TIDMIDOX
RNS Number : 8261Z
IDOX PLC
27 January 2022
27 January 2022
Idox plc
( 'Idox' or the 'Group' or the 'Company')
FY21 Results
"Another year of strong financial performance and strategic and
operational progress"
Idox plc (AIM: IDOX), a leading supplier of specialist
information management software and solutions to the public and
asset intensive sectors, is pleased to report its financial results
for the year ended 31 October 2021.
Financial highlights
Reconciliations between adjusted and statutory earnings are
contained at the end of this announcement.
Continuing operations ( excluding disposed Idox Content
businesses(1) ) :
Revenue
-- Revenue increased by 9% to GBP62.2m (2020: GBP57.3m), including 5% organic increase.
-- Recurring revenue(2) increased by 2% to GBP36.3m (2020: GBP35.7m).
Profit
-- Adjusted(3) EBITDA increased by 13% to GBP19.5m (2020: GBP17.2m).
-- Adjusted(3) EBITDA margin improved to 31% (2020: 30%).
-- Operating profit increased by 90% to GBP7.6m (2020: GBP4.0m).
Operating profit margin improved to 12% (2020: 7%).
-- Adjusted(4) diluted EPS increased by 54% to 2.27p (2020: 1.47p).
-- Diluted EPS increased to 1.34p (2020: 0.11p).
Cash and debt
-- Free cashflow(5) of GBP7.1m (2020: GBP11.2m) following
planned repayment of 2020 VAT deferrals.
-- Disposal of Content businesses generated net proceeds of
GBP10.7m; 3 acquisitions completed in the year with initial net
consideration of GBP10.5m.
-- Net debt(6) at 31 October 2021 reduced by 50% to GBP8.1m (2020: GBP16.1m).
Dividend
-- Final dividend of 0.4p per share (2020: 0.3p) declared,
reflecting the strong cash generation and healthy financial
position of the Group.
Operational highlights
Idox has maintained good progress against the Group's strategic
goals whilst delivering successful operational execution:
-- Material advancement in our M&A strategy to focus capital
on core software businesses with high margin operations and good
growth potential:
o Disposal of Content businesses, in line with our continued
simplification and focus on software operations.
o Acquisition of Aligned Assets, thinkWhere and exeGesIS, which
enhance our Public Sector offering and provide greater focus and
depth of expertise in the GIS (geospatial information services)
market.
o Further development of our M&A ambitions in both sourcing
and managing pipeline opportunities.
-- Improvements to our product and go-to-market efforts; now
fully managed and reported in our new Group-wide CRM platform.
-- Consolidated all offshore activity to a single Idox centre in Pune, India.
-- Clear focus on innovation and consolidation of our product
portfolio, including continuing our journey to cloud across our
portfolio.
-- Further investment in our people promoting higher levels of engagement, and leadership.
-- Increasing our commitments to Environmental, Social and
Governance initiatives; conducting business responsibly is core to
our business model and long-term strategic goals.
Current trading and outlook
-- FY22 has started well, in line with expectations.
-- Combination of recurring revenue and order book, driven by H2
sales orders, and resilient public sector markets, provides good
visibility for FY22 revenue.
-- The sales pipeline for FY22 remains encouraging.
-- FY21 acquisitions integrating well and to plan, and good line
of sight over an attractive M&A pipeline.
David Meaden, Chief Executive of Idox said:
"We are pleased to report another year of strong financial
performance, and strategic and operational progress.
After exiting our non-core Content businesses in March 2021, we
acquired three excellent Public Sector software businesses,
improved our balance sheet strength, and extended our financing
facilities for a further 18 months, to June 2024, on improved
terms.
We have invested in our people, improved our engagement with
customers and focused our product efforts in response to the
increasing pace of the move to digitisation and cloud. We continue
to improve our supporting infrastructure and processes to ensure
efficient and effective execution, and to support our ambitions to
continue to grow both organically and inorganically.
The outlook for the business remains strong and we are well
positioned in our 'fly' stage of growth to continue to create good
value for our people, customers and shareholders."
There will be a webcast at 10:00am UK time today for analysts
and investors. To register for the webcast please contact MHP
Communications on idox@mhpc.com
For further information please contact :
Idox plc +44 (0) 870 333 7101
Chris Stone, Non-Executive Chairman
David Meaden, Chief Executive
Rob Grubb, Chief Financial Officer
Peel Hunt LLP (NOMAD and Broker) +44 (0) 20 7418 8900
Edward Knight
Paul Gillam
James Smith
MHP Communications + 44 (0) 203 128 8170
Reg Hoare idox@mhpc.com
James Bavister
Harry Clarke
About Idox plc
For more information see www.idoxplc.com @Idoxgroup
Alternative Performance Measures
These items are excluded from statutory measures of profit to
present a measure of cash earnings from underlying activities on an
ongoing basis. This is in line with 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.
There have been no adjustments to any of our reporting metrics
for any impact of the Covid-19 pandemic.
(1) The comparatives have been restated due to the Content
business being reclassified as discontinued operations. There has
been no change to the overall results.
(2) Recurring revenue is defined as revenues recognised from
support and maintenance fees, managed service fees (including for
hosting) and Software-as-a-Service subscription fees.
(3) Adjusted EBITDA is defined as earnings before amortisation,
depreciation, restructuring, acquisition costs, impairment,
financing costs and share option costs. Share option costs are
excluded from Adjusted EBITDA as this is a standard measure in the
industry and how management and our shareholders track
performance.
(4) Adjusted EPS excludes amortisation on acquired intangibles,
restructuring, financing, impairment, share option and acquisition
costs.
(5) Free cashflow is defined as net cashflow excluding:
acquisitions / disposals, debt repayments & drawdowns, and
shareholder placing & dividends.
(6) Net debt is defined as the aggregation of cash, bank
borrowings and long-term bond.
Annual financial report announcement
The extracts below are from the Annual Financial Report 2021.
Note references refer to notes included in this Annual Financial
Report Announcement 2021.
Chairman's statement
Introduction
I am pleased to be able to report an excellent set of results to
all of our shareholders and other stakeholders for this financial
year. Since the appointment of David Meaden as CEO the business has
been thoroughly transformed and we are now seeing the continuing
and sustained benefits of this transformation in the results that
Idox is delivering. It is rewarding to be able to report on another
year of growth in revenues, profits and most importantly, cash, and
a return to paying a dividend. In business, no success story can be
taken for granted, but this transformation is notable and sets the
business up well for future success.
The past three years have seen a lot of change to our Board of
Directors and senior management team, but fortunately we had
managed to make most of these changes before having to deal with
the impact of the Covid-19 pandemic. Consequently, the business has
been managed consistently and steadily through a difficult phase,
and the stability that comes from a settled management team has
allowed us to make a couple of quite important strategic changes in
our portfolio.
During the year we disposed of two non-core businesses: our
compliance business, based in Germany and Belgium; and our grants
consultancy business, based in the Netherlands. Both are good
businesses in their own right but did not enjoy a particularly
strong strategic fit with our core software businesses. I would
like to thank the management and the staff of both businesses for
their very professional behaviour during the disposal processes and
we wish them and their new shareholders the very best of luck in
taking the businesses forward.
The cash generated from these disposals, together with the cash
that we are now generating from our own operations, has given us
the firepower to make a number of acquisitions that demonstrate a
stronger strategic fit with our core business. During the year we
made 3 acquisitions; Aligned Assets Limited, thinkWhere Limited and
exeGesIS Spatial Data Management Ltd. All of these businesses bring
exciting new capabilities that fit very well with our core
business, and we are pleased to welcome our new colleagues and look
forward to working with them to deliver value to both existing and
new customers from the combination of products and services that we
can now offer.
The investments that we have made over the past few years in
improving our core back-office systems and processes have allowed
us to set a target of generating over 30% margin from our mature
operations. I am pleased to say that we have achieved that target
in several areas of our business, with potentially a bit more
improvement to come as we further refine our processes.
In early 2021, we received an unsolicited approach for the
Group. Our strategy was to reject offers until the proposed offer
price was at a point where the Board felt that, if this were to be
confirmed, it was at a level that shareholders would want to
consider. Ultimately, the proposed offer did not materialise, and I
am pleased to note that the inevitable workload associated with
such an approach did not distract our colleagues from the focus
required to deliver the excellent results described above.
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.
The Covid-19 pandemic has affected everyone and Idox is no
exception. As I mentioned in my last report, we have been fortunate
that demand for our products and services did not drop during the
Covid-19 pandemic, and the excellent attitudes displayed by our
colleagues in figuring out practical and effective ways of working
with the many new restrictions meant that Idox did not suffer
financially through this period. However, we have all adopted new
ways of working, new attitudes towards essential and non-essential
travel, and blended home and office work. 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 very
impressed by the continuing positive attitudes and behaviours of
all our colleagues.
Group Strategy
The Group continued its focus on providing digital solutions and
services to the public sector in the United Kingdom, complemented
by our Engineering Information Management (EIM) business servicing
customers across the world. The key to our success is to ensure we
deliver better user results and productivity improvements for
customers through focusing on usability, functionality and
application of integrated digital and increasingly cloud-based
technologies and solutions. As mentioned above, we were able to
accelerate the development of this strategy through the disposal of
businesses that did not fit this model, and the integration of
further acquisitions where we identify businesses that can
accelerate our progress. We expect to continue to make such
accretive acquisitions in the coming year.
