised recurring revenues increased from #1.20 million at the end of October
2002 to #1.51 million at the half year, and #2.25 million at year end. While in
the first year of a managed service contract we receive less revenue than we
would for an outright sale of the software, we believe that the creation of
strong recurring revenue streams will give the Group a higher quality of
earnings and greater visibility in the future.
Market Place and Market Dynamics
One of the key issues facing local authorities is the handling and sourcing of
the vast quantities of information they generate and store, and how they can
make best use of this information to improve services to their customers - the
public. An increasing amount of legislation and Government directives in recent
years are aimed to help local authorities to:
* store their information in a more structured and accessible format (Records
Management)
* share information across service areas and also with other authorities and
partner organisations (Joined-Up Government)
* give the public access to all relevant information (Freedom of Information and
Data Protection)
* restructure their systems and streamline their processes using technology
(e-Government)
* use the experiences of other authorities to improve their own operations (Best
Practice, Pathfinder and Beacon councils).
In addition, the Government is encouraging local authorities not just to add
technology on top of their existing processes, but to re-evaluate those
processes themselves completely in order to fully support e-services. It is
clear that local authorities are struggling to understand how to manage and use
the wealth of information around them. IDOX aims to take a more comprehensive
approach than its competitors by providing the information, the tools to handle
the information and the expertise to implement and manage the process.
Consequently the Group continues to believe that it is well-placed to gain
significant additional contracts from the remainder of the UK local authorities,
as well as additional business from existing local authority customers.
In the 2003 financial year we have won a number of corporate contracts where our
software and services will be rolled out across the entire council as the
backbone of its IT systems, rather than being limited to a single department.
These include the Borough of Poole, where the council required an integrated
system to bring online forms, document management and workflow together.
Education, Housing and Planning have already been installed, and a further 23
business units will be linked to our systems over the course of the project. We
have also expanded our footprint in existing clients, for instance at the London
Borough of Hillingdon where our existing installation has been joined by new
implementations within the Human Resources and Education departments. We have
nearly doubled the number of implementations in Corporate Services, and
increased our penetration in Housing, Community Services and Education.
Our UKPlanning managed service, which makes planning information available on
the Internet both within the council and to citizens, has been especially
successful this year, growing its customer base from 5 councils last year to 15
councils at the end of 2003. We are particularly pleased with our success in
Kent, where Thanet District Council's good experience of the system since it
joined UKPlanning in July 2002 has encouraged three other local councils to sign
up. Now that we have demonstrated the value of the service, we expect to see
further strong growth in the number of councils taking up the offering. The
number of online searches being carried out has also increased to nearly 40,000
a month, a strong validation this e-Government service is meeting citizens'
needs.
While more firms have attempted to enter the local authority marketplace, the
only real impact on the Group has been that councils have taken longer to
evaluate tenders as a result of an increase in volume of responses. Reference
sites remain crucial to the sales effort and create a substantial barrier to
entry. Although the sales lead-time in the local authority marketplace continues
to be lengthy, local authorities are under considerable pressure to meet the
requirements of the implementation of the Freedom of Information Act in 2005 and
to achieve the Government's target of improving the delivery of services through
the use of technology by the same deadline.
Acquisition and Placing
In the period under review, IDOX acquired the entire issued share capital of the
online forms specialist, Nettgain Solutions Limited, trading as Mandoforms, for
a consideration of approximately #1,500 in cash and #0.18 million in deferred
contingent cash consideration. In addition, IDOX assumed net liabilities of up
to #0.81 million.
Mandoforms was founded as an e-commerce consultancy developing sophisticated
Java-based software solutions for online data capture and data processing to
generate fast, simple, safe and secure online forms. Since 2000, Mandoforms has
established a significant presence in the UK local authority marketplace.
Mandoforms' core product has gained wide acceptance within the local authority
market due to its ease of use and its ability to enable councils to build their
own forms. As at 31 October 2003, Mandoforms had supplied its products and
services to 47 UK local authorities.
