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REG - IDOX PLC - Half-year Report

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RNS Number : 8869O  IDOX PLC  15 June 2022

15 June 2022

Idox plc

Half Year Results for the six months ended 30 April 2022

Good performance whilst advancing strategy to focus on software businesses

 

Idox plc (AIM: IDOX, 'Idox', 'the Company' or 'the Group'), a leading supplier
of specialist information management software and solutions to the public and
asset intensive sectors, is pleased to announce its unaudited half year
results for the six months ended 30 April 2022 ('H1 FY22').

 

Financial highlights

Continuing operations (FY21 comparatives exclude Idox Content businesses
disposed in H1 FY21):

Revenue

·    Increased by 7% to £33.2m (H1 FY21: £31.1m), driven by double digit
growth in Public Sector Software.

·   Recurring revenues(1) increased by 13% to £19.8m (H1 FY21: £17.6m),
and now account for 60% of the Group's total revenue (H1 FY21: 57%).

Profit

·    Adjusted(2) EBITDA increased by 8% to £11.0m (H1 FY21: £10.1m).

·    Operating profit increased by 3% to £4.3m (H1 FY21: £4.1m).

·    Adjusted(2) EBITDA margin consistent at 33% (H1 FY21: 33%).

·    Operating profit margin consistent at 13% (H1 FY21: 13%).

·    Statutory profit before tax £3.6m (H1 FY21: £3.7m).

·    Adjusted(3) diluted EPS increased by 7% to 1.21p (H1 FY21: 1.13p).

·    Statutory diluted EPS increased by 1% to 0.68p (H1 FY21: 0.67p).

Cash

·   Net debt(4) reduction of 54% in the period to £3.8m (31 October 2021:
net debt £8.1m; 30 April 2021: net cash £7.6m). Comparatives reflect
disposal of Content businesses which generated net proceeds of £10.7m in H1
FY21, and three acquisitions completed in H2 FY21 with initial net
consideration of £10.5m.

·    Significant resources in place to fund M&A, including £35m
revolving credit facility and £10m accordion.

·   Cash generated from operating activities before taxation as a
percentage of Adjusted EBITDA for total operations was 122% (H1 FY21: 169%).

 

Operational highlights

·    Order intake of c.£40m, up 15% from H1 FY21, with strong pipeline
underpinning our confidence over the medium term.

·   Contract wins and extensions with increased average tenure across both
our Public Sector Software and Engineering Information Management (EIM)
businesses.

·  Strong double-digit growth in revenue and profit in Public Sector
Software buoyed by FY21 acquisitions; weaker performance in EIM due to
continued global uncertainties.

·    Integration of 2021 acquisitions substantially complete and to plan.

·    Continued upscaling of Pune, India, centre of excellence to increase
efficiency, capability, and knowledge sharing.

·    Good progress on furthering our M&A pipeline with strengthened
and dedicated team, led by Rob Grubb.

 

Current trading and outlook

·   Combination of recurring revenue and orderbook, in resilient Public
Sector Software markets, provides good revenue visibility for the remainder of
FY22.

·    EIM expected to deliver improved H2 FY22 performance.

·    The business continues to perform well and in line with the Board's
expectations.

 

David Meaden, Chief Executive Officer of Idox said:

"We continue to make good progress advancing our strategy to focus on
software. Our software solutions deliver value to our customers through
managing their complex operational, legislative, and regulatory issues, whilst
enabling us to maintain long term relationships with them.

 

Operationally, the business continues to perform strongly within our 'Four
Pillars' framework. I am particularly pleased with the progress from the
investment we have made in the business; in our people development, notably
our culture of engagement and leadership, organisational design incorporating
our offshore capabilities, improved management information and automation
programmes. All of this has helped deliver an improved quality of revenue,
with strong margins and underlying cash generation.

 

Further investments in our M&A team, led by Rob Grubb our former CFO, has
created greater focus and opportunity for further expansion through
acquisitions.

 

The outlook for the business is promising as we continue to improve our
operational capabilities and build momentum in our chosen markets. We are now
firmly focussed on our 'fly phase' which we believe will drive value for our
key stakeholders."

 

 

There will be a webcast at 9:00am UK time today for analysts and investors. To
register for the webcast please contact MHP Communications at idox@mhpc.com
(mailto:idox@mhpc.com)

 

For further information please contact:

 

 Idox plc                               +44 (0) 870 333 7101
 David Meaden, Chief Executive Officer  investorrelations@idoxgroup.com
 Anoop Kang, Chief Financial Officer

 Peel Hunt LLP (NOMAD and Broker)       +44 (0) 20 7418 8900
 Edward Knight
 Paul Gillam
 James Smith

 MHP Communications                     + 44 (0) 20 3128 8404
 Reg Hoare / Matthew Taylor              idox@mhpc.com (mailto:mhpc@idoxgroup.com)

 

About Idox plc

For more information see www.idoxgroup.com (http://www.idoxgroup.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.

(1) 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.

(2) 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 (see note 11 for reconciliation).

(3) Adjusted EPS excludes amortisation on acquired intangibles, restructuring,
financing, impairment, share option and acquisition costs (see note 11 for
reconciliation).

(4) Net (debt) / cash is defined as the aggregation of cash, bank borrowings
and the long-term bond.

 

Chair's statement

 

Introduction

I am pleased to report that the first half of this financial year has once
again seen a robust performance from the Group. During a period in which the
economic environment has become more difficult due to the war in Ukraine, the
lingering effects of the Covid-19 pandemic and the resulting pressure on costs
and talent, it is pleasing to see the business continue to progress so well
and continue to build momentum.

 

Following a period of corporate activity in the second half of FY21, which saw
the business become increasingly focussed on its software operations, we are
pleased to report continuing Group revenues up 7% on the same period last year
and a growth of 8% at EBITDA. This robust performance also translated into a
strong cash performance, with cash generated from continuing operations,
before tax, being £13.4m, representing a conversion rate of 122% against an
EBITDA for the period of £11.0m.

 

Once again net debt was considerably reduced, on this occasion by 54% in the
period. The Group is well placed to continue to execute on our growth strategy
supported by selective strategic acquisitions, with £7.1m of available cash
supplemented by our £35m revolving credit facility and £10m accordion.

 

We are confident in the momentum being built in the business and this is
supported by an increase in order intake over the period of 15%, with a strong
pipeline underpinning our confidence in the medium term.

 

The markets in which we operate have been the subject of much recent
discussion, particularly around Planning and the ongoing trend in Local
Government for consolidation into larger authorities. Whilst many of the well
trailed Planning Reform activities have not transpired to date, the continued
push for improvements in citizen engagement and the better use of data in
property and infrastructure development strategies are encouraging. These
trends, along with the continuing need for simplicity and cost savings using
advanced technology solutions lead us to believe there will continue to be
good opportunities for the business over the longer term. During the period we
have also seen some good contract wins in the EIM business, which will be
realised in the second half of the year.

