REG - IDOX PLC - Half Year results
08/06/2023 07:00
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RNS Number : 0200C IDOX PLC 08 June 2023
8 June 2023
Idox plc
Half Year results for the six months ended 30 April 2023
Good first half performance, with encouraging organic growth and continued
cash generation
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 2023 ('H1 FY23').
Financial highlights
Revenue
· Increased by 8% to £35.8m (H1 FY22: £33.2m).
· Recurring revenues(1) increased by 7% to £21.2m (H1 FY22: £19.8m),
accounting for 59% of the Group's total revenue (H1 FY22: 60%).
Profit
· Adjusted(2) EBITDA increased by 10% to £12.1m (H1 FY22: £11.0m).
· Operating profit increased by 16% to £4.9m (H1 FY22: £4.3m).
· Adjusted(2) EBITDA margin improvement at 34% (H1 FY22: 33%).
· Statutory operating profit margin improvement to 14% (H1 FY22: 13%).
· Statutory profit before tax increased 13% to £4.1m (H1 FY22:
£3.6m).
· Adjusted(3) diluted EPS for continuing operations increased by 10% to
1.33p (H1 FY22: 1.21p).
· Statutory diluted EPS for continuing operations increased by 7% to
0.73p (H1 FY22: 0.68p).
Cash
· Net cash(4) at the end of the period of £1.1m (31 October 2022: net
debt of £6.7m; 30 April 2022: net debt of £3.8m).
· Cash generated from operating activities before taxation as a
percentage of Adjusted EBITDA for total operations was 148% (H1 FY22: 122%).
· Free cashflow(5) generation up 84% at £12.9m (H1 FY22: £7.0m).
· Significant resources in place to fund M&A, including £35m
revolving credit facility and £10m accordion.
Operational highlights
· Order intake of £52m, up 23% from H1 FY22.
· New divisional structure fully embedded providing better market focus,
customer service and sharper sales execution:
o Land, Property & Public Protection (LPPP);
o Assets; and
o Communities.
· Further innovation, development and rationalisation of the Group's
product portfolio including the transition to Cloud.
· Good progress on developing the Group's geospatial capabilities.
· M&A pipeline remains attractive with positive leads on a number
of complementary and accretive targets.
Current trading and outlook
· Combination of strong recurring revenue and growing orderbook,
provides good revenue visibility for the remainder of FY23 and into FY24.
· The business continues to perform well and in line with the Board's
expectations.
Intention to pay a final dividend in line with the Group's stated dividend
policy
David Meaden, Chief Executive Officer of Idox said:
"The Group has delivered a good performance with double digit profit growth in
a challenging macro-economic environment.
We have continued to secure both new clients and new contracts with key
customers, which has resulted in significantly higher order intake, providing
good visibility for the remainder of this year and going into next year.
Having ended the period with net cash, compared to net debt at the year end,
we have the financial resources to continue to pursue complementary, value
enhancing acquisition targets.
Overall, our current full year financial performance is expected to be in line
with the Board's expectations reflecting our strong order intake and
consistent operational execution."
There will be a webcast at 10:00am UK time today for analysts and investors.
To register for the webcast please contact MHP at idox@mhpgroup.com
(mailto:idox@mhpgroup.com)
For further information please contact:
Idox plc +44 (0) 870 333 7101
Chris Stone, Non-Executive Chair investorrelations@idoxgroup.com
David Meaden, Chief Executive Officer
Anoop Kang, Chief Financial Officer
Peel Hunt LLP (NOMAD and Broker) +44 (0) 20 7418 8900
Paul Gillam
Michael Burke
James Smith
MHP + 44 (0) 20 3128 8276
Reg Hoare idox@mhpgroup.com (mailto:idox@mhpgroup.com)
Ollie Hoare
Matthew Taylor
About Idox plc
For more information see www.idoxgroup.com (http://www.idoxgroup.com)
@Idoxgroup
Alternative Performance Measures
The Group uses these APMs, which are not defined or specified under
International Financial Reporting Standards, as this is in line with the
management information requested and presented to the decision makers in our
business; and is consistent with how the business is assessed by our debt and
equity providers.