Board
There have been no changes to the Board in FY21 following a
number of changes in the prior year. We carried out a formal Board
Effectiveness review during the year, and there were some good
points raised which we will be incorporating in the coming
year.
The Board of Directors has one female Director. I am satisfied
that there is sufficient diversity in the Board structure to bring
a balance of skills, experience, independence, and knowledge to the
Group, however, I intend to keep this balance under review and
continued assessment.
Corporate governance
We are cognisant of the important responsibilities we have in
respect of Corporate Governance and shaping our culture to be
consistent with our objectives, strategy, and business model which
we set out in our Strategic Report and our description of Principal
Risks and Uncertainties. The Group is committed to conducting its
business fairly, impartially, in an ethical and proper manner, and
in full compliance with all laws and regulations. In conducting our
business, integrity is the foundation of all Company relationships,
including those with customers, suppliers, communities, and
employees.
Corporate simplification
As highlighted above, during the financial year we disposed of
our non-core Content businesses and reinvested in the acquisition
of three new companies, Aligned Assets, thinkWhere and exeGesIS,
which will enhance our core public sector software offering.
The trade and assets of Idox Health Limited was hived into Idox
Software Limited, in line with our corporate simplification
strategy. We also completed the consolidation of our Maltese
entities during the year, hiving five entities in to one.
Dividends
The Board has proposed a final dividend of 0.4p to be paid
(2020: 0.3p) for FY21, bringing the total for the year to 0.4p
(2020: 0.3p). Subject to approval at the AGM, the final dividend
will be paid on 8 April 2022 to shareholders on the register at 25
March 2022. This decision was reached after a full consideration of
the pace of recovery in our business, our strong financial position
and our confidence in the future.
Summary and outlook
The financial results of the last year reflect the quality of
the Idox business. We operate in good markets, with strong market
positions and insights, and we have every confidence that we can
continue the excellent progress we have seen in FY21. The changes
that we have made in the last couple of years, to the team, our
structure, systems, and processes have delivered a step-change
improvement in our financial performance. I am pleased 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 shareholders are fortunate that such a talented group of
people, comprising our entire workforce, 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
Chairman
Chief Executive's review
Overview
I am pleased to report another successful year at Idox, where
our teams across the Group have worked with great determination and
fortitude through the ongoing and obvious impacts caused by the
Covid-19 pandemic. We have adapted to the challenges of working
from home and more latterly, hybrid models for collaboration and
teamworking. I am tremendously proud of the way all my colleagues
have come together and made the required adjustments in their
day-to-day activities to deliver for customers and to drive the
business forward.
Idox has become synonymous with our strategy defined by 4
Pillars and 3 Phases. The 4 Pillars of Revenue, Margin,
Simplification and Communication have become engrained in our
operations and provide the foundations upon which we have delivered
the Walk and Run phases of our journey.
The improved strategic focus of the business, coupled with
thorough operational management of the business, has produced
improved financial results and the subsequent reduction in net debt
has provided the basis for strategic progress as we move into the
Fly phase of our journey.
The continued focus on producing software to manage complex
business process, legislative and regulatory environments is the
essence of our business model. This focus and clarity about what we
do and where we add substantive value for customers informed our
decision to sell the Content division, through two transactions to
separate private equity organisations. It has also provided us with
clarity in the delivery of our ongoing acquisition strategy, where
we have identified new capabilities that enhance our existing
offerings and work to increase the target addressable markets
available to us.
We were delighted to complete the acquisitions of Aligned
Assets, thinkWhere and exeGesIS during the year and each of these
businesses offer complementary software and data capabilities to
the Group. The addition of these address management and GIS
capabilities allows us to provide extended service engagements into
specific areas of the private sector that are also connected to the
built environment and plantech markets we have long served,
offering exciting opportunities for future growth and product
development for our Group.
Today Idox is well placed in its markets, where we improve
professional and expert processes and support clients in their
transition to becoming modern, agile organisations operating
digitally and through the Cloud. We are leaders in software for the
built environment, modern transportation networks, digitisation,
elections and facilities management. We empower those that need
extra support in special educational needs and disability and our
software also manages the sexual health of the nation. Furthermore,
with the addition of Aligned Assets, exeGesIS and ThinkWhere we can
improve client data quality and improve the accuracy, accessibility
and presentation of their address and geo-spatial information.
Our markets
We continue to see some impact on our markets of the Covid-19
pandemic, although retention rates for existing customers remains
high as our systems are typically central to the processes they
support.
We have seen a slowdown in some new business activity compared
to pre-Covid-19 pandemic levels, particularly in our Health and
Social Care businesses as client resources have been diverted to
directly support response to the Covid-19 pandemic, and in EIM
where a slowdown in consumer and industrial consumption generally
in FY20 and the first half of FY21 has impacted the engineering
projects our software supports. Conversely, we have seen high
demand for our services across our portfolio, as our clients look
to us as a trusted partner to maintain, maximise and extend
existing deployed solutions.
We continue to be active in our chosen markets, bringing thought
leadership and regular market engagement to identify current and
future problems in our client-base and adjusting our product
development plans accordingly. In addition, we are acquiring
well-respected product businesses that enhance and extend our
offerings to our customers and end markets.
Managing our business
Across our organisation we focus on our Four Pillars of Revenue,
Margin, Simplification and Communication. This approach provides
cohesion for the whole Group. The Four Pillars are well-articulated
across the organisation and embedded into our onboarding process
for people joining the organisation. This focus ensures that
everyone in the Group can make a meaningful contribution to our
overall success and has provided the basis on which the
organisation has discovered and articulated its values.
Revenue
We have established strong business controls such that we do not
pursue revenue for the sake of growth, but that we focus on
products with the certainty of delivering lasting value to
customers. We make sure that we fully understand the financial and
operational implications for each piece of business that we
contract. This results in improving the amount of recurring revenue
in the business, providing a strong foundation for future growth in
both revenues and margins.
During the year we improved revenues on a continuing basis by
8.6% to GBP62.2m including our acquisitions (5.5% excluding
acquisitions).
Sales Orders
During the year we established a centralised Revenue Assurance
unit and completed the integration of the sales operations to
include the EIM sales group. We closed over 4,000 orders to a total
contract value of GBP61.6m and welcomed over 150 new customers to
Idox.
We continued to deliver modern, digital SaaS platforms for built
environment and public protection customers through Idox Cloud
applications and FY21 saw significant new wins at Coventry City
Council, Warrington Borough Council, Birmingham City Council and
the Government of Bermuda. In addition, we saw continued success
with our conversion to the cloud strategy with wins including
Leicester City Council, Royal Borough of Chelsea & Westminster
and the City of Cardiff Council along with the provisioning of
private cloud services to our Uniform customer base, including The
City of Edinburgh Council. We also saw some early success from our
acquisitions, with Aligned Assets winning important contracts with
the national gas and electricity supplier switching project to
provide address matching services, and with the Metropolitan Police
to provide Risk Intelligence services for the whole of Greater
London.
In our Health & Social Care businesses we recorded wins
including Medway NHS Foundation Trust for the tracking of their day
forward packs; and North Somerset Council, who became the latest
user of our Education, Health and Care Hub as part of an overall
24-month programme to significantly improve special educational
needs and disabilities service provisions within the Council.
In Elections we were successful with Bracknell Forest Council
implementing the Idox Election Management System, deployed through
a Microsoft Azure environment, managing the council's full breadth
of electoral services and, replacing their long-term incumbent
solution.
In Computer Aided Facilities Management (CAFM) we recorded a
number of wins, such as BCAS Bio Medical Services to manage
maintenance of hospital devices following a highly successful
trial, along with BET365 and DHL to manage facilities within their
own organisations. In Databases we secured 96 new GrantFinder
Customers and 21 new ResearchConnect Customers. In Transport we
continued to closely support the ongoing Toronto Metrolinx project
which is due to go live in the coming financial year, and secured
long-term commitments from both Cornwall and Somerset for their
development solutions.
After a slower start to the year in the EIM Division,
FusionLive, our Engineering Document Management solution, secured
11 new customer wins in H2. This included a 5-year agreement with
EBLA, which involved the capture of 10.5m project documents and
drawings for the existing Doha International Airport as well as the
current expansion to scale up for the 2022 Football World Cup. Over
1,000 documents per day are uploaded into the system from engaged
engineering contractors. Other new customers included Rosetti
Marino and Audubon Engineering, who will be using FusionLive across
all group projects within their portfolios.
Margins
During a year of obvious Covid-19 pandemic challenges, we have
seen increased demand for services from our clients. Accordingly,
we have seen an improvement in our effectiveness in delivering
professional services to customers and this has helped to drive
further improvement in margins across our operations.
We have seen an improvement in Adjusted EBITDA margins to 31%
(2020: 30%) in our continuing business over the past twelve months.
We recorded a statutory profit before tax for continuing operations
of GBP7.3m (2020: GBP1.8m), representing a statutory profit before
tax margin of 12% (2020: 3%). With our desire and ambition to be a
'Rule of 40' business, we feel that further improvements in sales
of existing offerings to our current clients and entry into new
near adjacent markets with our newly acquired capabilities position
us well for future margin growth.