 

We have spoken of our strategy to supplement our existing market offerings
with further targeted acquisitions, and I am pleased that the three
acquisitions we made last year have integrated so well with the business. We
have more to come from enhancing our combined offerings for clients, but we
have made strong progress to date. Since the acquisition of Idox Cloud in
2019, we have generated revenue derived from the areas related to our
regulated offerings of over £7.5m and this bodes well for the companies we
were able to add to the Group last year.

 

We have increased our focus on further acquisitions and continue to look for
accretive, synergistic opportunities that support the long-term focus on
software and which complement the existing portfolio. We are confident that
there are a range of opportunities that fit the key criteria we have defined,
and we look forward to adding further assets in due course.

 

During the reporting period we have undertaken work to report our progress in
matters relating to ESG and enhanced our reporting on matters relating to
diversity, equality and inclusivity. In each of these areas our reporting is
now illustrative of the attention the management team place upon these matters
and the culture within the business that seeks to ensure that all
stakeholders, foremost amongst these our employees, can be proud of Idox work
in this area. The Chief Executive's statement includes further information on
our ESG related activities.

 

Dividend

As previously announced, the Group paid a dividend of 0.4p per share in April
2022 in respect of the year ending 31 October 2021. Our current policy is to
only declare a final dividend and therefore there is no interim dividend in
respect of H1 FY22 (H1 FY21: £Nil). We will keep the level of future
dividends under review in consideration of our financial position and our
confidence in the future.

 

Board

During the reporting period, Rob Grubb resigned his Board position as Chief
Financial Officer and took up a role as M&A Director for the Group
reporting to the CEO, David Meaden. He was succeeded by Anoop Kang who was
appointed to the Board as CFO on 16 March 2022, having previously held a
number of senior finance roles, including CFO, in a range of well-known
companies.

 

Summary

The Group has made credible progress with its strategy during the period,
building on the transformation achieved previously. Idox is now a pure
software Group and is well positioned to progress further with the financial
resources at its disposal. The business continues to perform well and in line
with the Board's expectations.

 

 

Christopher
Stone

Chair of the
Board

 

 

Chief Executive's statement

 

Building momentum

Our four pillars of Revenue expansion, Margin enhancement, Simplification and
Communication continue to be the platform on which we build and operate the
business. I am pleased to report on another period of strong performance as we
continued to focus on software businesses that deliver value to customers, and
which allow Idox to maintain long term relationships through our proven
ability to manage complex operational, legislative, and regulatory issues.

 

The three acquisitions made in the second half of FY21 (Aligned Assets,
thinkWhere & exeGesIS) strengthen our position in the area of Planning
Technology and further expanded our capabilities in Address Management and
particularly in Geo-Spatial solutions and services. These acquisitions are now
fully integrated within our sales and operational delivery teams, and we are
already seeing benefits from our combined propositions as well as
opportunities to develop further into near adjacent markets.

 

We are in a strong financial position to add further customers, technology,
and recurring income through carefully selected M&A, further extending
Idox's position in markets where it is noted for its expertise and insight.

 

Strong progress

During this reporting period we have seen growth in Group revenues for our
continuing operations of 7%, with accompanying adjusted EBITDA improving by 8%
from £10.1m to £11.0m. Following strong cash generation, we have moved from
a net debt position at 31 October 2021 of £8.1m to a net debt position of
£3.8m.

 

As our focus has now shifted into our 'fly phase', and given our strong
operational cadence and financial position, we are well placed for growth in
our software operations and have established a solid position from which to
add compatible bolt on acquisitions to our portfolio of offerings.

 

The 'Four Pillars' programme

Revenue expansion

The Chair of the Board referenced the unsettling economic conditions caused by
the war in Ukraine and the lingering effects of the pandemic. During the
period we demonstrated high resilience as a business and our core areas
performed well. Our strong market positions have allowed us to continue to
sell more to existing clients as we meet their needs, as well as adding new
client accounts. Performance overall has been bolstered by the
transformational activities we have undertaken that have led to better sales
execution and improved integration across the Group, which in turn have
delivered consistent margins and improved bottom-line performance.

 

Order intake across the Group for the six months ended 30 April 2022 continued
to grow, helping to support the in-year revenue growth and build the future
orderbook. In the period we secured c.£40m of total contract value,
increasing by 15% over the same period last year.

 

Sales order intake in local government continued to rise, up 13% on the same
period; new wins in H1 FY21 included Rother & Wealden District Council,
Dartmoor National Park Authority and Belfast City Council, choosing to
implement the Idox Cloud Solution. The Idox Cloud business continued to enjoy
good growth in H1 FY22 as planned, with revenues up 7%, whilst its recurring
revenue was up 11% on the same period last year.

 

In Elections, we saw a very busy first half of the year. A combination of UK
local elections, an election in Malta and the completion of a number of
project deliverables for the Scottish eCount contract resulted in revenues up
17% when compared to the same period in FY21.

 

Health revenues also increased 9% on the comparable period with consistent
recurring revenue and new sales from our sexual health products. Sales orders
were also up in the period, although we still believe customers have continued
to focus their efforts on managing the after effects of the Covid-19 pandemic.

 

In the Grants subscription business incorporating GrantFinder &
ResearchConnect, our new product UI (launched last year) has been welcomed by
the market. Revenues were up in the period 6% and sales order intake was also
up over 10% in the period. We also continued support for Charities and
organisations with incomes of less than £30,000 through the "My Funding
Central" solution, providing free access to grants and funding information to
over 3,000 subscribers following the withdrawal of these services by the
National Council Voluntary Organisation.

 

New business sales in EIM were supported by significant new FusionLive sales
including Lummus Technologies and Transalta, supporting growth in the markets
of Renewables and Construction. Revenues were down in EIM as the business was
affected by uncertainty in some of its markets largely due to the impact of
the global economy and the war in Ukraine.

 

Margin enhancement

During the period we have substantially grown our operations in India,
expanding our operational footprint to include the areas of HR, Finance and
Professional Services as well as broadening our Development Services there. We
see scope for further expansion throughout the rest of this year and beyond.

 

Development teams have been successfully restructured, our technology
footprints have been consolidated where possible and we have improved resource
sharing across our teams. Cost savings and efficiencies driven through data
centre consolidation and greater sharing of skills and capabilities across the
software and professional services teams continued to take effect.

 

Overall, these changes and investments are expected to enhance our long-term
margins.

 

Simplification

Stratification of the sales teams has provided a greater focus on
communication, renewals and the customer experience and continues to
positively impact customer attrition and the length of contracts.

 

Continued investment in our internal processes, systems, and the integration
of data across sales, customer services, professional services and finance
ensures that we have consistent customer information, improving all aspects of
our operational performance.

 

Professional Services utilisation continues to improve, and significant work
has been delivered to improve and simplify the process of data migration
between Idox solutions, thus making the transition of on-premise legacy
platforms to our latest cloud provisioned services shorter and more cost
effective for customers.

 

Communication

Regular and open communication with all colleagues across the business is a
strategic focus for the Group and is delivered through a number of channels.