This acquisition provides IDOX with market leading electronic forms technology
to meet the needs of existing and potential customers. Furthermore, with only 5
customers in common as at 31 October 2003, the acquisition presents IDOX with
considerable cross-selling opportunities in respect of its unique e-Government
solutions offerings encompassing software, information and managed services. An
excellent team of people at Mandoforms has further strengthened the existing
IDOX team.
Funding for the transaction was arranged via a placing of new ordinary shares in
the Company. Noble & Company, acting as agent for the Group, placed a total of
11,500,000 ordinary shares of 1p each on behalf of the Group, raising #1.15
million before issue expenses, at a price of 10p per share. The proceeds were
used towards the acquisition of the entire issued share capital of Mandoforms,
the settlement of certain liabilities of Mandoforms and to augment the Group's
existing working capital. The resulting new ordinary shares rank pari passu with
the existing ordinary shares of the Group and represent 7.48% of the enlarged
issued share capital of the Group at that time. Dealings in the new ordinary
shares commenced on 4 September 2003.
IDOX Product and Service Offerings
The Group's business base comprises three core elements: software, information
and managed services, combined under the strapline of 'Information into
Intelligence'. All three divisions within the Group have made considerable
progress during the period. IDOX is now successfully positioned not only as an
important provider of information and software to Local Government but
increasingly as an information management company providing information,
software and professional expertise in the handling of information. The
Directors believe this represents a unique offering in the local authority and
wider public sector marketplace.
IDOX continues to make rapid progress in winning contracts in departments
outside its original expertise of Planning, such as Education, Chief Executive's
and Social Services departments. As providers of corporate solutions, the Group
is exploring a broad range of further opportunities in National and Local
Government and in non-Government markets. IDOX Software is now being implemented
within departments such as Housing and Revenues & Benefits, where vendors of
traditional transactional systems have historically enjoyed a strong foothold.
As a result of the move to single solutions for multiple departments, IDOX is
now being awarded larger "corporate solution" type contracts, and is also seeing
significant revenues from increasing penetration within existing customers. The
Group continues to strengthen further its Revenues & Benefits solutions.
Mandoforms has taken steps this year to expand into the mobile electronic forms
market. Two implementations, one at Teignbridge District Council and one at
Leicestershire County Council, have seen the installation of benefits and social
services forms on hand held PC Tablets, enabling officers to capture information
in citizens' homes. The captured information is integrated directly into their
back office benefits systems.
Recent Project Wins
The combination of IDOX's software and information provision was instrumental in
the Group's winning a number of information projects over the past year,
including:
* Building and maintaining a searchable web based database of labour market
intelligence for Futureskills Scotland. Research material is sourced from over
100 journals and a similar number of web sites around the globe
(www.futureskillsscotland.org.uk)
* Creating a searchable database of regeneration projects in the North East of
England for the Regeneration Exchange in Newcastle
* Undertaking a content development project for the North East regional pages of
renewal.net, the Government's key web service supporting thousands of urban
regeneration practitioners; a service which IDOX manages under a long term
contract (www.renewal.net).
Product and Service Development
IDOX continues to invest in the development of its products and services to meet
the needs of its current and future customers, and during 2003 over #1 million
was invested in product research and development.
Developments in IDOX Software over the past year have included improvements to
process workflow to improve the Group's offering in areas such as Revenues &
Benefits, increased functionality in management reporting functions to help
managers in all departments and the development of a records management module
to meet the requirements of the Freedom of Information Act, Data Protection Act
and the requirements of The National Archives (formerly Public Records Office).
The National Archives has updated its Electronic Records Management compliance
standards and IDOX is at the final stages of development of software to meet
these latest requirements. To this end, IDOX has made the formal application for
testing under the approval scheme. The development of the Electronic Records
Management component of IDOX Software has been a major effort, including a new
state-of-the-art architecture based around the Sun J2EE architecture. We have
also had excellent initial user feedback in terms of its look-and-feel and
useability.
A key improvement to the IDOX Information Service has been the extension of
functionality to the online search facility of the database. It is now possible
for members to search the complete library database, and to order many more
items in full text online. Hypertext links also guide members to relevant online
items where appropriate. In addition to this work, areas of interest to members
are reviewed regularly for updating of titles, journals and web references held.