We take pride across our teams in delivering effectively to
customers and this in turn ensures that we enjoy strong cash
generation for our activities. At the end of the financial year, we
had a net debt position of GBP8.1m. We have seen net cash
generation and a reduction in debt over the last three financial
years of GBP23.7m (a 75% reduction).
Across the Group we have continued to drive initiatives that we
believe will deliver improved margins. This included a fundamental
review of our approach to data migration and in particular data
mapping, with tooling developed to remove the need for our
customers to map data items. This will reduce lead times, improve
quality and enhance new customer experience in the critical early
days of working with Idox. Also of note, our sexual health product
reached a significant milestone with the release of our SaaS
self-service platform, which we believe is the first to be fully
NHS digital, data and technology standards compliant; and we
successfully transitioned our education, health and care ('EHC')
customers to the Idox Cloud SaaS platform.
Simplification
We continue in our efforts to maintain the Group as a well-run,
simple and efficient organisation. Following the disposals of our
Content division, Idox is now a single business providing
software-based solutions to the Public Sector and Engineering
markets.
During the period we have continued to streamline our operations
with the consolidation of all UK activities into our main UK
trading company, Idox Software Limited. The trade of Aligned Assets
and thinkWhere transferred to Idox Software Limited on 1 November
2021 and exeGesIS will be similarly transferred in early FY22. This
consolidation allows us to maintain single customer, people and tax
structures which provides clarity, simplicity, and superior service
to all involved.
We continue with ongoing development of our CRM installed in the
prior year, and to improve the integration and utility of our ERP.
We have expanded the use of CRM by embedding our key sales approval
processes, installing a new configure, price and quoting process to
improve the processing of customer orders, and established new
reporting to understand progress in sales pipeline management and
reporting of revenues. In our ERP, we have undergone a programme of
industrialising a number of processes, allowing their measurement
in real-time. These investments in our processes and systems help
bring clarity and efficiencies through lower processing times and
better information and provide a strong base for our ongoing and
planned future growth.
We have maintained our 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) as well as
achieving certification for ISO 22301 (Business Continuity).
Communication
This year we have continued to improve the way we work and
communicate with our customers through our direct account
management teams, internal sales support and our project management
office. In addition, we have developed the "Idox, Do More"
proposition to help deliver a consistent brand and message; this
includes a number of thought leadership positions that explore in
detail the challenges our clients face and how people, process and
technology solutions combine to improve service, efficiency and
public engagement.
We have continued to engage openly with all our teams and to
address issues and challenges identified with gusto. We host
regular CEO broadcasts along with forums and workshops to work
through any issues raised that require business attention or
improvement. Increasingly, these activities are initiated and
driven by teams formed across the business that have a shared
interest rather than initiated from a top-down approach. This is a
good sign of a healthy and vibrant business. We also aim to reflect
our own people's desire for Idox to be a socially responsible and
sustainable business.
As we described in prior reports, we have embraced more
flexibility in our working patterns across the Group and have
listened carefully to our teams about what works for them and is
practical. We do not intend to mandate a return to offices, and we
will continue to work flexibly. We have offered continuing support
to our teams to ensure good mental health is maintained and our
Idox Wellbeing team, which is drawn from across the business,
provides mental health support to the Group and we are all grateful
for their continued commitment to this activity.
The Idox leadership development programme that ran in 2021 has
proven very successful. As we move into 2022, we have a further 70
individuals committing to a year-long programme of
self-development. We are grateful to the 33 people that committed
to the programme in 2021, for exemplifying our DRIVE values and for
their ongoing contribution to the success of the Group.
Responsible Idox and ESG
We recognise the importance of our responsibilities in respect
to ESG. In FY21 we formed an ESG steering committee, with the
responsibility of understanding and monitoring how our business
practices are sustainable in environmental and social terms, as
well as being well governed. This year we publish our ESG plans in
detail within this financial report, and I am proud that these are
an authentic representation of our progress and ambition in this
area.
Outlook
FY22 has started well and we continue to trade in line with
expectations. We will continue to invest selectively to grow our
capabilities and support our customers. The business has a strong
foundation in property and asset-based solutions and this, along
with our focus on digital transformation and Cloud provision, will
underpin our future strategy and growth.
A successful business rests upon the quality of its teams and
the desire and ability to go that extra step for customers,
colleagues, and shareholders. Over the past three years we have
invested in our people and have sought to create an environment
that develops talent and is welcoming to new team members. We
believe this lays the foundation for our future success and this
combined with our investments in governance, processes and
infrastructure will support our future progression as a successful
business. We continue to have financial resources at our disposal
for accretive and enhancing acquisitions and, having shown that
this can be delivered successfully, we look forward to driving
shareholder value moving forward and becoming a 'rule of 40'
business.
David Meaden
Chief Executive Officer
Financial review
The financial year ended 31 October 2021 has seen a lot of
change, consistent with our continued corporate simplification and
focus on our core public sector software markets. The Content
businesses were disposed of in March and April 21 for net proceeds
of GBP10.7m, whilst the proceeds from the disposal were reinvested
in the acquisition of Aligned Assets, thinkWhere and exeGesIS, for
initial net consideration of GBP10.5m. A strong focus on sales and
commercial governance has enabled us to pursue only
earnings-enhancing revenues. This approach has resulted in
improving revenue, Adjusted EBITDA and improved cash generation,
for continuing operations, compared to prior periods.
Idox Content is classified as discontinued operations given the
disposal of its businesses during the year. In addition, corporate
costs previously allocated to Idox Content in FY20 have been
reduced by GBP1,348,000 to better reflect the actual reduction in
corporate costs as a result of the discontinued operations.
The following table sets out the revenues and Adjusted EBITDA
for each of the Group's segments from its continuing and
discontinued activities:
FY21 FY20 Variance
----------------
GBP000 GBP000 GBP000 %
Revenue
- Public Sector Software 54,114 48,426 5,688 12%
- Engineering Information
Management 8,071 8,858 (787) (9%)
------- ------- --------
- Idox Software 62,185 57,284 4,901 9%
- Idox Content (discontinued) 3,897 10,733 (6,836) (64%)
------- ------- --------
- Total 66,082 68,017 (1,935) (3%)
Revenue split
- Public Sector Software 82% 71%
- Engineering Information
Management 12% 13%
------- -------
- Idox Software 94% 84%
- Idox Content (discontinued) 6% 16%
Adjusted EBITDA*
- Public Sector Software 17,969 15,536 2,433 16%
- Engineering Information
Management 1,550 1,702 (152) (9%)
------- ------- --------
- Idox Software 19,519 17,238 2,281 13%
- Idox Content (discontinued) 276 2,346 (2,070) (88%)
------- ------- --------
- Total 19,795 19,584 211 1%
Adjusted EBITDA margin
split
- Public Sector Software 33% 32%
- Engineering Information
Management 19% 19%
------- -------
- Idox Software 31% 30%
- Idox Content (discontinued) 7% 22%
------- -------
- Total 30% 29%
* Adjusted EBITDA is defined as earnings before amortisation,
depreciation, restructuring, acquisition costs, impairment,
financing costs and share option costs .
Continuing operations - PSS and EIM
The PSS and EIM divisions, accounting for 94% of Group revenues
(2020: 84%), delivered revenues of GBP62.2m (2020: GBP57.3m).
FY21 FY20 Variance
---------------
GBP000 GBP000 GBP000 %
Continuing revenues
- Recurring (PSS) 30,111 28,863 1,248 4%
- Recurring (EIM) 6,139 6,886 (747) (11%)
- Non-recurring (PSS) 24,003 19,563 4,440 23%
- Non-recurring (EIM) 1,932 1,972 (40) (2%)
------- ------- -------
62,185 57,284 4,901 9%
- Recurring* 58% 62%
- Non-recurring** 42% 38%
* Recurring revenue is defined as revenues associated with
access to a specific ongoing service, with invoicing that typically
recurs on an annual basis and underpinned by either a multi-year or
rolling contract. These services include Support & Maintenance,
SaaS fees, Hosting services, and some Managed Service arrangements
which involve a fixed fee irrespective of consumption.
** Non-Recurring revenue is defined as revenues without any
formal commitment from the customer to recur on an annual
basis.
Recurring revenues have increased in PSS due to the acquisitions
made in the second half of the year which have delivered recurring
revenues of GBP1.1m. The recurring revenues in EIM have decreased
in the year due to some contracts coming to their end and not being
renewed. The proportion of recurring revenues has decreased
slightly due to non-recurring revenues growth slightly outpacing
our recurring revenues.
Non-recurring revenues have increased also due to the impact of
the continued high levels of sales governance implemented over the
last 2 years, resulting in higher recoveries.
Adjusted EBITDA increased by 13% to GBP19.5m (2020: GBP17.2m),
delivering an improved EBITDA margin of 31% (2020: 30%). The margin
improvement has been driven by the increased revenues converting
strongly to margin and has been boosted by the high margin
acquisitions of Aligned Assets and exeGesIS that were made in the
year.
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.
Discontinued operations - Content
The Content division recorded a revenue reduction of 64% to
GBP3.9m (2020: GBP10.7m) and a decrease in Adjusted EBITDA of 88%
to GBP0.3m (2020: GBP2.3m) as a result of the businesses being
disposed of in March and April 2021.