 

We continue to provide regular updates through our CEO broadcasts where
various members of the management team participate to provide a broad range of
insights and inputs to the sessions, including an open Q&A provision for
all colleagues to participate. Our colleagues across the business are highly
engaged and participation levels demonstrate this.

 

Personally, conducting final conversations with prospective new team members
enables me to outline how we operate and work at Idox, what they can expect
from us and we in turn expect from them. This ensures that we have a well
communicated and understood culture and our ambitions for the business and the
opportunity for individuals to have meaningful careers in a unique company can
be fully aligned from the outset.

 

Responsible Idox

Conducting business responsibly is core to Idox's business model and long-term
strategic goals. The Board recognises the importance of our environmental and
societal responsibilities in defining and growing the value of our services
and solutions and in building lasting commercial relationships across the
industries and communities in which we operate. Our commitment is focused in
four areas: our people, our communities, our environment, and our
organisational responsibilities. Each of these focus areas addresses relevant
United Nations Sustainable Development Goals.

 

In FY21 we formed an ESG steering committee, with the core responsibility of
understanding and monitoring how our business practices are sustainable in
environmental and social terms, as well as ensuring Idox is well governed.
This committee has sponsored further initiatives during the first half of FY22
with particular focus on Diversity, Equality and Inclusivity, most notably
with the 'Dare to be Different' survey which was completed during the period.
Response rate from employees was extremely high, demonstrating the levels of
commitment our team have in celebrating our successes whilst also identifying
further opportunities for improvement. Our most recent initiative is the
introduction of 'Employee Lounges' - small virtual meetings to discuss how
these improvements should be made in the most effective way.

 

Idox recognises the importance of environmental protection and is committed to
operating its business responsibly by operating an Environmental Management
System accredited to BS EN ISO 14001:2015, participating in the Energy Saving
Opportunities Scheme ('ESOS'), and meeting the requirements of the Streamlined
Energy and Carbon Reporting ('SECR') regulations. FY21 saw the introduction of
enhanced reporting of our Scope 1, 2 and 3 emissions disclosures within the
Task Force on Climate-related Financial Disclosures ('TCFD') framework and in
the first half of FY22 we have continued to drive initiatives such as moving
towards electric vehicles for our service operations and maintaining
disciplines on avoiding unnecessary travel as Covid restrictions have been
removed.

 

Employees continue to use our community days scheme to support good causes in
their local communities and the payroll giving scheme to maximise the impact
of their contributions. The workplace wellbeing sessions also continue to be
very well attended and appreciated by members of the Idox Team.

 

Outlook

We continue to build momentum with a sharp focus on growing revenues within an
optimised operational structure; this will support good margin performance as
we progress through our 'fly phase' which we believe will drive value for all
our stakeholders.

 

We are making good progress and our strategy remains unchanged. We are clear
in our view that software provided in the cloud and / or provisioned through
our data centre services across each of our business areas is a strategic
necessity to service the market needs whilst, in turn, growing our recurring
revenue and we continue to invest across the business to facilitate this.

 

Our good cash generation provides a solid foundation from which to invest in
organic growth whilst initiating complimentary growth through the acquisition
of strategic targets that add to our portfolio of offerings. Overall, our
current full year financial performance is expected to be in line with Board
expectations reflecting our strong order book and consistent operational
execution.

 

 

David Meaden

Chief Executive
Officer

 

 

Chief Financial Officer's review

 

Financial review

The first six months of 2022 have built upon the changes implemented in FY21.
We have successfully integrated Aligned Assets and thinkWhere into the Group,
with exeGesIS substantially progressed and planned to complete in the second
half of the year. The acquisitions have proven to be earnings enhancing as
anticipated, contributing towards our 7% increase in continuing revenue to
£33.2m (H1 FY21: £31.1m) and our 8% increase in adjusted EBITDA to £11.0m
(H1 FY21: £10.1m).

 

The Idox Content business was classified as discontinued following its
disposal in FY21.

 

The following table sets out the Revenue and Adjusted EBITDA for each of the
Group's segments.

 

                                         H1 FY22  H1 FY21        Variance
                                         £000     £000           £000     %
 Revenue
 - Public Sector Software                29,652   26,982         2,670    10%
 - Engineering Information Management    3,554    4,148          (594)    (14%)
 Idox Software                           33,206       31,130     2,076    7%
 Idox Content (discontinued)             -            3,897      (3,897)  N/A
 Total                                   33,206       35,027     (1,821)  (5%)

 Revenue Split
 - Public Sector Software                89%      77%
 - Engineering Information Management    11%      12%
 - Idox Software                         100%     89%
 - Idox Content (discontinued)           -        11%

 Adjusted EBITDA(1)
 - Public Sector Software                10,679   9,420          1,259    13%
 - Engineering Information Management    311      719            (408)    (57%)
 Idox Software                           10,990       10,139     851      8%
 Idox Content (discontinued)             -        276            (276)    N/A
 Total                                   10,990   10,415         575      6%

 Adjusted EBITDA Margin Split
 - Public Sector Software                36%      35%
 - Engineering Information Management    9%       17%
 - Idox Software                         33%      33%
 - Idox Content (discontinued)           -        7%
 - Total                                 33%      30%

 

(1) Adjusted EBITDA is defined as earnings before amortisation, depreciation,
restructuring, acquisition costs, impairment, financing costs and share option
costs. See note 11 for reconciliations of the alternative performance
measures.

 

Public Sector Software ('PSS') and Engineering Information Management ('EIM')

PSS delivered revenues of £29.7m, an improvement of 10% on the prior year,
while the revenues in EIM have decreased to £3.6m in the period. Within PSS,
the acquisitions made in FY21, contributed £3.2m of revenue. On a 'like for
like' basis the Group delivered £30.0m of revenue, slightly down on the prior
period.

 

                           H1 FY22  H1 FY21  Variance
                           £000     £000     £000   %
 Idox Software Revenues
 - Recurring (PSS)         16,866   14,508   2,358  16%
 - Recurring (EIM)         2,964    3,117    (153)  (5%)
                           19,830   17,625   2,205  13%

 - Non-Recurring (PSS)     12,786   12,474   312    3%
 - Non-Recurring (EIM)     590      1,031    (441)  (43%)
                           13,376   13,505   (129)  (1%)

                           33,206   31,130   2,076  7%
 - Recurring(1)            60%      57%
 - Non-Recurring(2)        40%      43%

 

(1) Recurring revenue is defined as revenues associated with access to a
specific ongoing service, with invoicing that typically recurs on an annual
basis and underpinned by either a multi-year or rolling contract. These
services include Support & Maintenance, SaaS fees, Hosting services, and
some Managed service arrangements which involve a fixed fee irrespective of
consumption.

(2) Non-recurring revenue is defined as revenues without any formal commitment
from the customer to recur on an annual basis.

 

Total recurring revenue increased by 13% in the period to £19.8m and now
accounts for 60% of the Group's total revenue (H1 FY21: 57%). Recurring
revenues in PSS have increased 16% to £16.9m and have been positively
impacted by the acquisitions in the second half of FY21. In EIM recurring
revenues have decreased by 5% to £3.0m, impacted by certain contracts which
ended in FY21 and were not renewed and a continuation of uncertain market
conditions.