(1) Recurring revenue is defined as revenues associated with access to a
specific ongoing service, with invoicing that typically recurs on an annual
basis and underpinned by either a multi-year or rolling contract. These
services include Support & Maintenance, SaaS fees, Hosting services, and
some Managed service arrangements which involve a fixed fee irrespective of
consumption.
(2) Adjusted EBITDA 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 cash / debt is defined as the aggregation of cash, bank borrowings and
the long-term bond (see note 11 for reconciliation).
(5) Free cash flow is defined as net cash flow from operating activities after
taxation less capital expenditure and lease payments (see note 11 for
reconciliation).
Chair's statement
Introduction
I am pleased to introduce a strong set of results from Idox for the first half
of the financial year. Building on the Four Pillars strategy and the three
phases of Walk, Run, Fly, the business has focussed its activities on software
and has delivered encouraging organic growth in the first half of the year
against what continues to be a challenging macro-economic and geopolitical
backdrop.
During the period, revenues grew by 8% and Adjusted EBITDA by 10%. The Group
has continued to be focussed on cash generating activities, with cash
generated from operating activities, before tax, being £18.0m, a conversion
rate of 148% against an Adjusted EBITDA for the period of £12.1m. The period
ended with the business eliminating its net debt position and returning to a
positive cash position of £1.1m.
Effective from the beginning of the period, the business re-organised its
activities around three divisions, Land, Property & Public Protection
(LPPP), Assets and Communities. This has allowed for a clearer focus on
growth, and it is a notable that each of the leaders in these areas, along
with the appointed Head of Engineering have been graduates of the Idox Leading
Together programme.
The Group is well placed to execute on our growth strategy. 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 23%, with a strong pipeline
underpinning our confidence in the medium term.
Where clients are extending their software engagements, we have seen an
increased demand across our portfolio to provide technical support and managed
services related to software that help overcome the challenges of staff
recruitment and provide high availability services. The markets in which we
operate have continued to evolve and we see demand for high quality software
supporting complex business processes. We are also seeing ongoing interest in
the surfacing of data held within systems to improve business processes and to
inform strategic decision-making across supply eco-systems. The organisational
changes I referenced are allowing us to assess and explore these opportunities
more readily and we are ready to support future growth options with
appropriate investment as may be required.
We continue to look for accretive, synergistic opportunities that support the
long-term focus on software and complement the existing portfolio. We are
confident that there are a range of opportunities that fit the key criteria we
have defined, and whilst it is incumbent on the Board to exercise the
necessary patience to ensure that we are delivering in the best long-term
interests of shareholders, we look forward to adding further assets in due
course. In support of our growth strategy, the focus on cash and paying down
existing debt has put the business in a strong position and we have over £45m
of available resources for selective acquisitions at the half year.
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 the
Company's work in this area. The Chief Executive's statement includes further
information on our ESG related activities.
We are grateful to our clients for continuing to have confidence in Idox as a
partner and to our colleagues for their hard work and dedication in making
Idox the business it is today. We appreciate that they choose to spend their
time and talents building our business and without their engagement and
contributions these results would not be possible.
Dividend
As previously announced, the Group paid a dividend of 0.5p per share in April
2023 in respect of the year ending 31 October 2022. Our current policy is to
only declare a final dividend and therefore, no interim dividend is proposed
in respect of H1 FY23 (H1 FY22: £Nil). We will keep the level of future
dividends under review in consideration of our financial position and our
confidence in the future.
Board
There have been no changes to the Board in the period. 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.
Summary
The Group has made good progress in the period, with the implementation of the
new divisional structure facilitating double digit Adjusted EBITDA growth. We
are well positioned to increase our portfolio through strategic M&A
activity. The business continues to perform well and in line with the Board's
expectations.
Chris
Stone
Chair of the
Board
Chief Executive's statement
I am pleased to report on another period of strong performance as we continue
to focus on software businesses that deliver great value to customers in our
areas of expertise. Our solutions provide our customers with the ability to
seamlessly manage complex operational, legislative, and regulatory issues.
Our 'Four Pillars' of Revenue expansion, Margin enhancement, Simplification
and Communication are the foundation on which we continue to grow and operate
the business.