FY21 FY20 Variance
----------------
GBP000 GBP000 GBP000 %
Idox Content revenues
- Recurring 604 1,626 (1,022) (63%)
- Non-recurring 3,293 9,107 (5,814) (64%)
------- ------- --------
3,897 10,733 (6,836) (64%)
- Recurring 15% 15%
- Non-recurring 85% 85%
Profit before tax for continuing operations
The reported profit before tax was GBP7.3m (2020: GBP1.8m). The
reasons for the improved adjusted EBITDA are set out above, and the
reasons for the movements in all other constituent parts of profit
before tax are set out below. The following table provides a
reconciliation between adjusted EBITDA and statutory profit before
taxation for continuing operations.
FY21 FY20 Variance
----------------
GBP000 GBP000 GBP000 %
Adjusted EBITDA 19,519 17,238 2,281 13%
Depreciation and Amortisation (10,204) (10,063) (141) 1%
Restructuring costs 90 (1,748) 1,838 (105%)
Acquisition costs 134 (125) 259 (207%)
Financing costs (110) (306) 196 (64%)
Share option costs (1,789) (1,004) (785) 78%
Net finance costs (372) (2,177) 1,805 (83%)
--------- ---------
Profit before taxation 7,268 1,815 5,453 300%
--------- --------- -------
Restructuring gains were GBP0.1m (2020: GBP1.7m costs). The
restructuring of business units in the prior year has now largely
been completed and as a result restructuring costs have been
significantly reduced and represent a small gain in the current
year. Restructuring costs are analysed as follows:
FY21 FY20 Variance
-----------------
GBP000 GBP000 GBP000 %
Redundancies (22) (245) (223) (91%)
Disposal of subsidiaries 32 (397) (429) (108%)
Take over approach (171) - 171 n/a
Litigation - (34) (34) (100%)
Property 251 (1,072) (1,323) (123%)
------- --------
Total restructuring costs 90 (1,748) (1,846) (106%)
------- -------- --------
Acquisition gains of GBP0.2m (2020: GBP0.1m costs) relates to
the acquisition of Aligned Assets, thinkWhere and exeGesIS in the
year. The prior year is in relation to the final settlements to the
acquisition of Idox Cloud (formerly Tascomi) in August 2019.
There were no impairments in the year (2020: GBPNil).
Financing costs of GBP0.1m (2020: GBP0.3m) relate to
professional fees incurred as part of the loan extension and
transition to SONIA from LIBOR in October 2021. The prior year
costs were incurred as part of the refinancing in December
2019.
Share option costs of GBP1.8m (2020: GBP1.0m) relate to the
accounting charge for awards made under the Group's Long-term
Incentive Plan.
Net finance costs have decreased to GBP0.4m (2020: GBP2.2m) as a
result of less interest being payable in respect of the Group's
decreased banking facilities which were fully drawn in the second
half of the prior year as part of our Covid-19 pandemic defensive
actions. Additionally, the effective interest rate accounting
adjustments have decreased as a result of the change in drawn loan
balances.
The Group continues to invest in developing innovative
technology solutions across the Idox Software portfolio and has
incurred capitalised development costs of GBP4.6m (2020:
GBP4.7m).
Taxation
The effective tax rate (ETR) for the year was 9.4% (2020: 52.8%)
for total operations. The ETR for the year for continuing
operations was 17.0% (2020: 73.7%).
The main factors for the reduction in the volatility in the ETR
on the profit before tax position was the significant increase in
the profit before tax as well as the disposals in the year which
resulted in income not subject to tax meaning, permanent and other
differences giving rise to ETR effects were proportionately lower.
These differences included routine non-allowable amounts in
addition to international losses not recognised in the period and
higher overseas tax rates.
There are substantial carried-forward losses not recognised for
deferred tax purposes to date, owing to adoption of a prudent loss
recognition position. The gross value of these losses not
recognised to date totals GBP10.8m, split across Malta (GBP8.5m),
the UK (GBP0.6m), and France (GBP1.7m). The Board is hopeful that
the Group will benefit from these unrecognised tax losses, with the
exception of Malta, in the future and these will be recognised at
the point where utilisation becomes more certain.
Earnings per share and dividends
Basic earnings per share for continuing and discontinued
operations improved to 2.71p (2020: 0.29p) as a result of the Group
reporting a significantly larger profit after tax compared to that
in FY20. Diluted earnings per share improved to 2.65p (2020:
0.29p).
Adjusted earnings per share for continuing operations increased
to 2.33p (2020: 1.50p) as a result of the Group reporting a
significantly larger profit after tax compared to that in FY20, as
well as reduced restructuring costs in the year. Adjusted diluted
earnings per share increased to 2.27p (2020: 1.47p).
The Board proposes a final dividend of 0.4p per share (2020:
0.3p), which represents a total dividend for the year of 0.4p per
share (2020: 0.3p), at a total cost of GBP1.8m (2020: GBP1.3m).
Balance sheet and cash flows
The Group's net assets have increased to GBP60.8m compared to
GBP47.0m at 31 October 2020. 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
2021 GBP000
Total Equity as per FY20 Financial Report 46,958
Share option movements 2,081
Fair value of deferred consideration shares
on purchase of subsidiary 1,261
Equity dividends paid (1,331)
Profit for the year 11,949
Exchange gains on translation of foreign operations (108)
Total Equity as per FY21 Financial Report 60,810
-------------
The increase in the Group's net assets is principally due to the
profit for the year, with a significant improvement in net debt in
the year as the Group continued to target cash generative revenues
and margins across its business. This is bolstered by the increase
of intangible assets due to the purchase of three acquisitions in
the year, and partially offset by the increase in deferred
consideration payable on these acquisitions. The Group has deferred
VAT of GBP1.0m as at 31 October 2021 (2020: GBP3.9m), which it is
anticipated will be repaid in the year ended 31 October 2022.
Cash generated from operating activities after tax as a
percentage of Adjusted EBITDA was 85% (2020: 124%). This decrease
was due primarily to the VAT liability deferrals the Group took
advantage of as part of its early Covid-19 pandemic defensive
actions in the prior year which will be settled across FY21 and
FY22. The Group generally continues to have high levels of adjusted
EBITDA to cash conversion.
The reported net cashflow was an outflow of GBP12.2m (2020:
inflow of GBP23.7m) due in the main to net debt repayments during
the year of GBP19.4m (2020: net debt drawdown GBP12.8m). Free
cashflow at 31 October 2021 was GBP7.1m (2020: GBP11.2m). Free
cashflow has decreased in the year due to the VAT effect referred
to above.
FY21 FY20
GBP000 GBP000
Net cashflow (12,068) 23,683
Add back:
Acquisitions / disposals (139) 200
Debt repayments 35,000 25,762
Drawdowns (15,600) (38,575)
Net cost of staff share schemes
/ (Issue of shares) (64) 118
--------- ---------
Free cashflow 7,129 11,188
--------- ---------
The Group ended the year with net debt of GBP8.1m (2020:
GBP16.1m), a significant improvement on the previous year. Net debt
comprised cash of GBP18.3m less bank borrowings of GBP15.4m and the
Maltese listed bond of GBP11.0m.
In October 2021 the Group extended its facility with the Royal
Bank of Scotland plc, Silicon Valley Bank and Santander UK plc (the
'Lenders') for an additional 18 months, to June 2024. The Group
also transitioned from LIBOR to SONIA at this point. The Group's
total signed debt facilities at 31 October 2021 consisted of a
revolving credit facility of GBP35m and GBP10m accordion .
The Group has carefully assessed the likely impact of the
Covid-19 pandemic on the business and our customers. Idox is
fundamentally resilient due to the Group's high recurring revenue
base, its focus on public sector markets and the high proportion of
staff that routinely work from home. The Group retains significant
liquidity with cash and available committed bank facilities and has
strong headroom against financial covenants. We continue to monitor
the situation and adapt our approach as required.
Rob Grubb
Chief Financial Officer
Consolidated statement of comprehensive
income
Restated*
Note 2021 2020
GBP000 GBP000
Continuing operations
Revenue 3 62,185 57,284
Cost of sales (17,130) (14,752)
-------- ---------
Gross profit 45,055 42,532
Administrative expenses (37,415) (38,540)
Operating profit 7,640 3,992
Analysed as:
Earnings before depreciation, amortisation,
restructuring, acquisition costs, impairment,
financing costs and share option costs 3 19,519 17,238
Depreciation (1,581) (1,498)
Amortisation (8,623) (8,565)
Restructuring costs 90 (1,748)
Acquisition costs 134 (125)
Financing costs (110) (306)
Share option costs (1,789) (1,004)
----------------------------------------------- ---- -------- ---------
Finance income 818 181
Finance costs (1,190) (2,358)
Profit before taxation 7,268 1,815
Income tax charge (1,237) (1,338)
Profit for the year from continuing
operations 6,031 477
Discontinued operations
Profit for the year from discontinued
operations 4 5,918 799
Profit for the year attributable to
the owners of the parent 11,949 1,276
Other comprehensive loss for the year
Items that will be reclassified subsequently
to profit or loss:
Exchange movements on translation of
foreign operations net of tax (108) (97)
-------- ---------
Other comprehensive loss for the year,
net of tax (108) (97)
-------- ---------
Total comprehensive profit for the
year 11,841 1,179
======== =========
Total comprehensive profit for the
year attributable to owners of the
parent 11,841 1,179
======== =========
From continuing operations
Basic 5 1.37p 0.11p
Diluted 5 1.34p 0.11p
From continuing and discontinued operations
Basic 5 2.71p 0.29p
Diluted 5 2.65p 0.29p
*The comparatives have been restated due to the Content business
being reclassified as discontinued operations. There has been no
change to the overall results.