 

Non-recurring revenues have remained stable at £13.4m for the period and
account for 40% of the Group's revenue. A reduction of £0.4m in EIM has been
offset by improvements in PSS, particularly in the Elections part of the
business.

 

The Group's order intake for the period was up 15% on last year to c.£40m.
Furthermore, the average tenure of new contracts has increased from 20 months
to 22 months, as the Group focuses on transitioning existing customer
relationships to longer term arrangements, this includes contract wins in both
PSS and EIM. The orderbook for professional services ended the period at
£8.9m, down from £9.8m at 31 October 2021 and as a result of the planned
unwind of Elections contracts.

 

Adjusted EBITDA increased by 8% to £11.0m (H1 FY21: £10.1m), delivering a
stable EBITDA margin of 33% (H1 FY21: 33%). The improvement in adjusted EBITDA
benefitted from the FY21 acquisitions but was partially offset by reduced
revenues in EIM and the phasing of certain contracts in PSS to the second half
of 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.

 

Profit / (Loss) Before Taxation

The following table provides a reconciliation between adjusted EBITDA and
statutory profit before taxation for continuing operations.

 

                                    H1 FY22  H1 FY21             Variance
                                    £000     £000                £000   %

 Adjusted EBITDA                    10,990       10,139          851    8%

 Depreciation & Amortisation        (5,328)  (5,043)             (285)  6%
 Restructuring costs                (119)        (160)           41     (26%)
 Acquisition costs                  (11)            (6)          (5)    83%
 Financing costs                    (30)            (29)         (1)    3%
 Share option costs                 (1,249)         (784)        (465)  59%
 Net finance costs                  (651)        (462)           (189)  41%
 Profit before taxation             3,602    3,655               (53)   (1%)

 

The reported profit before tax for continuing operations was £3,602,000 (H1
FY21: £3,655,000).

 

Restructuring costs are analysed as follows:

 

                              H1 FY22  H1 FY21  Variance
                              £000     £000     £000   %

 Corporate restructuring      109      -        109    100%
 Litigation                   -        (11)     11     100%
 Property                     10       -        10     100%
 Take over approach           -        171      (171)  (100%)
 Total restructuring costs    119      160      (41)   (26%)

 

Acquisition costs of £11,000 (H1 FY21: £6,000) relates to the final
settlements in relation to the acquisition of Aligned Assets, thinkWhere and
exeGesIS in FY21. The prior year comparative is in relation to Idox Cloud
(formerly Tascomi) in August 2019.

 

Financing costs of £30,000 (H1 FY21: £29,000) relate to professional fees
incurred as part of the ongoing bank facility agreement.

 

Share option costs of £1.2m (H1 FY21: £0.8m) relate to the accounting charge
for awards in the current and prior years under the Group's Long-term
Incentive Plan.

 

Net finance costs have increased to £0.7m (H1 FY21: £0.5m) as a result of
the foreign exchange gain on the revaluation of the euro denominated bond
being lower than in the comparative period and less interest being payable in
respect of the Group's banking facilities.

 

The Group capitalised £3.1m of development costs during the period (H1 FY21:
£2.2m). £0.7m related to the FY21 acquisitions and £2.4m in respect of the
Group's legacy products. The Group has a number of products which are all at
differing stages of their lifecycle. These platforms require continued
investment to remain operational and current. For example, enhancements
include technical refreshes, functional changes and investment needed to
ensure continued operability.

 

Taxation

The effective tax rate (ETR) for the period was 17% (H1 FY21: 8%) for total
operations. The ETR for the period for continuing operations was 15% (H1 FY21:
18%). On an adjusted basis the Group's ETR was 20% (H1 FY21: 20%).

 

The main factors for the reduction in the volatility in the ETR on the profit
before tax position was the disposals in FY21 which resulted in income not
subject to tax, meaning permanent and other differences giving rise to ETR
effects were proportionately lower in the current period. The difference
between the statutory rate of 19% and the adjusted ETR of 20% is due to
certain disallowables, the impact of overseas tax rates and international
losses arising in the period and not recognised.

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 £12m, split
across Malta (£9.1m), the UK (£0.6m), and France (£2.3m). The Board is
hopeful that the Group will benefit from the unrecognised tax losses in the UK
and France 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 operations improved 3% to 0.70p (H1
FY21: 0.68p) as a result of the Group reporting a larger profit after tax
compared to that in H1 FY21. Diluted earnings per share for continuing
operations improved 1% to 0.68p (H1 FY21: 0.67p).

 

Adjusted basic earnings per share for continuing operations increased 7% to
1.24p (H1 FY21: 1.16p). Adjusted diluted earnings per share for continuing
operations increased 7% to 1.21p (H1 FY21: 1.13p).

 

In line with FY21 the Board does not propose an interim dividend in respect of
the six months ended 30 April 2022. We will keep the level of future dividends
under review in consideration of our financial position and our confidence in
the future.

 

Balance sheet and cashflow

The Group's net assets have increased to £63.1m compared to £60.8m at 31
October 2021. The constituent movements are detailed in the Group's
consolidated Statement of Changes in Equity: which are summarised as follows:

 

                                                      6 months to

                                                      30 April 2022

                                                      £000

 Total Equity as per FY21 Financial Report            60,810
 Share option movements                               1,221
 Equity dividends paid                                (1,784)
 Profit for the period                                2,508
 Exchange gains on translation of foreign operations  310
 Total Equity as per H1 FY22 Financial Report         63,065

The Group continued to have good cash generation in the period. Cash generated
from operating activities before taxation as a percentage of Adjusted EBITDA
for total operations was 122% (H1 FY21: 169%). The reduction in the conversion
rate is primarily due to the settlement of VAT deferrals and exceptional cash
costs in H1 FY22 and the timing of certain other creditor payments falling
into the second half of FY21.

 

                                                          H1 FY22  H1 FY21
                                                          £000     £000

 Net cashflow from operating activities after taxation    11,127   17,775
 Capex                                                    (3,588)  (3,097)
 Lease payments                                           (509)    (678)
 Free cashflow                                            7,030    14,000

 

The Group ended the period with net debt of £3.8m (H1 FY21: net cash of
£7.6m), representing a 54% reduction from the net debt position of £8.1m at
31 October 2021. The net cash position in the prior year reflected the net
cash inflow of £10.7m from the disposal of our Content business, which was
subsequently reinvested in the acquisitions in the second half of the year.
Net debt comprised cash of £21.6m less bank borrowings of £14.5m and the
Maltese listed bond of £10.9m.

 

In October 2021 the Group extended its revolving credit facility of £35m and
£10m accordion with the Royal Bank of Scotland plc, Silicon Valley Bank and
Santander UK plc for an additional 18 months, to June 2024. The Group also
transitioned from LIBOR to SONIA at this point.