A new divisional structure has been implemented in H1 FY23, providing better
market focus, customer service and sharper sales execution. We are already
seeing the benefits of cross-sell expansion within the customer base, through
leveraging a single sales structure for complementary solutions from across
the divisional portfolio, as evidenced by delivering encouraging organic
revenue growth.
Our financial position remains strong and supports the addition of market
expansion through the acquisition of complementary technology and recurring
revenue, through carefully selected M&A, further extending Idox's position
in our chosen markets.
Strong progress
During this reporting period, we have seen growth in Group revenues of 8%,
with accompanying Adjusted EBITDA improving by 10% from £11.0m to £12.1m.
Following strong cash generation, we have moved from a net debt position at 30
April 2022 of £3.8m to a net cash position of £1.1m at 30 April 2023.
Our strong operational cadence and financial position leaves Idox well placed
for continued investment in our software operations and provides a secure
position from which to accelerate growth.
Divisional performance
Land, Property & Public Protection
Sales order intake in Local Authority continued to rise, up 50% on the same
period last year; this included a mix of new services and large contract
extensions, securing future long-term revenues, including contracts with The
City of Edinburgh Council & City of Wolverhampton Council - extending
contracts for six & five years respectively and East Lothian Council &
Harborough District Council, both choosing a provisioned hosting service for
their existing software platforms.
Revenues in Idox Cloud were up in H1 FY23 by 40%, with order intake continuing
to improve - up 28% on the same period last year, welcoming new customers like
Conwy County Borough Council, Blaenau Gwent County Borough Council and Harrow
Council.
Our recent acquisitions have continued to perform well; revenues in Exegesis
were up 19% on a year over year basis, with the delivery of a number of large
projects utilising our specialist geospatial expertise in land and
conservation software. Aligned Assets order intake was also significantly up,
31% on H1 FY22, with significant wins with the Metropolitan Police Service and
Cadent Gas, as our specialist address management tools gained further traction
in near adjacent markets to our traditional public sector position.
Assets
Engineering Information Management (EIM) had a solid start to the FY23
campaign, with revenues up 15% when compared to the same period in FY22. New
Fusion Live sales included KNPC through our partners in the Middle East, Ebla
and VME Process Inc and Elecnor, as well as significant new work within the
existing customer base.
CAFM (the Group's computer aided facilities management software) saw the
launch of version 12, which helped increase sales order intake in the first
half of FY23 to over 17% compared to the same period last year; revenues were
also up in CAFM by 6% in H1.
The good performance in EIM and CAFM was partially offset by lower than
anticipated revenues in Transport and iFit.
Communities
With no major elections events, across the UK or Malta, in the first half of
FY23, Elections revenues and order intake were down on the previous period.
However, this was a busy development period for work with the Department for
Levelling Up, Housing and Communities ('DLUHC') and Central Government and an
opportunity to prepare for what looks like a very busy FY24, which will
include the introduction of Idox Elections Cloud Services, during an election
year.
Revenue and order intake for our sexual health solution, Lilie, were up in H1
- 6% and 25% respectively, including a number of significant contracts
extensions.
In the Database subscription businesses GrantFinder and ResearchConnect,
revenues were up over 12% on the same period last year. Whilst GrantFinder
order intake was down slightly, as pressure on discretionary spend came under
pressure particularly in the Public Sector, ResearchConnect, which operates in
the International Higher Education markets, had a very good H1. Following the
launch of the new product version last year, order intake was up over 100% on
the same period last year and we welcomed 14 new customers, mainly from across
Northern Europe.
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 following the withdrawal of these services
by the National Council Voluntary Organisation. We expect subscribers to these
services to reach over 3,500 by the end of the financial year.
Social Care continued to show good growth throughout H1, particularly in our
directory services solutions, with revenues up 15% for the period and order
intake up 12%.
The 'Four Pillars' programme
Revenue expansion
During the period we demonstrated high resilience as a business and our core
areas performed well. Our strong market positions allowed us to continue to
sell more solutions and services to existing clients, in addition to welcoming
new client accounts across the Divisions. Performance overall has been
increased through improved sales execution and better integration across the
Group, which in turn has delivered consistent margins and improved bottom-line
performance.
Order intake across the Group for the six months ended 30 April 2023 continued
to grow, helping to support the in-year revenue growth and build the future
orderbook. In the period we secured c.£52m of total contract value, which
increased by 23% when compared to same period last year.