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated balance sheet
Note 2021 2020
GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 1,307 1,183
Intangible assets 6 92,025 81,652
Right-of-use-assets 2,363 3,726
Investment - 18
Deferred tax assets 2,623 1,111
Total non-current assets 98,318 87,690
------- -------
Current assets
Trade and other receivables 16,968 18,700
Current tax receivable - 1,117
Cash and cash equivalents 18,283 30,812
Total current assets 35,251 50,629
------- -------
Total assets 133,569 138,319
------- -------
LIABILITIES
Current liabilities
Trade and other payables 8,075 6,084
Deferred consideration 2,070 57
Current tax payable 1,399 -
Other liabilities 23,547 26,839
Provisions 1,433 1,261
Lease liabilities 727 1,188
Total current liabilities 37,251 35,429
------- -------
Non-current liabilities
Deferred tax liabilities 5,579 3,907
Deferred consideration 841 27
Lease liabilities 1,747 2,695
Other liabilities 949 1,791
Provisions - 612
Bonds in issue 10,998 11,848
Borrowings 15,394 35,052
------- -------
Total non-current liabilities 35,508 55,932
------- -------
Total liabilities 72,759 91,361
------- -------
Net assets 60,810 46,958
======= =======
EQUITY
Called up share capital 4,469 4,450
Capital redemption reserve 1,112 1,112
Share premium account 41,556 41,356
Treasury reserve (594) (621)
Share option reserve 3,962 2,618
Other reserves 8,789 7,528
ESOP trust (417) (373)
Foreign currency translation
reserve (189) (161)
Retained earnings / (accumulated
losses) 2,122 (8,951)
------- -------
Total equity attributable to the owners
of the parent 60,810 46,958
======= =======
The financial statements were approved by the Board of Directors
and authorised for issue on 26 January 2022 and are signed on its
behalf by:
David Meaden Rob Grubb
Chief Executive Officer Chief Financial Officer
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company name: Idox plc Company number: 03984070
Consolidated statement of changes
in equity
Retained
Called Foreign earnings
up Capital Share Share currency /
share redemption premium Treasury option Other ESOP translation (accumulated Non-controlling
capital reserve account reserve reserve reserves trust reserve losses) interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1 November
2019 4,446 1,112 41,348 (621) 1,837 7,528 (365) (64) (10,500) (110) 44,611
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Issue of
share capital 4 - 8 - - - - - - - 12
Share option
costs - - - - 1,054 - - - - - 1,054
Exercise
/ lapses
of share
options - - - - (273) - - - 273 - -
ESOP trust - - - - - - (8) - - - (8)
Disposal
of investment - - - - - - - - - 110 110
Transactions
with owners
and
non-controlling
interests 4 - 8 - 781 - (8) - 273 110 1,168
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Profit for
the year - - - - - - - - 1,276 - 1,276
Other
comprehensive
loss
Exchange
movement
on translation
of foreign
operations - - - - - - - (97) - - (97)
Total
comprehensive
(loss) /
profit for
the year - - - - - - - (97) 1,276 - 1,179
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Balance at
31 October
2020 4,450 1,112 41,356 (621) 2,618 7,528 (373) (161) (8,951) - 46,958
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Issue of
share capital 19 - 200 - - - - - - - 219
Share option
costs - - - - 1,894 - - - - - 1,894
Exercise
/ lapses
of share
options - - - 27 (550) - - - 535 - 12
ESOP trust - - - - - - (44) - - - (44)
Fair value
of deferred
consideration
shares on
purchase
of subsidiary - - - - - 1,261 - - - - 1,261
Equity dividends
paid - - - - - - - - (1,331) - (1,331)
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Transactions
with owners 19 - 200 27 1,344 1,261 (44) - (796) - 2,011
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Profit for
the year - - - - - - - - 11,949 - 11,949
Other
comprehensive
loss
Recycled
exchange
movements
on disposal
of subsidiaries - - - - - - - 80 (80) - -
Exchange
movement
on translation
of foreign
operations - - - - - - - (108) - - (108)
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Total
comprehensive
(loss) /
profit for
the year - - - - - - - (28) 11,869 - 11,841
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
Balance at
31 October
2021 4,469 1,112 41,556 (594) 3,962 8,789 (417) (189) 2,122 - 60,810
--------- ----------- --------- --------- -------- --------- ------- ------------ ------------- ---------------- --------
The accompanying accounting policies and notes form an integral
part of these financial statements .
Consolidated cashflow statement
Note 2021 2020
GBP000 GBP000
Cash flows from operating activities
Profit for the year before taxation 13,186 2,702
Adjustments for:
Depreciation of property, plant and
equipment 801 817
Depreciation of right-of-use assets 1,021 1,240
Amortisation of intangible assets 8,835 9,282
(Gain) / loss on disposal / purchase
of subsidiary (6,679) 380
Finance income (800) (5)
Finance costs 1,060 2,210
Debt issue costs amortisation 144 189
Research and development tax credit (267) (134)
Share option costs 1,908 1,057
Loss on disposal of leases - 36
Movement in stock - 54
Movement in receivables 3,086 1,192
Movement in payables (5,947) 4,329
-------- --------
Cash generated by operations 16,348 23,349
Tax refunded / (tax paid) 206 (2,000)
-------- --------
Net cash from operating activities 16,554 21,349
-------- --------
Cash flows from investing activities
Acquisition of subsidiaries (10,530) -
Disposal of subsidiaries 10,669 (200)
Purchase of property, plant and equipment (1,110) (931)
Purchase of intangible assets (4,637) (5,998)
Finance income 66 5
-------- --------
Net cash used in investing activities (5,542) (7,124)
-------- --------
Cash flows from financing activities
Interest paid (967) (1,644)
New loans 15,600 38,575
Loan related costs (292) (48)
Loan repayments (35,000) (25,762)
Principal lease payments (1,154) (1,545)
Equity dividends paid (1,331) -
Issue of own shares 64 (118)
-------- --------
Net cash (outflows) / inflows from
financing activities (23,080) 9,458
Net movement in cash and cash equivalents (12,068) 23,683
Cash and cash equivalents at the beginning
of the year 30,812 7,023
Exchange gains on cash and cash equivalents (461) 106
-------- --------
Cash and cash equivalents at the end
of the year 18,283 30,812
======== ========
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 2020 and 31
October 2021 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 2021.
Statutory accounts for the year ended 31 October 2020 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 31 October 2021, 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 2020 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 December 2019 the Group had refinanced with the Royal Bank of
Scotland plc, Silicon Valley Bank and Santander UK plc. The
facilities, which comprise a revolving credit facility of
GBP35,000,000, were extended during the year and are committed
until June 2024.
Idox along with most companies has been impacted by the Covid-19
pandemic, however the impact on our Group has in the main been
limited to the initial disruption of the early stages of the
emerging challenges in 2020, including restrictions on physical
movement. We have largely seen our operations return to their
pre-Covid 19 pandemic levels across our Group.
We remain cautious in respect of the ongoing impact of the
Covid-19 pandemic and associated restrictions but are confident we
are fundamentally resilient due to the Group's high recurring
revenue base, its focus on public sector markets and the high
proportion of staff that routinely work from home. The Group
retains significant liquidity with cash and available committed
bank facilities and has strong headroom against financial
covenants.
We continue to assess the impact of the Covid-19 pandemic on the
business, taking actions to mitigate or limit the impacts on our
organisation where we can and supporting our staff, customers and
partners in dealing with the ongoing impacts which are largely in
respect of associated restrictions.
As part of the preparation of our FY21 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. Under this
sensitivity analysis, recurring revenues renewals were assumed to
be 37% lower than plan and non-recurring revenues won and delivered
lower by 74%, with no corresponding action on costs to address
these shortfalls. Under this scenario, the Group would likely be in
breach of its banking covenants during FY22, albeit liquidity even
in this extreme scenario remains strong. This scenario is not
considered credible given the growth the Group has experienced in
FY20 and FY21 in recurring and non-recurring revenues despite the
impact of the Covid-19 pandemic.
Therefore, this supports the going concern assessment for the
business .
The Annual Financial Report Announcement was approved by the
Board of Directors on 26 January 2022 and signed on its behalf by
David Meaden and Rob Grubb.
2 RESPONSIBILITY STATEMENTS UNDER THE DISCLOSURE AND
TRANSPARENCY RULES
The Directors confirm that:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the company and the undertakings included in the consolidation
taken as a whole;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
-- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the company's position and
performance, business model and strategy.
The name and function of each of the Directors for the year
ended 31 October 2021 are set out in the Annual Financial Report
2021.
3 SEGMENTAL ANALYSIS
During the year ended 31 October 2021, the Group was organised
into three operating segments, which are detailed below.
Financial information is reported to the chief operating
decision maker, which comprises the Chief Executive Officer and the
Chief Financial Officer, monthly on a business unit basis with
revenue and operating profits split by business unit. Each business
unit is deemed an operating segment as each offers different
products and services.
-- Public Sector Software (PSS) - delivering specialist
information management solutions and services to the public
sector.
-- Engineering Information Management (EIM) - delivering
engineering document management and control solutions to asset
intensive industry sectors.