 

 

 

The Group has carefully assessed the ongoing impact of the Covid-19 pandemic
on the business and on 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. For this
reason, the Directors continue to adopt the going concern basis in preparing
the financial statements.

 

 

Anoop Kang

Chief Financial Officer

 

                                                                                 Note                                                   6 months to      12 months to

                                                                                                            6 months to 30 April 2022   30 April 2021*   31 October 2021

                                                                                                            (unaudited)                 (unaudited)      (audited)
                                                                                                            £000                        £000             £000

 Continuing operations
 Revenue                                                                         3                          33,206                      31,130           62,185
 Cost of sales                                                                                              (8,389)                     (8,467)          (17,130)
 Gross profit                                                                                               24,817                      22,663           45,055
 Administrative expenses                                                                                    (20,564)                    (18,546)         (37,415)
 Operating profit                                                                                           4,253                       4,117            7,640

 Analysed as:
 Adjusted EBITDA                                                                 11                         10,990                      10,139           19,519
 Depreciation & Amortisation                                                                                (5,328)                     (5,043)          (10,204)
 Restructuring costs                                                                                        (119)                       (160)            90
 Acquisition costs                                                                                          (11)                        (6)              134
 Financing costs                                                                                            (30)                        (29)             (110)
 Share option costs                                                                                         (1,249)                     (784)            (1,789)

 Finance income                                                                                             219                         801              818
 Finance costs                                                                                              (870)                       (1,263)          (1,190)

 Profit before taxation                                                                                     3,602                       3,655            7,268

 Income tax charge                                                               5                          (527)                       (650)            (1,237)

 Profit for the period from continuing operations                                                           3,075                       3,005            6,031

 Discontinued operations
 (Loss) / profit for the year from discontinued operations                       6                          (567)                       4,284            5,918

 Profit for the period attributable to the owners of the parent                                             2,508                       7,289            11,949

 Other comprehensive income / (loss) for the period                                                         310                         401              (108)

 Items that will be reclassified subsequently to profit or loss:

 Exchange movement on translation of foreign operations net of tax
 Other comprehensive income / (loss) for the period, net of tax                                             310                         401              (108)
 Total comprehensive income for the period attributable to owners of the parent                             2,818                       7,690            11,841

 Earnings per share attributable to owners of the parent during the period
 From continuing operations
 Basic                                                                           7                          0.70p                       0.68p            1.37p
 Diluted                                                                         7                          0.68p                       0.67p            1.34p

 From continuing and discontinued operations
 Basic                                                                           7                          0.57p                       1.66p            2.71p
 Diluted                                                                         7                          0.56p                       1.62p            2.65p

Consolidated interim statement of comprehensive income

 

*The comparatives have been re-presented for a more appropriate reallocation
between cost of sales and administrative expenses as result of the Content
business being reclassified as discontinued operations in the prior period.
There has been no change to the overall results.

 

The accompanying notes form an integral part of these financial statements.

 

                                           Note                          At 30 April       At 30 April 2021 (unaudited)      At 31 October 2021

                                                                         2022                                                (audited)

                                                                         (unaudited)
                                                                         £000              £000                              £000
 Assets
 Non-current assets
 Property, plant and equipment                                           1,341             1,179                             1,307
 Intangible assets                         8                             91,530            71,386                            92,025
 Right-of-use-assets                                                     2,000             2,066                             2,363
 Deferred tax assets                                                     2,133             1,450                             2,623
 Total non-current assets                                                97,004            76,081                            98,318

 Current assets
 Trade and other receivables                                             20,966            20,088                            16,968
 Current tax receivable                                                  725               -                                 -
 Cash and cash equivalents                                               21,560            29,159                            18,283
 Total current assets                                                    43,251            49,247                            35,251

 Total assets                                                            140,255           125,328                           133,569

 Liabilities
 Current liabilities
 Trade and other payables                                                8,404             7,372                             8,075
 Deferred consideration                                                  2,691             -                                 2,070
 Current tax payable                                                     -                 126                               1,399
 Other liabilities                                                       30,928            33,388                            23,547
 Provisions                                                              853               1,967                             1,433
 Lease liabilities                                                       563               701                               727
 Total current liabilities                                               43,439            43,554                            37,251

 Non-current liabilities
 Deferred tax liabilities                                                6,256             3,445                             5,579
 Deferred consideration                                                  -                 -                                 841
 Lease liabilities                                                       1,454             1,485                             1,747
 Other liabilities                                                       727               934                               949
 Bonds in issue                                                          10,848            11,364                            10,998
 Borrowings                                                              14,466            10,207                            15,394
 Total non-current liabilities                                           33,751            27,435                            35,508
 Total liabilities                                                       77,190            70,989                            72,759
 Net assets                                                              63,065            54,339                            60,810

 Equity
 Called up share capital                                                 4,511             4,463                             4,469
 Capital redemption reserve                                              1,112             1,112                             1,112
 Share premium account                                                   41,556            41,466                            41,556
 Treasury reserve                                                        (594)             (594)                             (594)
 Share option reserve                                                    3,673             3,068                             3,962
 Other reserves                                                          8,789             7,528                             8,789
 ESOP trust                                                              (445)             (379)                             (417)
 Foreign currency translation reserve                                    121               320                               (189)
 Retained earnings / (accumulated losses)                                4,342             (2,645)                           2,122
 Equity attributable to the owners of the parent                         63,065            54,339                            60,810

Consolidated interim balance sheet

 

 

The financial statements were approved by the Board of Directors and
authorised for issue and are signed on its behalf by:

 

 

David Meaden
 
Anoop Kang

Chief Executive
Officer
Chief Financial Officer

 

The accompanying notes form an integral part of these financial statements.

 

 

                                                                                                                       Share                                                     Foreign currency translation reserve  Retained earnings / (accumu-lated losses)

                                                                        Called up share capital   Capital redemption   premium                      Share     Other              £000                                  £000                                       Total

                                                                        £000                      reserve              account   Treasury reserve   options   reserves   ESOP                                                                                     £000