Margin enhancement
As evidenced by our strong EBITDA performance we have continued to drive
improved margin. Improved operational performance is driven through the Group
organisational set-up including development, professional services and
technical teams, working together creating scale and efficiencies. This
approach provides opportunities for shared learning, improved technical
capabilities and pooled resources providing additional support and scale
across the Group.
Notably, during the period we continued to improve and increase our operations
in India. Overall, we remain focussed on creating further opportunities for
expansion and improved margin performance.
Simplification
We continue to invest in our internal processes and systems, this includes the
improved integration of data across all aspects of the business bringing a
consolidated view of all customers and activities.
Utilisation of the expanded sales capabilities has improved communications and
the process of renewals and re-signs. This has created efficiencies in the
organisation and improves the overall customer experience of working with
Idox.
We continue to invest in improving and simplifying the process of data
migration across all Idox solutions, simplifying the transition of on-premise
legacy platforms to our latest cloud provisioned services. This provides
quicker and more cost-effective transitions for all customers onboarding from
both existing Idox legacy platforms as well as new customers to Idox.
Communication
As we operate in the modern world of hybrid working, we are working hard to
provide an engaging and open environment for everyone. We have encouraged more
regular face to face activities, where we feel that this encourages and
improves collaborations particularly in areas of creativity and development.
We have a regular and open communication strategy with all colleagues across
the business delivered through a variety of media and channels.
CEO broadcasts underpin our open communication approach and various colleagues
from across the business contribute to providing a broad range of insights,
opinions, and inputs, and always includes an opportunity for colleagues to ask
open questions of the panel. Participation and contribution levels from
colleagues remain very high for this type of engagement.
Personally, contributing to the selection and onboarding of new team members
enables me to outline our culture and work at Idox and what our expectation
levels are for each other. This approach helps to ensure that we maintain our
culture and authenticity and our ambitions for both the business and
individuals are fully aligned from the outset.
Responsible
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, as we build a sustainable business which grows the
value that our services and solutions, and lasting commercial relationships,
and the positive benefits that these bring to the communities in which we
operate. Our commitment is focused in four areas: our people, our communities,
our environment, and our organisational responsibilities. These focus areas
address the seven United Nations Sustainable Development Goals most relevant
to Idox.
Our ESG steering committee (formed in FY21) has continued with its core
responsibility of understanding and implementing our sustainable business
practices a according to the material issues of our stakeholders, whilst
monitoring its effectiveness and maintaining proper governance. This committee
has sponsored further initiatives during the first half of FY23, maintaining
our focus on Diversity, Equality and Inclusivity and the growing use of
'Employee Lounges' - small, cross business virtual meetings to discuss how
these improvements should be made in the most effective way. The ESG steering
committee has also supported a number of employee-led initiatives to raise
funds in support of various charities and we continue to use our community
days scheme to support good causes in our local communities. The payroll
giving scheme continues to maximise the impact of employee's contributions.
The workplace wellbeing sessions also continue to be very well received by
members of the Idox team.
During the first half of FY23 we entered several social value partnerships
with clients allied to the delivery of our products and services. We are
delighted that these arrangements enable us to make a very real and direct
contribution in the clients' local community.
Idox recognises the importance of environmental protection and is committed to
operating its business responsibly. We operate 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. In FY22 we further improved
our reporting of our Scope 1, 2 and 3 emissions disclosures within the Task
Force on Climate-related Financial Disclosures ('TCFD') framework and for FY23
we will also report in line with the Financial Reporting Council's Thematic
review of TCFD disclosures and climate in the financial statements.
In the first half of FY23 we have continued to drive initiatives such as
introducing a scheme to incentivise employees to obtain an electric vehicle,
when purchasing a new car. The ESG steering committee also monitors our
ongoing carbon reduction initiatives to ensure we are meeting our targets,
including maintaining disciplines on avoiding unnecessary travel by continuing
to take advantage of virtual meetings and delivery of many of our services.