-- Content (CONT) - delivering funding and compliance solutions
to corporate, public and commercial customers. The entities
comprising this segment were fully disposed in the year ended 31
October 2021, and the results which have been consolidated under
the Group's ownership have been disclosed as Discontinued
operations in these financial statements.
Segment revenue comprises sales to external customers and
excludes gains arising on the disposal of assets and finance
income. Segment profit reported to the Board represents the profit
earned by each segment before the allocation of taxation, Group
interest payments and Group acquisition costs. The assets and
liabilities of the Group are not reviewed by the chief operating
decision maker on a segment basis. The Group does not place
reliance on any specific customer and has no individual customer
that generates 10% or more of its total Group revenue.
The segment revenues by geographic location are as follows:
Continuing Discontinued Total Group
GBP000 GBP000 GBP000
2021: Revenues from external
customers
United Kingdom 52,038 46 52,084
USA 5,181 27 5,208
Europe 4,275 3,824 8,099
Rest of World 691 - 691
62,185 3,897 66,082
========== ============ ===========
Continuing Discontinued Total Group
GBP000 GBP000 GBP000
2020: Revenues from external
customers
United Kingdom 47,572 328 47,900
USA 5,913 193 6,106
Europe 2,589 10,212 12,801
Rest of World 1,210 - 1,210
---------- ------------ -----------
57,284 10,733 68,017
========== ============ ===========
Revenues are attributed to individual countries on the basis of
the location of the customer.
The segment revenues by type are as follows:
Continuing Discontinued Total Group
GBP000 GBP000 GBP000
2021: Revenues by type
Recurring revenues - PSS 30,111 - 30,111
Recurring revenues - EIM 6,139 - 6,139
Recurring revenues - Content - 604 604
---------- ------------ -----------
Recurring revenues 36,250 604 36,854
---------- ------------ -----------
Non-recurring revenues - PSS 24,003 - 24,003
Non-recurring revenues - EIM 1,932 - 1,932
Non-recurring revenues - Content - 3,293 3,293
---------- ------------ -----------
Non-recurring revenues 25,935 3,293 29,228
---------- ------------ -----------
62,185 3,897 66,082
========== ============ ===========
Revenue from sale of
goods 23,940 1,220 25,160
Revenue from rendering
of services 38,245 2,677 40,922
---------- ------------ -----------
62,185 3,897 66,082
========== ============ ===========
Continuing Discontinued Total Group
GBP000 GBP000 GBP000
2020: Revenues by type
Recurring revenues - PSS 28,863 - 28,863
Recurring revenues - EIM 6,886 - 6,886
---------- ------------ -----------
Recurring revenues - Software 35,749 - 35,749
Recurring revenues - Content - 1,626 1,626
---------- ------------ -----------
Recurring revenues 35,749 1,626 37,375
---------- ------------ -----------
Non-recurring revenues - PSS 19,563 - 19,563
Non-recurring revenues - EIM 1,972 - 1,972
---------- ------------ -----------
Non-recurring revenues - Software 21,535 - 21,535
Non-recurring revenues - Content - 9,107 9,107
---------- ------------ -----------
Non-recurring revenues 21,535 9,107 30,642
---------- ------------ -----------
57,284 10,733 68,017
========== ============ ===========
Revenue from sale of
goods 19,144 3,158 22,302
Revenue from rendering
of services 38,140 7,575 45,715
---------- ------------ -----------
57,284 10,733 68,017
========== ============ ===========
Recurring revenue is income generated from customers on an
annual contractual basis. Recurring revenue amounts to
approximately 58% (2020: 62%) of continuing revenue, 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 license or re-license
a customer's existing user without any further obligations, in
which case the revenue is recognised upon completion of the
obligation.
All contracts are issued with commercial payment terms without
any unusual financial or deferred arrangements and do not include
any amounts of variable consideration that are constrained.
The Group's total outstanding contracted performance obligations
at 31 October 2021 was GBP53,897,000 and it is anticipated that 64%
of this will be recognised as revenue in FY22 and 22% in FY23.
The segment results by business unit for the year ended 31
October 2021:
Continuing Discontinued
Operations Operations
PSS EIM Total CONTENT Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 54,114 8,071 62,185 3,897 66,082
--------- --------- ------------ ------------- ---------
Earnings before depreciation,
amortisation, restructuring,
acquisition costs, impairment,
financing costs and share
option costs 17,969 1,550 19,519 276 19,795
--------- --------- ------------ ------------- ---------
Depreciation (751) (36) (787) (14) (801)
Depreciation - right-of-use-assets (709) (85) (794) (227) (1,021)
Amortisation - software
licences, customer lists,
order backlog and R&D (4,193) (869) (5,062) (46) (5,108)
Amortisation - acquired
intangibles (3,210) (351) (3,561) (166) (3,727)
Restructuring costs 98 (8) 90 (11) 79
Acquisition costs 134 - 134 - 134
Share option costs (1,760) (29) (1,789) (119) (1,908)
--------- --------- ------------ ------------- ---------
Segment operating profit
/ (loss) 7,578 172 7,750 (307) 7,443
--------- --------- ------------ ------------- ---------
Financing costs (110) - (110)
------------ ------------- ---------
Operating profit / (loss) 7,640 (307) 7,333
------------ ------------- ---------
Gain from sale of discontinued
operations - 6,239 6,239
Finance income 818 - 818
Finance costs (1,190) (14) (1,204)
------------ ------------- ---------
Profit before taxation 7,268 5,918 13,186
------------ ------------- ---------
The corporate recharge to the business unit EBITDA is allocated
on a head count basis with the exception of Content, which has had
corporate costs reduced to avoid stranded costs.
The segment results by business unit for the year ended 31
October 2019:
Continuing Discontinued
Operations Operations
PSS EIM Total CONTENT* Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 48,426 8,858 57,284 10,733 68,017
--------- --------- ------------ ------------- ---------
Earnings before depreciation,
amortisation, restructuring,
acquisition costs, impairment,
financing costs and share
option costs 15,536 1,702 17,238 2,346 19,584
--------- --------- ------------ ------------- ---------
Depreciation (708) (83) (791) (26) (817)
Depreciation - right-of-use-assets (618) (89) (707) (533) (1,240)
Amortisation - software
licences, customer lists,
order backlog and R&D (3,803) (752) (4,555) (270) (4,825)
Amortisation - acquired
intangibles (3,570) (440) (4,010) (447) (4,457)
Restructuring costs (1,652) (96) (1,748) (90) (1,838)
Acquisition costs (125) - (125) - (125)
Share option costs (1,004) - (1,004) (53) (1,057)
--------- --------- ------------ ------------- ---------
Segment operating profit 4,056 242 4,298 927 5,225
--------- --------- ------------ ------------- ---------
Financing costs (306) - (306)
------------ ------------- ---------
Operating profit 3,992 927 4,919
------------ ------------- ---------
Finance income 181 - 181
Finance costs (2,358) (40) (2,398)
------------ ------------- ---------
Profit before taxation 1,815 887 2,702
------------ ------------- ---------
*Corporate costs for Idox Content have been reduced by
GBP1,349,000 to better reflect the actual reduction in Corporate
costs as a result of the discontinued operations. These costs have
been allocated to PSS and EIM on a headcount basis.
4 DISCONTINUED OPERATIONS
During the first six months of the financial year, the Group
received separate offers to acquire its Continental Compliance
operations, and its Netherlands Grants Consultancy operations.
These operations collectively comprised the Idox Content division
of the Group. These offers were at an acceptable valuation and
given the Group's desire to prioritise capital on its Idox Software
operation, these disposals were completed in the year.
The Continental Compliance operations were disposed on 12 March
2021 and the Netherlands Grants Consultancy operations were
disposed on 6 April 2021. These dates represent the point the
control and legal ownership of these operations passed to the
acquirers.
The results of the discontinued operations, which have been
excluded in the consolidated income statement, were as follows:
2021 2020
GBP000 GBP000
Revenue 3,897 10,733
Expenses (4,218) (9,846)
Gain on Disposal 6,239 -
Profit before tax 5,918 887
Attributable tax expense - (88)
Net profit attributable to discontinued
operations 5,918 799
======== ========
During the year, Content contributed GBP2.7m (2020: GBP1.6m) to
the Group's net operating cash flows and contributed GBP10.7m
(2020: GBPNil) in respect of investing and financing
activities.