                                                                                                  £000                 £000       £000              reserve   £000       trust

                                                                                                                                                    £000                 £000
 Balance at 1 November 2020 (audited)                                   4,450                     1,112                41,356    (621)              2,618     7,528      (373)   (161)                                 (8,951)                                    46,958
 Issue of share capital                                                 13                        -                    110       -                  -         -          -       -                                     -                                          123
 Share option charge                                                    -                         -                    -         -                  893       -          -       -                                     -                                          893
 Exercise / lapses of share options                                     -                         -                    -         27                 (443)     -          -       -                                     428                                        12
 ESOP trust                                                             -                         -                    -         -                  -         -          (6)     -                                     -                                          (6)
 Equity dividends paid                                                  -                         -                    -         -                  -         -          -       -                                     (1,331)                                    (1,331)
 Transactions with owners and non-controlling interests                 13                        -                    110       27                 450       -          (6)     -                                     (903)                                      (309)
 Profit for the period                                                  -                         -                    -         -                  -         -          -       -                                     7,289                                      7,289
 Other comprehensive income
 Recycled exchange movements on disposal of subsidiaries                -                         -                    -         -                  -         -          -       80                                    (80)                                       -
 Exchange movement on translation of foreign operations                 -                         -                    -         -                  -         -          -       401                                   -                                          401
 Total comprehensive loss for the period                                -                         -                    -         -                  -         -          -       481                                   7,209                                      7,690
 At 30 April 2021 (unaudited)                                           4,463                     1,112                41,466    (594)              3,068     7,528      (379)   320                                   (2,645)                                    54,339
 Issue of share capital                                                 6                         -                    90        -                  -         -          -       -                                     -                                          96
 Share options charge                                                   -                         -                    -         -                  1,001     -          -       -                                     -                                          1,001
 Exercise / lapses of share options                                     -                         -                    -         -                  (107)     -          -       -                                     107                                        -
 ESOP trust                                                             -                         -                    -         -                  -         -          (38)    -                                     -                                          (38)
 Fair value of deferred consideration shares on purchase of subsidiary  -                         -                    -         -                  -         1,261      -       -                                     -                                          1,261
 Transactions with owners                                               6                         -                    90        -                  894       1,261      (38)    -                                     107                                        2,320
 Profit for the period                                                  -                         -                    -         -                  -         -          -       -                                     4,660                                      4,660
 Other comprehensive income
 Exchange movement on translation of foreign operations                 -                         -                    -         -                  -         -          -       (509)                                 -                                          (509)
 Total comprehensive profit for the period                              -                         -                    -         -                  -         -          -       (509)                                 4,660                                      4,151
 Balance at 31 October 2021 (audited)                                   4,469                     1,112                41,556    (594)              3,962     8,789      (417)   (189)                                 2,122                                      60,810
 Issue of share capital                                                 42                        -                    -         -                  -         -          -       -                                     -                                          42
 Share option charge                                                    -                         -                    -         -                  1,207     -          -       -                                     -                                          1,207
 Exercise / lapses of share options                                     -                         -                    -         -                  (1,496)   -          -       -                                     1,496                                      -
 ESOP trust                                                             -                         -                    -         -                  -         -          (28)    -                                     -                                          (28)
 Equity dividends paid                                                  -                         -                    -         -                  -         -          -       -                                     (1,784)                                    (1,784)
 Transactions with owners                                               42                        -                    -         -                  (289)     -          (28)    -                                     (288)                                      (563)
 Profit for the period                                                  -                         -                    -         -                  -         -          -       -                                     2,508                                      2,508
 Other comprehensive loss
 Exchange movement on translation of foreign operations                 -                         -                    -         -                  -         -          -       310                                   -                                          310
 Total comprehensive profit for the period                              -                         -                    -         -                  -         -          -       310                                   2,508                                      2,818
 At 30 April 2022 (unaudited)                                           4,511                     1,112                41,556    (594)              3,673     8,789      (445)   121                                   4,342                                      63,065

Consolidated interim statement of changes in equity

The accompanying notes form an integral part of these financial statements.

 

 

Consolidated interim cash flow statement

 

                                                           Note

                                                                                             6 months to     6 months to                 12 months to

                                                                                             30 April 2022   30 April 2021 (unaudited)   31 October 2021 (audited)

                                                                                             (unaudited)
                                                                                             £000            £000                        £000
 Cash flows from operating activities
 Profit for the period before taxation                                                       3,035           7,935                       13,186
 Adjustments for:
 Depreciation of property, plant and equipment                                               371             467                         801
 Depreciation of right-of-use assets                                                         363             610                         1,021
 Amortisation of intangible assets                                                           4,594           4,420                       8,835
 Loss / (gain) on disposal of subsidiary                   6                                 567             (4,592)                     (6,679)
 Finance income                                                                              (199)           (801)                       (800)
 Finance costs                                                                               810             1,205                       1,060
 Debt issue costs amortisation                                                               60              73                          144
 Research and development tax credit                                                         (161)           (100)                       (267)
 Share option costs                                                                          1,249           903                         1,908
 Movement in receivables                                                                     (4,428)         (2,879)                     3,086
 Movement in payables                                                                        7,177           10,386                      (5,947)
 Cash generated by operations                                                                13,438          17,627                      16,348

 (Tax paid) / tax refunded                                                                   (2,311)         148                         206
 Net cash from operating activities                                                          11,127          17,775                      16,554

 Cash flows from investing activities
 Acquisition of subsidiaries                                                                 (651)           -                           (10,530)
 Disposal of subsidiaries                                                                    (148)           10,730                      10,669
 Gain on sale of property, plant and equipment                                               11              -                           -
 Purchase of property, plant and equipment                                                   (404)           (790)                       (1,110)
 Purchase of intangible assets                                                               (3,184)         (2,307)                     (4,637)
 Finance income                                                                              37              19                          66
 Net cash from / (used in) investing activities                                              (4,339)         7,652                       (5,542)

 Cash flows from financing activities
 Interest paid                                                                               (227)           (363)                       (967)
 New loans                                                                                   2,500           5,000                       15,600
 Loan related costs                                                                          (76)            -                           (292)
 Loan repayments                                                                             (3,600)         (30,000)                    (35,000)
 Principal lease payments                                                                    (509)           (678)                       (1,154)
 Equity dividends paid                                                                       (1,784)         (1,331)                     (1,331)
 (Purchase) / issue of own shares                                                            (51)            69                          64
 Net cash outflows from financing activities                                                 (3,747)         (27,303)                    (23,080)

 Net movement in cash and cash equivalents                                                   3,041           (1,876)                     (12,068)

 Cash and cash equivalents at the beginning of the period                                    18,283          30,812                      30,812
 Exchange gains / (losses) on cash and cash equivalents                                      236             223                         (461)
 Cash and cash equivalents at the end of the period                                          21,560          29,159                      18,283

 

The accompanying accounting policies and notes form an integral part of these
financial statements.

 

 

Notes to the interim accounts

 

1 General information

 

Idox plc is a leading supplier of software and services for the management of
Local Government and other organisations. The Company is a public limited
company, limited by shares, which is listed on the AIM Market of the London
Stock Exchange and is incorporated and domiciled in the UK. The address of its
registered office is 2nd Floor, 1310 Waterside, Arlington Business Park,
Theale, Reading, RG7 4SA. The registered number of the Company is 03984070.
There is no ultimate controlling party.

 

The financial statements are prepared in pounds sterling.

 

 

2 Basis of preparation

 

The financial information for the period ended 30 April 2022 set out in this
interim report does not constitute statutory accounts as defined in Section
434 of the Companies Act 2006. The Group's statutory financial statements for
the year ended 31 October 2021 have been filed with the Registrar of
Companies. The auditor's report on those financial statements was unqualified.

 

The interim financial information has been prepared using the same accounting
policies and estimation techniques as will be adopted in the Group financial
statements for the year ending 31 October 2022. The Group financial statements
for the year ended 31 October 2021 were prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards (IFRS)
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union. They were also prepared in accordance with International Financial
Reporting Standards as issued by the IASB. These interim financial statements
have been prepared on a consistent basis and format. The Group has not applied
IAS 34 'Interim Financial Reporting', which is not mandatory for AIM
companies, in the preparation of these interim financial statements.