Outlook
Through the new divisional structure, we have outlined a clearer market focus
and a clearer connection of future software development to the needs of
customers. This has helped build sales order intake growth in H1 which
underpins future growth and revenue security. Our Group operations across
development, onboarding and customer engagement continue to leverage the scale
of the Group and support our improving margin performance, which we believe
will drive significant stakeholder value. The structure also provides a strong
basis for the integration of the businesses that we acquire as part of our
M&A strategy.
Our long-term strategy of providing software solutions both in the cloud and /
or provisioned through our data centre services remains unchanged, this is
built upon a commitment to deliver the transformational needs and requirements
of the markets that we serve whilst growing recurring revenues.
We have a solid balance sheet and good cash generation, which provides a
strong foundation to continue to pursue attractive acquisition opportunities
that will be complementary to our existing portfolio of solutions. 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
The Group established a new divisional structure, effective from 1 November
2022. The new structure comprising, Land, Property & Public Protection
(LPPP), Assets and Communities provides better market focus, customer service
and sharper sales execution. In accordance with IFRS 8 Operating Segments,
information is provided to the chief operating decision maker, the Board of
Directors, on this basis. Accordingly, the Group has prepared its segmental
disclosures in the same manner. In addition, the Group has re-presented
comparative information in line with the new divisional structure. Revenue has
increased 8% in the period to £35.8m (H1 FY22: £33.2m) with double-digit
growth of 10% in Adjusted EBITDA to £12.1m (H1 FY22: £11.0m).
The following table sets out the Revenue and Adjusted EBITDA for each of the
Group's segments.
H1 FY23 H1 FY22 Variance
£000 £000 £000 %
Revenue
LPPP 21,458 17,540 3,918 22%
Assets 7,177 6,819 358 5%
Communities 7,146 8,847 (1,701) (19%)
Total 35,781 33,206 2,575 8%
Revenue Split
LPPP 60% 53%
Assets 20% 20%
Communities 20% 27%
Total 100% 100%
Adjusted EBITDA(1)
LPPP 7,735 6,217 1,518 24%
Assets 1,811 2,053 (242) (12%)
Communities 2,557 2,720 (163) (6%)
Total 12,103 10,990 1,113 10%
Adjusted EBITDA Margin Split
LPPP 36% 35%
Assets 25% 30%
Communities 36% 31%
- Total 34% 33%
(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.
Adjusted EBITDA increased by 10% to £12.1m (H1 FY22: £11.0m), delivering a
slightly improved Adjusted EBITDA margin of 34% (H1 FY22: 33%). The
improvement in Adjusted EBITDA benefitted from increased profitability in
Local Authority and Cloud within LPPP which was up 24% as a whole. This was
partially offset by a 12% reduction in Adjusted EBITDA in Assets, where
improved profitability in EIM was more than offset by reductions in Transport
and iFit. In addition, there was a 6% reduction in Adjusted EBITDA in
Communities where improvements in Databases, Social Care and Lilie were more
than offset by the anticipated reduction in Elections due to no significant
elections in the first half of 2023.
We continue with our efforts to improve efficiencies through marginal gains
across our sales, development, professional services and support activities,
and leverage our common resources to drive higher margins through improved
economies of scale.
Revenues
H1 FY23 H1 FY22 Variance
£000 £000 £000 %
Revenues
- Recurring (LPPP) 11,689 10,636 1,053 10%
- Recurring (Assets) 4,788 4,810 (22) (0%)
- Recurring (Communities) 4,674 4,384 290 7%
21,151 19,830 1,321 7%
- Non-Recurring (LPPP) 9,769 6,904 2,865 41%
- Non-Recurring (Assets) 2,389 2,009 380 19%
- Non-Recurring (Communities) 2,472 4,463 (1,991) (45%)
14,630 13,376 1,254 9%
35,781 33,206 2,575 8%
- Recurring(1) 59% 60%
- Non-Recurring(2) 41% 40%
(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 7% in the period to £21.2m and remained
stable at 59% of the Group's total revenue (H1 FY22: 60%). LPPP has seen an
increase of 10% in recurring revenues to £11.7m driven by the core Local
Authority and Cloud businesses as well as continued growth in the FY21
acquisitions. Recurring revenue within the Assets division has remained stable
at £4.8m with growth in CAFM and iFit offset by modest reductions in EIM and
Transport. Communities has improved by 7% driven by a good performance in
Databases.