The Group has recently reviewed the entire Environmental Services subject area
and has extended its service offering to ensure that comprehensive coverage is
provided.
People
Our workforce grew from 80 at 31 October 2002 to 94 at the end of this financial
year. The Group possesses a team and infrastructure capable of delivering and
managing rapid business growth, so that increasing revenue can be accommodated
within a stable cost base. At the same time the Group continues to exercise
tight internal financial control in order to meet its financial goals.
The Group received the Investor in People award in March 2003, having achieved
ISO9001 status last year. The benefit of such accreditations is not only that
they act as a useful audit of our internal policies and procedures, but that
they further enhance our eligibility to participate successfully in the local
authority tender process.
Strategy and Outlook
This year the Group fulfilled its primary financial objective of enjoying
regular profitability on a monthly basis by the end of the financial year. The
Board's goal now is to build on this progress thereby ensuring profitability for
2004, while increasing its revenues and improving its market share. While it
remains difficult to predict the timing of contract signings, the pipeline is
strong, and a number of new contracts have already been secured since the end of
the year. The Group's recurring revenue streams from maintenance, information
services and UKPlanning form a secure underpinning for our business and we
remain conservatively optimistic about next year's growth plans.
The Group will continue to seek to increase its market share, revenue and
profitability, both through organic growth and through appropriate acquisitions.
The Board remains committed to fulfilling the best interests of our shareholders
while securing a leading place within the Local Government market.
Andrew Fraser
Chief Executive
5 December 2003
This announcement was approved by the Board of Directors on 5 December 2003.
i-documentsystems group plc
Consolidated Profit and Loss Account
For the year ended 31 October 2003
Note 2003 2002
# #
Turnover
Continuing 4,211,401 3,017,602
Acquisitions 260,904 -
4,472,305 3,017,602
External charges
Continuing (611,361) (667,161)
Acquisitions - -
(611,361) (667,161)
3,860,944 2,350,441
Staff costs
Continuing (3,099,052) (2,524,671)
Acquisitions (125,097) -
(3,224,149) (2,524,671)
Other operating charges
Continuing (1,272,430) (1,386,671)
Acquisitions (33,287) -
(1,305,717) (1,386,671)
Operating (loss)/profit
Continuing (771,442) (1,560,901)
Acquisitions 102,520 -
(668,922) (1,560,901)
Interest receivable 73,862 77,428
Loss on ordinary activities before taxation (595,060) (1,483,473)
Tax on loss on ordinary activities 2 - -
Loss for the period transferred from reserves (595,060) (1,483,473)
Loss per share (pence) 3 (0.42)p (1.11)p
All operations are attributable to continuing operations. There are no
recognised gains or losses other than those set out above.
i-documentsystems group plc
Consolidated Balance Sheet
At 31 October 2003
2003 2002
# #
Fixed assets
Intangible assets 1,703,513 696,906
Tangible assets 255,561 259,727
Investments 28,344 28,344
1,987,418 984,977
Current assets
Debtors 1,530,906 1,167,227
Cash at bank and in hand 2,646,695 2,537,752
4,177,601 3,704,979
Creditors: amounts falling due within one year (2,840,376) (1,949,553)
Net current assets 1,337,225 1,755,426
Total assets less current liabilities 3,324,643 2,740,403
Creditors: amounts falling due after more than one (30,000) (40,000)
year
Net assets 3,294,643 2,700,403
Capital and reserves
Called up share capital 1,536,789 1,408,039
Deferred share capital - 1,112,014
Capital redemption reserve 1,112,014 -
Share premium account 5,159,088 4,098,538
Other reserves 1,294,745 1,294,745
Profit and loss account (5,807,993) (5,212,933)
Shareholders' funds 3,294,643 2,700,403
i-documentsystems group plc
Consolidated Cash Flow Statement
For the year ended 31 October 2003
Note 2003 2002
# #
Net cash outflow from operating activities 4 (624,388) (843,324)
Returns on investments and servicing of finance
Interest received 71,825 77,143
Net cash inflow from returns on investments and 71,825 77,143
servicing of finance
Capital expenditure and financial investment
Purchase of tangible fixed assets (210,810) (236,377)
Sale of tangible fixed assets 3,026 -
Purchase of investment - (28,344)
Net cash outflow from capital expenditure and (207,784) (264,721)
financial investment
Acquisitions
Purchase of company (89,591) (418,601)
Net cash balances acquired with the company (230,419) 181,481
Net cash outflow from acquisitions (320,010) (237,120)
Financing
Issue of shares 1,189,300 1,434,016
Net cash inflow from returns on investments and 1,189,300 1,434,016
servicing of finance
Increase in cash 5 108,943 165,994
i-documentsystems group plc
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 October 2003
2003 2002
# #
Loss for the financial year (595,060) (1,483,473)
New share issue 1,189,300 1,434,016
Provision for issue costs released - 55,274
Share options exercised - 27,500
Net increase in shareholders' funds 594,240 33,317
Shareholders' funds at 1 November 2002 2,700,403 2,667,086
Shareholders' funds at 31 October 2003 3,294,643 2,700,403
i-documentsystems group plc
Notes to the announcement
For the year ended 31 October 2003
1 BASIS OF PREPARATION
The announcement has been prepared in accordance with applicable United Kingdom
accounting standards and under the historical cost convention.