 

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 £35,000,000, were extended in October 2021 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.

 

On the basis of the above considerations, the Directors have a reasonable
expectation that the Group will have adequate resources to continue in
business for the foreseeable future and therefore continue to adopt the going
concern basis in preparing the interim financial statements.

 

 

3 Segmental analysis

 

During the period ended 30 April 2022, the Group was organised into two
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
with revenue and operating profits split by business unit. Each business unit
is deemed an operating segment as each offers different products and services.

·      Idox Software: Public Sector Software (PSS) - delivering
specialist information management solutions and services to the public sector.

·      Idox Software: Engineering Information Management (EIM) -
delivering engineering document management and control solutions to asset
intensive industry sectors.

During the six months ended 30 April 2021 the Group disposed of its
Continental Compliance operations and its Netherlands Grants Consultancy
operations, which together comprised the Idox Content segment. As Idox Content
was a separately identifiable division the results for the period ended 30
April 2022 and comparative period have been classified as a discontinued
operation.

 

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 results for the six months to 30 April 2022 were:

 

                                            PSS      EIM     Continuing operations total  Discontinued operations Content  Total

                                            £000     £000    £000                         £000                             £000
 Revenue                                    29,652   3,554   33,206                       -                                33,206
 Adjusted EBITDA (note 11)                  10,679   311     10,990                       -                                10,990
 Depreciation & Amortisation                (4,698)  (630)   (5,328)                      -                                (5,328)
 Restructuring costs                        (44)     (75)    (119)                        -                                (119)
 Acquisition costs                          (11)     -       (11)                         -                                (11)
 Share option costs                         (1,060)  (189)   (1,249)                      -                                (1,249)
 Segment operating profit                   4,866    (583)   4,283                        -                                4,283
 Financing costs                                             (30)                         -                                (30)
 Operating profit                                            4,253                        -                                4,253
 Loss from sale of discontinued operations                   -                            (567)                            (567)
 Finance income                                              219                          -                                219
 Finance costs                                               (870)                        -                                (870)
 Profit before tax                                           3,602                        (567)                            3,035

 

The corporate recharge to the business unit is allocated on a head count
basis.

 

The segment results for the six months to 30 April 2021 were:

 

                                            PSS      EIM     Continuing operations total  Discontinued operations Content  Total

                                            £000     £000    £000                         £000                             £000
 Revenue                                    26,982   4,148   31,130                       3,897                            35,027
 Adjusted EBITDA (note 11)                  9,420    719     10,139                       276                              10,415
 Depreciation & Amortisation                (4,778)  (265)   (5,043)                      (454)                            (5,497)
 Restructuring costs                        (127)    (33)    (160)                        -                                (160)
 Acquisition costs                          (6)      -       (6)                          -                                (6)
 Share option costs                         (771)    (13)    (784)                        (119)                            (903)
 Segment operating profit / (loss)          3,738    408     4,146                        (297)                            3,849
 Financing costs                                             (29)                         -                                (29)
 Operating profit                                            4,117                        (297)                            3,820
 Gain from sale of discontinued operations                   -                            4,592                            4,592
 Finance income                                              801                          -                                801
 Finance costs                                               (1,263)                      (15)                             (1,278)
 Profit before tax                                           3,655                        4,280                            7,935

 

 

The segment revenues by geographic location were as follows:

 

                                                 Continuing  Discontinued  Total Group
                                                 £000        £000          £000
 H1 FY22: Revenues from external customers:
 United Kingdom                                  29,546      -             29,546
 North America                                   2,008       -             2,008
 Europe                                          1,407       -             1,407
 Rest of World                                   245         -             245
                                                 33,206      -             33,206

 

                                                 Continuing  Discontinued  Total Group
                                                 £000        £000          £000
 H1 FY21: Revenues from external customers:
 United Kingdom                                  26,679      46            26,725
 North America                                   2,836       27            2,863
 Europe                                          1,149       3,824         4,973
 Rest of World                                   466         -             466
                                                 31,130      3,897         35,027

 

 

4 Dividends

 

During the period a dividend was paid in respect of the year ended 31 October
2021 of 0.4p per ordinary share at a total cost of £1,784,000 (H1 FY21: 0.3p
per ordinary share at a total cost of £1,331,000).

 

The directors do not propose a dividend in respect of the interim period ended
30 April 2022 (H1 FY21: £Nil).

 

 

 

5 Tax on profit on ordinary activities

 

 Continuing operations                                 6 months to                 6 months to                 12 months to

                                                       30 April 2022 (unaudited)   30 April 2021 (unaudited)   31 October 2021

                                                                                                               (audited)
                                                       £000                        £000                        £000
 Current tax
 UK corporation tax on profit / loss for the year      361                         1,116                       2,406
 Foreign tax on overseas companies                     -                           294                         145
 Under / (over) provision in respect of prior periods  43                          (53)                        (30)
 Total current tax                                     404                         1,357                       2,521

 Deferred tax
 Origination and reversal of timing differences        11                          (723)                       (1,553)
 Adjustment for rate change                            (12)                        16                          826
 Adjustments in respect of prior periods               124                         -                           (577)
 Other                                                 -                           -                           20
 Total deferred tax                                    123                         (707)                       (1,284)

 Total tax charge                                      527                         650                         1,237

 

 Total operations                                      6 months to                 6 months to                 12 months to

                                                       30 April 2022 (unaudited)   30 April 2021 (unaudited)   31 October 2021

                                                                                                               (audited)
                                                       £000                        £000                        £000
 Current tax
 UK corporation tax on profit / loss for the year      361                         1,136                       2,406
 Foreign tax on overseas companies                     -                           294                         145
 Under / (over) provision in respect of prior periods  43                          (88)                        (30)
 Total current tax                                     404                         1,342                       2,521

 Deferred tax
 Origination and reversal of timing differences        11                          (712)                       (1,553)
 Adjustment for rate change                            (12)                        -                           826
 Adjustments in respect of prior periods               124                         16                          (577)
 Other                                                 -                           -                           20
 Total deferred tax                                    123                         (696)                       (1,284)

 Total tax charge                                      527                         646                         1,237

 

Unrelieved trading losses of £1,217,000 remain available to offset against
future taxable trading profits (excluding unrecognised losses of £549,249 in
the UK and £11,480,717 overseas).

 

 

6 Discontinued operations

 

During the six months ended 30 April 2021, 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 period.

 

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:

                                                              6 months to 30 April 2022 (unaudited)  6 months to 30 April 2021 (unaudited)  12 months to

                                                                                                                                            31 October 2021 (audited)
                                                              £000                                   £000                                   £000

 Revenue                                                      -                                      3,897                                  3,897
 Expenses                                                     -                                      (4,209)                                (4,218)
 (Loss) / gain on disposal                                    (567)                                  4,592                                  6,239
 Profit before tax                                            (567)                                  4,280                                  5,918

 Attributable tax expense                                     -                                      4                                      -
 Net (loss) / profit attributable to discontinued operations  (567)                                  4,284                                  5,918

 

During the period, Content contributed £0.6m (H1 FY21: £0.1m) to the Group's
net operating cash flows and contributed (£0.1m) (HY21 H1: £10.7m) in
respect of investing and financing activities.