Non-recurring revenues have improved by 9% to £14.6m for the period and
account for 41% of the Group's revenue. LPPP has benefitted from significant
increases year on year in the Local Authority and Cloud businesses. EIM has
seen an increase in non-recurring revenue, which has led to an increase in
both the overall EIM and Assets positions and has offset a reduction in
non-recurring revenue in both Transport and iFit. With no significant
elections held in the period there has been a large, anticipated decrease in
the Communities non-recurring revenue in the period, though this is partially
offset within the other businesses in the division.
The Group's order intake for the period was up 23% on last year to £52m which
provides good levels of revenue visibility for the remainder of the year and
into FY24.
Profit before taxation
The following table provides a reconciliation between Adjusted EBITDA and
statutory profit before taxation for continuing operations.
H1 FY23 H1 FY22 Variance
£000 £000 £000 %
Adjusted EBITDA 12,103 10,990 1,113 10%
Depreciation & Amortisation (5,288) (5,328) 40 (1%)
Restructuring costs (329) (119) (210) 176%
Acquisition costs (340) (11) (329) 2,991%
Financing costs (28) (30) 2 (7%)
Share option costs (1,200) (1,249) 49 (4%)
Net finance costs (840) (651) (189) 29%
Profit before taxation 4,078 3,602 476 13%
The reported profit before tax for continuing operations was £4,078,000 (H1
FY22: £3,602,000).
Restructuring costs of £329,000 (H1 FY23: £119,000) relate to internal
corporate restructuring, property related costs and redundancies.
Acquisition costs of £340,000 (H1 FY22: £11,000) relate to the final
settlements in relation to the acquisition of LandHawk in FY22 and deferred
consideration arrangements associated with the acquisitions of Aligned Assets
and exeGesIS (acquired in FY21). A final £0.5m is due to be paid in
connection with the Aligned Assets acquisition in June 23. This will conclude
the cash payments associated with our previous acquisitions.
Financing costs of £28,000 (H1 FY22: £30,000) relate to professional fees
incurred as part of the ongoing bank facility agreement.
Share option costs of £1.2m (H1 FY22: £1.2m) relate to the accounting charge
for awards in the current and prior years under the Group's Long-term
Incentive Plan.
Net finance costs are broadly in line with the prior year at £0.8m (H1 FY22:
£0.7m).
The Group continues to invest in developing innovative technology solutions
across the portfolio and has capitalised £3.4m of development costs during
the period (H1 FY22: £3.1m). The increase in the period is primarily due to
the impact of the FY22 acquisition (£0.1m), with the remaining £0.5m being
driven by an increase in development work across the portfolio.
Taxation
The effective tax rate (ETR) for the period was 18% (H1 FY22: 17%) for total
operations.
The main factors contributing to the difference between the statutory rate of
20% (blended rate: 19% from 01/11/2022 to 31/03/2023, and 25% from 01/04/2023
to 30/04/2023) and the ETR of 18% is due to tax relief on share options and
research and development costs, partially offset by the impact of overseas tax
rates and disallowable losses arising in the period.
Earnings per share and dividends
Basic earnings per share for continuing operations improved 7% to 0.75p (H1
FY22: 0.70p). Whilst the profit for the period is up 9%, the growth in the
basic earnings per share is slightly lower due to a higher number of weighted
average shares in issue compared to April 2022. Diluted earnings per share for
continuing operations improved 7% to 0.73p (H1 FY22: 0.68p).
Adjusted basic earnings per share for continuing operations increased 10% to
1.36p (H1 FY22: 1.24p). Adjusted diluted earnings per share for continuing
operations increased 10% to 1.33p (H1 FY22: 1.21p).
In line with H1 FY22 the Board does not propose an interim dividend in respect
of the six months ended 30 April 2023. It will keep the level of future
dividends under review in consideration of the Group's performance, financial
position and overall confidence in the future, and expects to pay a final
dividend.