5 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 2021 2020
GBP000 GBP000
Profit for the year 6,031 477
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 440,376,576 439,245,132
----------- -----------
Basic earnings per share 1.37p 0.11p
=========== ===========
Weighted average number of shares in issue 440,376,576 439,245,132
Add back:
Dilutive share options 10,749,077 7,279,721
Weighted average allotted, called up and
fully paid share capital 451,125,653 446,524,853
----------- -----------
Diluted earnings per share
Diluted earnings per share 1.34p 0.11p
=========== ===========
2021 2020
Adjusted earnings per share GBP000 GBP000
Profit for the year 6,031 477
Add back:
Amortisation on acquired intangibles 3,561 4,010
Acquisition costs (134) 125
Restructuring costs (90) 1,748
Financing costs 110 306
Share option costs 1,789 1,004
Tax rate changes 826 -
Tax effect (1,841) (1,094)
------------ ------------
Adjusted profit for year 10,252 6,576
============ ============
Weighted average number of shares in issue
- basic 440,376,576 439,245,132
Weighted average number of shares in issue
- diluted 451,125,653 446,524,853
Adjusted earnings per share 2.33p 1.50p
Adjusted diluted earnings per share 2.27p 1.47p
Discontinued Operations 2021 2020
GBP000 GBP000
Profit for the year 5,918 799
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 440,376,576 439,245,132
----------- -----------
Basic earnings per share 1.34p 0.18p
=========== ===========
Weighted average number of shares in issue 440,376,576 439,245,132
Add back:
Dilutive share options 10,749,077 7,279,721
Weighted average allotted, called up and
fully paid share capital 451,125,653 446,524,853
----------- -----------
Diluted earnings per share
Diluted earnings per share 1.31p 0.18p
=========== ===========
Total Operations 2021 2020
GBP000 GBP000
Profit for the year 11,949 1,276
----------- -----------
Basic earnings per share
Weighted average number of shares in issue 440,376,576 439,245,132
----------- -----------
Basic earnings per share 2.71p 0.29p
=========== ===========
Weighted average number of shares in issue 440,376,576 439,245,132
Add back:
Dilutive share options 10,749,077 7,279,721
Weighted average allotted, called up and
fully paid share capital 451,125,653 446,524,853
----------- -----------
Diluted earnings per share
Diluted earnings per share 2.65p 0.29p
=========== ===========
2021 2020
Adjusted earnings per share GBP000 GBP000
Profit for the year 11,949 1,276
Add back:
Amortisation on acquired intangibles 3,727 4,457
Acquisition costs (134) 125
Restructuring costs (6,318) 1,838
Financing costs 110 306
Share option costs 1,908 1,057
Tax rate changes 826 -
Tax effect (1,911) (1,122)
------------ ------------
Adjusted profit for year 10,157 7,937
============ ============
Weighted average number of shares in issue
- basic 440,376,576 439,245,132
Weighted average number of shares in issue
- diluted 451,125,653 446,524,853
Adjusted earnings per share 2.31p 1.81p
Adjusted diluted earnings per share 2.25p 1.78p
6 INTANGIBLE ASSETS
Customer
relation- Trade Develop-ment Order Customer
Goodwill ships names Software costs backlog lists Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 November 2019 79,841 31,958 12,593 22,687 19,288 320 273 166,960
Foreign exchange - - - (9) 27 (8) 5 15
Additions - - - 380 4,672 - - 5,052
Fair value (113) - - - - - - (113)
At 31 October 2020 79,728 31,958 12,593 23,058 23,987 312 278 171,914
Foreign exchange - - - (1) (88) (10) (18) (117)
Additions - - - 56 4,588 - - 4,644
Additions on acquisition 7,775 5,808 - 6,192 422 - - 20,197
Disposals (4,893) (2,920) (877) (906) (870) - (260) (10,726)
At 31 October 2021 82,610 34,846 11,716 28,399 28,039 302 - 185,912
======== ========== ====== ======== ============ ======== ======== ========
Amortisation
At 1 November 2019 31,709 19,142 8,565 12,565 8,558 258 159 80,956
Foreign exchange - - - (9) 29 (7) 11 24
Amortisation for the
year - 1,685 675 2,998 3,755 61 108 9,282
At 31 October 2020 31,709 20,827 9,240 15,554 12,342 312 278 90,262
Foreign exchange - - - (1) (78) (10) (18) (107)
Amortisation for the
year - 1,321 612 2,676 4,226 - - 8,835
Disposals - (2,530) (762) (775) (776) - (260) (5,103)
At 31 October 2021 31,709 19,618 9,090 17,454 15,714 302 - 93,887
======== ========== ====== ======== ============ ======== ======== ========
Carrying amount at
31 October 2021 50,901 15,228 2,626 10,945 12,325 - - 92,025
======== ========== ====== ======== ============ ======== ======== ========
Carrying amount at
31 October 2020 48,019 11,131 3,353 7,504 11,645 - - 81,652
======== ========== ====== ======== ============ ======== ======== ========
Average remaining amortisation
period (years)
31 October 2021 n/a 12.0 4.3 3.8 2.9 - -
31 October 2020 n/a 6.6 5.0 2.5 3.1 - -
During the year, goodwill and intangibles were reviewed for
impairment in accordance with IAS 36, 'Impairment of Assets'. An
impairment charge of GBPNil (2020: GBPNil) was processed in the
year.
Fair value adjustments are in relation to the finalisation of
acquisition accounting in respect of Aligned Assets Limited,
thinkWhere Limited and exeGesIS Spatial Data Management Ltd.
Impairment test for goodwill
For this review, goodwill was allocated to individual Cash
Generating Units (CGUs) on the basis of the Group's operations as
disclosed in the segmental analysis. As the Board reviews results
on a segmental level, the Group monitors goodwill on the same
basis.
The carrying value of goodwill by each CGU is as follows:
2021 2020
Cash Generating Units GBP000 GBP000
Public Sector Software (PSS) 40,927 30,624
Engineering Information Management (EIM) 9,974 9,974
Idox Content (discontinued) - 7,421
------ ------
50,901 48,019
====== ======
The recoverable amount of all CGUs has been determined using
value-in-use calculations. These calculations use pre-tax cash flow
projections based on financial budgets approved by management
covering the next five financial years. The key assumptions used in
the financial budgets relate to revenue and EBITDA growth targets.
Cash flows beyond this period are extrapolated using the estimated
growth rates stated below. Growth rates are reviewed in line with
historic actuals to ensure reasonableness and are based on an
increase in market share.
For value-in-use calculations, the growth rates and margins used
to estimate future performance are based on financial year 2022
budgets (as approved by the Board) which is management's best
estimate of short-term performance based on an assessment of market
opportunities and macro-economic conditions. In the year to 31
October 2021, the Weighted Average Cost of Capital for each CGU has
been used as an appropriate discount rate to apply to cash flows.
The same basis was used in the year to 31 October 2020.
The assumptions used for the value-in-use calculations are as
follows and are considered appropriate for each of the risk
profiles of the respective CGUs:
Discount
rate Compound Long term Discount Growth
Cash Generating Current Annual Growth growth rate rate rate Prior
Units year Rate Current year Prior year year
PSS 12.4% 4.2% 1.7% 11.8% 1.5%
EIM 13.5% (0.1)% 1.7% 12.7% 1.5%
Idox Content (discontinued) - - - 12.7% 1.5%
Individual Weighted Average Costs of Capital were calculated for
each CGU and adjusted for the market's assessment of the risks
attaching to each CGUs cash flows. The Weighted Average Cost of
Capital is recalculated at each period end.
Management considered the level of intangible assets within the
Group in comparison to the future budgets and have processed an
impairment charge of GBPNil within the year (2020: GBPNil).
Management have specifically considered the past financial
performance of the EIM CGU which has seen revenue decreases
following market challenges in the Oil and Gas sectors, compounded
by the Covid-19 pandemic and its impact on global consumption in
FY20 and FY21 following various periods of domestic lockdowns.
Reported EIM revenues have also been impacted by new business being
on a SaaS basis compared to previous periods that recorded larger
on-premise enterprise license sales. However, the business has
benefitted from the reorganisation of the Group in the past three
years, with adjusted EBITDA contribution (i.e., before allocation
of corporate expenses) up in FY19, FY20 and FY21, achieving a CAGR
of 17%. Management anticipates a return to revenue growth in FY22
following the easing of lockdown restrictions and improvement in
global supply, and following implementation of a more focused
go-to-market approach established from a strategic review completed
in late FY21. In the event the EIM CGU does not achieve revenue
growth in FY22 as anticipated, this may give rise to an impairment
in the carrying value of the EIM CGU assets.
The Group has conducted sensitivity analysis on the impairment
test of each CGU and the group of units carrying value.
Sensitivities have been run on the discount rate applied and
management are satisfied that a reasonable increase in the discount
rate used would not lead to the carrying amount of each CGU
exceeding the recoverable amount.
Sensitivities have also been run on cash flow forecasts for all
CGUs EBITDA by 10%. Management are satisfied that this change would
not lead to the carrying amount of each CGU exceeding the
recoverable amount. Sensitivities have also been run on cash flow
forecasts for all CGUs reducing the growth rate to 0%. Management
are satisfied that this change would not lead to the carrying
amount of each CGU exceeding the recoverable amount. In relation to
EIM, in the event a combination of all the sensitivities occur,
this could give rise to an impairment; however, the Directors have
concluded the likelihood of this is remote.
Management have further considered the CGUs for which prior
period impairments were recorded to reduce the value-in-use of
those CGUs to their recoverable amount, and how such carrying
values are subject to the current year sensitivities noted
above.
Whilst the current year impairment reviews and sensitivities
have not provided any indicators of further impairment on these
assets, management have considered whether a reversal of the prior
period impairment is required and concluded this is not appropriate
at this time due to the ongoing transformation and improvement of
those businesses.
7 ACQUISITIONS
Aligned Assets
On 5 June 2021, the Group acquired the entire share capital of
Aligned Assets.
Aligned Assets has provided software solutions to local
authorities and a range of other public and private sectors for
Address Management Solutions for over 20 years and adds to the
Group's existing portfolio of local government focussed solutions
which focus on built environment, public protection, transport,
elections, and social care.