 

 

7 Earnings per share

 

The earnings per share is calculated by reference to the earnings attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during each period, as follows:

 

 Continuing operations                                              6 months to     6 months to     12 months to

                                                                    30 April 2022   30 April 2021   31 October 2021

                                                                    (unaudited)     (unaudited)     (audited)

 Profit for the period (£000)                                       3,075           3,005           6,031

 Basic earnings per share
 Weighted average number of shares in issue                         441,605,209     439,472,715     440,376,576

 Basic earnings per share                                           0.70p           0.68p           1.37p

 Weighted average number of shares in issue                         441,605,209     439,422,715     440,376,576
 Add back:
 Dilutive share options                                             10,214,904      9,809,942       10,749,077
 Weighted average allotted, called up and fully paid share capital  451,820,113     449,232,657     451,125,653

 Diluted earnings per share

 Diluted earnings per share                                         0.68p           0.67p           1.34p

 

 

 Adjusted earnings per share                           6 months to     6 months to     12 months to

                                                       30 April 2022   30 April 2021   31 October 2021

                                                       (unaudited)     (unaudited)     (audited)

 Adjusted profit for the period (£000) (see note 11)   5,483           5,081           10,252

 Weighted average number of shares in issue - basic    441,605,209     439,422,715     440,376,576
 Weighted average number of shares in issue - diluted  451,820,113     449,232,657     451,125,653

 Adjusted basic earnings per share                     1.24p           1.16p           2.33p

 Adjusted diluted earnings per share                   1.21p           1.13p           2.27p

 

 

 Total operations                                                   6 months to     6 months to     12 months to

                                                                    30 April 2022   30 April 2021   31 October 2021

                                                                    (unaudited)     (unaudited)     (audited)

 Profit for the period (£000)                                       2,508           7,289           11,949

 Basic earnings per share
 Weighted average number of shares in issue                         441,605,209     439,422,715     440,376,576

 Basic earnings per share                                           0.57p           1.66p           2.71p

 Weighted average number of shares in issue                         441,605,209     439,422,715     440,376,576
 Add back:
 Dilutive share options                                             10,214,904      9,809,942       10,749,077
 Weighted average allotted, called up and fully paid share capital  451,820,113     449,232,657     451,125,653

 Diluted earnings per share

 Diluted earnings per share                                         0.56p           1.62p           2.65p

 

 

8 Intangibles

 

                        Goodwill  Customer relationships  Trade names  Software  Development costs  Total
                        £000      £000                    £000         £000      £000               £000

 At 31 October 2021     50,901    15,228                  2,626        10,945    12,325             92,025
 Additions              -         -                       -            70        3,114              3,184
 Fair Value Adjustment  915       -                       -            -         -                  915
 Amortisation           -         (757)                   (223)        (1,320)   (2,294)            (4,594)
 At 30 April 2022       51,816    14,471                  2,403        9,695     13,145             91,530

 

No impairment charge was incurred during H1 FY22 (H1 FY21: £Nil).

 

9 Long-term incentive plan (LTIP)

 

During the period, 5,462,258 options were granted under the LTIP.

 

The Group recognised a total charge of £1,249,211 (H1 FY21: £892,622) for
equity-settled share-based payment transactions related to the LTIP during the
period. The total cost was in relation to outstanding share options and share
options granted in the year.

 

The number of options in the LTIP scheme is as follows:

 

                                             30 April 2022  30 April 2021  31 October 2021
                                             No.            No.            No.
 Outstanding at the beginning of the period  15,557,052     12,435,871     12,435,871
 Granted                                     5,462,258      3,387,735      4,800,709
 Forfeited                                   -              (265,345)      (265,345)
 Exercised                                   (4,182,312)    (999,428)      (1,414,183)
 Outstanding at the end of the period        16,836,998     14,558,833     15,557,052
 Exercisable at the end of the period        4,722,051      4,941,749      5,301,163

 

 

10 Post balance sheet events

 

There have been no post balance sheet events which had a material impact on
the Group.

 

 

11 Alternative Performance Measures

 

Where relevant, adjusted measures of profit have been used alongside statutory
definitions. The main items that are added back to statutory profit are:
amortisation from acquired intangible assets, impairment, restructuring costs,
acquisition & financing costs and share option costs. 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 providers
of capital.

The following tables set out the Alternative Performance Measures in respect
of continuing operations:

 

 Continuing operations                                            6 months to 30 April 2022 (unaudited)  6 months to 30 April 2021 (unaudited)  12 months to 31 October 2021
                                                                  £000's                                 £000's                                 £000's

 Adjusted EBITDA:
 Profit before taxation                                           3,602                                  3,655                                  7,268
 Add back:
  Depreciation & Amortisation                                     5,328                                  5,043                                  10,204
  Restructuring costs                                             119                                    160                                    (90)
  Acquisition costs                                               11                                     6                                      (134)
  Financing costs                                                 30                                     29                                     110
  Share option costs                                              1,249                                  784                                    1,789
  Net finance costs                                               651                                    462                                    372
  Adjusted EBITDA                                                 10,990                                 10,139                                 19,519

 Free cashflow:
 Net cashflow from operating activities                           11,127                                 17,775                                 16,554
 Capex                                                            (3,588)                                (3,097)                                (5,747)
 Lease payments                                                   (509)                                  (678)                                  (1,154)
 Free cashflow                                                    7,030                                  14,000                                 9,653

 Net debt / (cash):
  Cash                                                            (21,560)                               (29,159)                               (18,283)
  Bank borrowings                                                 14,466                                 10,207                                 15,394
  Bonds in issue                                                  10,848                                 11,364                                 10,998
  Net debt / (cash)                                               3,754                                  (7,588)                                8,109

 Adjusted profit for the period and adjusted earnings per share:
 Profit for the period                                            3,075                                  3,005                                  6,031
 Add back:
  Amortisation from acquired intangibles                          1,881                                  1,737                                  3,561
  Restructuring costs                                             119                                    160                                    (90)
  Acquisition costs                                               11                                     6                                      (134)
  Financing costs                                                 30                                     29                                     110
  Share option costs                                              1,249                                  784                                    1,789
  Tax rate changes                                                -                                      -                                      826
  Tax effect                                                      (882)                                  (640)                                  (1,841)
  Adjusted profit for the period                                  5,483                                  5,081                                  10,252

  Weighted average number of shares in issue - basic              441,605,209                            439,422,715                            440,376,576
  Weighted average number of shares in issue - diluted            451,820,113                            449,232,657                            451,125,653

  Adjusted basic earnings per share                               1.24p                                  1.16p                                  2.33p

  Adjusted diluted earnings per share                             1.21p                                  1.13p                                  2.27p

 

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