Balance sheet and cashflow
The Group's net assets have increased to £69.5m compared to £67.4m at 31
October 2022. 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 2023
£000
Total Equity as per FY22 Financial Report 67,416
Share option movements 1,173
Equity dividends paid (2,268)
Profit for the period 3,338
Exchange losses on translation of foreign operations (162)
Total Equity as per H1 FY23 Financial Report 69,497
The Group continued to have good cash generation in the period. Cash generated
from operating activities before taxation was £18.0m, and as a percentage of
Adjusted EBITDA was 148% (H1 FY22: 122%). The Group typically operates on a
negative working capital cycle. A significant part of the Group's contracts
renew and re-sign during the first half of the year. As a result, billings and
cash collections typically tend to be annually in advance in the first half of
the year.
H1 FY23 H1 FY22
£000 £000
Net cashflow from operating activities after taxation 17,136 11,127
Capex (3,785) (3,588)
Lease payments (423) (509)
Free cashflow(1) 12,928 7,030
( )
(1) Free cash flow is defined as net cash flow from operating activities after
taxation less capital expenditure and lease payments (see note 11 for
reconciliation).
Given the strong cash collection during the first half of the year, the Group
ended the period with net cash of £1.1m compared to a net debt position of
£6.7m at 31 October 2022. Net cash comprised cash of £23.7m less bank
borrowings of £11.2m and the Maltese listed bond of £11.4m.
The Group retains significant liquidity with cash and available committed bank
facilities and has strong headroom against financial covenants. The Group's
total available facilities at 30 April 2023 consisted of a revolving credit
facility of £35m and £10m accordion which continue to 18 June 2024,
providing scope for select acquisitions. Refinancing of the Group's facilities
is underway and expected to conclude well in advance of the end of the
financial year.
Anoop Kang
Chief Financial Officer
Consolidated interim statement of comprehensive
income
Note 6 months to 12 months to
6 months to 30 April 2023 30 April 2022 31 October 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Continuing operations
Revenue 3 35,781 33,206 66,184
Cost of sales (7,717) (8,389) (15,050)
Gross profit 28,064 24,817 51,134
Administrative expenses (23,146) (20,564) (42,476)
Operating profit 4,918 4,253 8,658
Analysed as:
Adjusted EBITDA 11 12,103 10,990 22,509
Depreciation & Amortisation (5,288) (5,328) (10,584)
Restructuring costs (329) (119) (470)
Acquisition costs (340) (11) (183)
Financing costs (28) (30) (30)
Share option costs (1,200) (1,249) (2,584)
Finance income 61 219 97
Finance costs (901) (870) (2,153)
Profit before taxation 4,078 3,602 6,602
Income tax charge 5 (740) (527) (991)
Profit for the period from continuing operations 3,338 3,075 5,611
Discontinued operations
Loss for the period from discontinued operations 6 - (567) (567)
Profit for the period attributable to the owners of the parent 3,338 2,508 5,044
Other comprehensive (loss) / income for the period (162) 310 428
Items that will be reclassified subsequently to profit or loss:
Exchange movement on translation of foreign operations net of tax
Other comprehensive (loss) / income for the period, net of tax (162) 310 428
Total comprehensive income for the period attributable to owners of the parent 3,176 2,818 5,472
Earnings per share attributable to owners of the parent during the period
From continuing operations
Basic 7 0.75p 0.70p 1.27p
Diluted 7 0.73p 0.68p 1.24p
From continuing and discontinued operations
Basic 7 0.75p 0.57p 1.14p
Diluted 7 0.73p 0.56p 1.11p
The accompanying notes form an integral part of these financial statements.