Goodwill arising on the acquisition of Aligned Assets has been
capitalised and consists largely of the value of the synergies and
economies of scale expected from combining the operations of
Aligned Assets with Idox. None of the goodwill recognised is
expected to be deductible for income tax purposes. The purchase of
Aligned Assets has been accounted for using the acquisition method
of accounting.
Book value Fair value
GBP000 GBP000
Intangible Assets 3,424 -
Property, plant and equipment 104 46
Trade receivables 394 394
Other receivables 184 258
Cash at bank 367 367
----------- -----------
Total Assets 4,473 1,065
Trade payables (71) (71)
Other liabilities (804) (211)
Contract liabilities (1,362) (1,527)
Social security and other
taxes (111) (111)
Deferred tax liability (7) (1,691)
-----------
Total Liabilities (2,355) (3,611)
-----------
Net Assets (2,546)
-----------
Goodwill arising on acquisition 5,609
Purchased customer relationships
capitalised 3,822
Purchased software capitalised 3,194
-----------
Total consideration 10,079
===========
Satisfied by:
Cash to vendor 7,557
Earnout consideration 2,522
-----------
10,079
===========
The revenue included in the consolidated statement of
comprehensive income since 5 June 2021 contributed by Aligned
Assets was GBP1,229,000. Aligned Assets also made a profit after
tax of GBP537,000 for the same period. If Aligned Assets had been
included from 1 November 2020, it would have contributed
GBP3,289,000 to Group revenue and a profit after tax of
GBP1,353,000.
Acquisition costs of GBP165,000 have been written off in the
consolidated statement of comprehensive income.
thinkWhere
On 6 August 2021, the Group acquired the entire share capital of
thinkWhere.
thinkWhere provides end to end GIS systems using open source,
cloud-based products and applications, providing unique access to a
wealth of open datasets supported by professional consulting
services. thinkWhere will help build capability and new
opportunities for both our customers and products. Having
previously been equally owned by Falkirk and Stirling Councils, the
acquisition will provide thinkWhere and its staff with the
investment and resources to scale and accelerate as part of
Idox.
We were able to complete the purchase of thinkWhere Limited for
GBP1 as the funding requirements that the company was placing on
Stirling and Falkirk councils was deemed to be too high. The
purchase of thinkWhere has been accounted for using the acquisition
method of accounting.
Book value Fair value
GBP000 GBP000
Intangible Assets 322 421
Trade receivables 36 36
Other receivables 114 114
Cash at bank (24) (24)
----------- -----------
Total Assets 448 547
Trade payables (50) (50)
Other liabilities (69) (69)
Contract liabilities (261) (261)
Social security and other
taxes (128) (128)
Deferred tax liability 185 119
-----------
Total Liabilities (323) (389)
-----------
Net Assets 158
-----------
Gain on acquisition (440)
Purchased customer relationships
capitalised 157
Purchased software capitalised 125
-----------
Total consideration -
===========
The revenue included in the consolidated statement of
comprehensive income since 6 August 2021 contributed by thinkWhere
was GBP174,000. thinkWhere also made a loss after tax of GBP42,000
for the same period. If thinkWhere had been included from 1
November 2020, it would have contributed GBP694,000 to Group
revenue and a loss after tax of GBP168,000.
Acquisition costs of GBP35,000 have been written off in the
consolidated statement of comprehensive income.
exeGesIS
On 4 October 2021, the Group acquired the entire share capital
of exeGesIS.
exeGesIS provides both public and private sectors software which
helps collect information and manage assets of ecological,
environmental and historical importance. The company works with
private organisations, local authorities and other public sector
bodies who manage public rights-of-way, archaeological sites,
historic assets, conservation areas and nature reserves. This
customer base is complementary to Idox's and brings a number of new
clients into the Group.
Goodwill arising on the acquisition of exeGesIS has been
capitalised and consists largely of the value of the synergies and
economies of scale expected from combining the operations of
exeGesIS with Idox. None of the goodwill recognised is expected to
be deductible for income tax purposes. The purchase of exeGesIS has
been accounted for using the acquisition method of accounting.
Book value Fair value
GBP000 GBP000
Property, plant and equipment 14 11
Trade receivables 366 366
Other receivables 9 9
Cash at bank 2,033 2,033
----------- -----------
Total Assets 2,422 2,419
Trade payables (34) (34)
Other liabilities (404) (565)
Contract liabilities (779) (779)
Social security and other
taxes (13) (13)
Deferred tax liability (2) (2)
-----------
Total Liabilities (1,232) (1,393)
-----------
Net Assets 1,026
-----------
Goodwill arising on acquisition 2,166
Purchased customer relationships
capitalised 1,829
Purchased software capitalised 2,873
-----------
Total consideration 7,894
===========
Satisfied by:
Cash to vendor 6,244
Earnout consideration 1,650
-----------
7,894
===========
The revenue included in the consolidated statement of
comprehensive income since 4 October 2021 contributed by exeGesIS
was GBP224,000. exeGesIS also made a profit after tax of GBP91,000
for the same period. If exeGesIS had been included from 1 November
2020, it would have contributed GBP2,686,000 to Group revenue and a
profit after tax of GBP1,095,000.
The purchase price allocation between goodwill, customer
relationships and software is management's best estimate as a
formal valuation has not yet been finalised. Any required
reallocations between the categories will be completed within 12
months of acquisitions as permitted by IFRS 3.
Acquisition costs of GBP102,000 have been written off in the
consolidated statement of comprehensive income.
8 POST BALANCE SHEET EVENTS
There have been no post balance sheet events which had a
material impact on the Group.
9 ADDITIONAL INFORMATION
Related Party Transactions
No related party transactions have taken place during the year
that have materially affected the financial position or performance
of the Company.
Principal Risks and Uncertainties
The principal risk and uncertainties facing the Group together
with the actions being taken to mitigate them and future potential
items for consideration are set out in the Strategic Report section
of the Annual Financial Report 2021.
10 ALTERNATIVE PERFORMANCE MEASURES
The Group makes reference to Alternative Performance Measures
(APMs) which are not defined or specified under International
Reporting Standards. The Group uses these APMs 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. Details are
included within the financial review section of the Strategic
Report.
The following table reconciles these APMs to statutory
equivalents for continuing operations:
2021 2020
GBP000 GBP000
Adjusted EBITDA:
Profit before taxation 7,268 1,815
Depreciation and Amortisation 10,204 10,063
Restructuring costs (90) 1,748
Acquisition costs (134) 125
Financing costs 110 306
Share option costs 1,789 1,004
Net finance costs 372 2,177
------------ ------------
Adjusted EBITDA 19,519 17,238
============ ============
Free cashflow:
Net cashflow (12,068) 23,683
Add back:
Acquisitions / disposals (139) 200
Debt repayments 35,000 25,762
Drawdowns (15,600) (38,575)
(Issue of shares) / net cost of staff share
schemes (64) 118
------------ ------------
Free cashflow 7,129 11,188
============ ============
Net debt:
Cash (18,283) (30,812)
Bank borrowings 15,394 35,052
Bonds in issue 10,998 11,848
------------ ------------
Net Debt 8,109 16,088
============ ============
Adjusted profit for the year and adjusted
earnings per share:
Profit for the year 6,031 477
Add back:
Amortisation on acquired intangibles 3,561 4,010
Acquisition costs (134) 125
Restructuring costs (90) 1,748
Financing costs 110 306
Share option costs 1,789 1,004
Tax rate changes 826 -
Tax effect (1,841) (1,094)
------------ ------------
Adjusted profit for year 10,252 6,576
============ ============
Weighted average number of shares in issue
- basic 440,376,576 439,245,132
Weighted average number of shares in issue
- diluted 451,125,653 446,524,853
Adjusted earnings per share 2.33p 1.50p
Adjusted diluted earnings per share 2.27p 1.47p
The following table reconciles these APMs to statutory
equivalents for total operations:
2021 2020
GBP000 GBP000
Adjusted EBITDA:
Profit before taxation 13,186 2,702
Depreciation and Amortisation 10,657 11,339
Restructuring costs (6,318) 1,838
Acquisition costs (134) 125
Financing costs 110 306
Share option costs 1,908 1,057
Net finance costs 386 2,217
------------ ------------
Adjusted EBITDA 19,795 19,584
============ ============
Free cashflow:
Net cashflow (12,068) 23,683
Add back:
Acquisitions / disposals (139) 200
Debt repayments 35,000 25,762
Drawdowns (15,600) (38,575)
(Issue of shares) / net cost of staff share
schemes (64) 118
------------ ------------
Free cashflow 7,129 11,188
============ ============
Net debt:
Cash (18,283) (30,812)
Bank borrowings 15,394 35,052
Bonds in issue 10,998 11,848
------------ ------------
Net Debt 8,109 16,088
============ ============
Adjusted profit for the year and adjusted
earnings per share:
Profit for the year 11,949 1,276
Add back:
Amortisation on acquired intangibles 3,727 4,457
Acquisition costs (134) 125
Restructuring costs (6,318) 1,838
Financing costs 110 306
Share option costs 1,908 1,057
Tax rate changes 826 -
Tax effect (1,911) (1,122)
------------ ------------
Adjusted profit for year 10,157 7,937
============ ============
Weighted average number of shares in issue
- basic 440,376,576 439,245,132
Weighted average number of shares in issue
- diluted 451,125,653 446,524,853
Adjusted earnings per share 2.31p 1.81p
Adjusted diluted earnings per share 2.25p 1.78p
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