The principal accounting policies have remained unchanged from those set out in
the Group's 2002 annual report and accounts.
The financial information set out in this announcement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
consolidated balance sheet at 31 October 2003 and the consolidated profit and
loss account, consolidated cash flow statement and associated notes for the year
ended 31 October 2003 have been extracted from the statutory accounts upon which
the auditors opinion is unqualified and does not include any a statement under
section 237 of the Companies Act 1985.
2 TAX ON LOSS ON ORDINARY ACTIVITIES
There was no charge for taxation for the year ended 31 October 2003 (2002: nil)
due to operating losses in the current year. Unrelieved trading losses of
#4,492,620 (2002: #2,658,543), amounting to #1,347,786 (2002: #797,563),
calculated at the standard rate of corporation tax in the UK of 30%, remain
available to offset against future taxable trading profits in certain companies
within the Group. Factors affecting tax losses available for carry forward in
the period are:
2003 2002
# #
Loss on ordinary activities before taxation (595,060) (1,483,473)
Loss on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 30% (178,518) (445,042)
Effects of:
Expenses not deductible for tax purposes 4,034 21,048
Depreciation in excess of capital allowances 23,366 45,005
Capital expenditure in revenue - 1,753
General provision 6,333 5,577
Increase in tax losses 144,785 371,659
- -
Total unrecognised deferred tax asset amounts to #1,384,575 (2002: #793,023).
The Directors consider that it is unlikely that this deferred tax asset will
crystallise in the foreseeable future.
3 LOSS PER SHARE
The loss per ordinary share is calculated by reference to the loss attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during each period, as follows:
2003 2002
# #
Loss for the year (595,060) (1,483,473)
Weighted average number of shares in issue 142,805,965 133,976,939
Loss per share (0.42)p (1.11)p
The deferred ordinary shares and options are anti dilutive under FRS 14.
4 NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2003 2002
# #
Operating loss (668,922) (1,560,901)
Depreciation 216,644 150,029
Goodwill amortisation 81,669 30,250
Profit on sale of fixed assets (834) -
Gain on share options - 27,500
Increase in debtors (217,592) (14,150)
(Decrease)/increase in creditors (35,353) 523,948
Net cash outflow from operating activities (624,388) (843,324)
5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
# #
Increase in cash in the year, being movement in net 108,943 165,994
funds in the year
Net funds at 1 November 2002 2,537,752 2,371,758
Net funds at 31 October 2003 2,646,695 2,537,752
6 FURTHER COPIES
Copies of this announcement and the full annual report and accounts are
available, free of charge, for a period of one month from the Company's
Nominated Adviser and Broker Noble & Company Limited, 1 Frederick's Place,
London, EC2R 8AB, Tel: 020 7367 5600 or from i-documentsystems group plc, 10th
Floor, 21 New Fetter Lane, London EC4A 1AJ, Tel: 020 7427 0660. Copies of the
full financial statements will be posted to shareholders on 8 December 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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