Consolidated interim balance sheet
Note At 30 April At 30 April 2022 (unaudited) At 31 October 2022
2023 (audited)
(unaudited)
£000 £000 £000
Assets
Non-current assets
Property, plant and equipment 1,275 1,341 1,380
Intangible assets 8 91,368 91,530 92,410
Right-of-use-assets 1,628 2,000 1,782
Deferred tax assets 2,804 2,133 2,679
Total non-current assets 97,075 97,004 98,251
Current assets
Trade and other receivables 23,734 20,966 17,912
Current tax receivable - 725 -
Cash and cash equivalents 23,722 21,560 13,864
Total current assets 47,456 43,251 31,776
Total assets 144,531 140,255 130,027
Liabilities
Current liabilities
Trade and other payables 8,070 8,404 6,811
Deferred consideration 420 2,691 2,271
Current tax payable 365 - 165
Other liabilities 34,691 30,928 23,451
Provisions 555 853 453
Lease liabilities 473 563 545
Total current liabilities 44,574 43,439 33,696
Non-current liabilities
Deferred tax liabilities 5,673 6,256 6,086
Lease liabilities 1,145 1,454 1,265
Other liabilities 1,035 727 1,038
Bonds in issue 11,362 10,848 11,325
Borrowings 11,245 14,466 9,201
Total non-current liabilities 30,460 33,751 28,915
Total liabilities 75,034 77,190 62,611
Net assets 69,497 63,065 67,416
Equity
Called up share capital 4,535 4,511 4,525
Capital redemption reserve 1,112 1,112 1,112
Share premium account 41,558 41,556 41,556
Treasury reserve - (594) (594)
Share option reserve 5,469 3,673 4,816
Other reserves 9,165 8,789 8,745
ESOP trust (505) (445) (466)
Foreign currency translation reserve 77 121 239
Retained earnings 8,086 4,342 7,483
Equity attributable to the owners of the parent 69,497 63,065 67,416
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.
Consolidated interim statement of changes
in equity
Called up share capital Capital redemption Share Treasury reserve Share Other ESOP Foreign currency translation reserve Retained earnings Total
£000 reserve premium £000 options reserves* trust £000 £000 £000
£000 account reserve £000 £000
£000 £000
Balance at 1 November 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 costs - - - - 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 income
Exchange movement on translation of foreign operations - - - - - - - 310 - 310
Total comprehensive income 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
Issue of share capital 14 - - - - - - - - 14
Share options costs - - - - 1,328 - - - - 1,328
Exercise / lapses of share options - - - - (185) - - - 185 -
ESOP trust - - - - - - (21) - - (21)
Exercise of deferred consideration shares - - - - - (420) - - 420 -
Fair value of deferred consideration shares on purchase of subsidiary - - - - - 376 - - - 376
Transactions with owners 14 - - - 1,143 (44) (21) - 605 1,697
Profit for the period - - - - - - - - 2,536 2,536
Other comprehensive income
Exchange movement on translation of foreign operations - - - - - - - 118 - 118
Total comprehensive income for the period - - - - - - - 118 2,536 2,654
Balance at 31 October 2022 (audited) 4,525 1,112 41,556 (594) 4,816 8,745 (466) 239 7,483 67,416
Issue of share capital 10 - 2 - - - - - - 12
Share option costs - - - - 1,198 - - - - 1,198
Exercise / lapses of share options - - - 594 (545) - - - (47) 2
ESOP trust - - - - - - (39) - - (39)
Reallocation of deferred consideration share exercise costs - - - - - 420 - - (420) -
Equity dividends paid - - - - - - - - (2,268) (2,268)
Transactions with owners 10 - 2 594 653 420 (39) - (2,735) (1,095)
Profit for the period - - - - - - - - 3,338 3,338
Other comprehensive loss
Exchange movement on translation of foreign operations - - - - - - - (162) - (162)
Total comprehensive (loss) / income for the period - - - - - - - (162) 3,338 3,176
At 30 April 2023 (unaudited) 4,535 1,112 41,558 - 5,469 9,165 (505) 77 8,086 69,497
*Other reserves includes merger relief reserve of £1.6m.
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 2023 30 April 2022 (unaudited) 31 October 2022 (audited)
(unaudited)
£000 £000 £000
Cash flows from operating activities
Profit for the period before taxation 4,078 3,035 6,035
Adjustments for:
Depreciation of property, plant and equipment 480 371 848
Depreciation of right-of-use assets 346 363 749
Amortisation of intangible assets 8 4,462 4,594 8,987
Loss on disposal / purchase of subsidiary 299 567 657
Finance income (8) (199) (73)
Finance costs 840 810 2,034
Debt issue costs amortisation 60 60 119
Research and development tax credit (258) (161) (449)
Share option costs 9 1,200 1,249 2,584
Profit on disposal of fixed assets - - (15)
Movement in receivables (5,821) (4,428) (1,316)
Movement in payables 12,285 7,177 (1,896)
Cash generated by operations 17,963 13,438 18,264
Tax paid (827) (2,311) (2,617)
Net cash from operating activities 17,136 11,127 15,647
Cash flows from investing activities
Acquisition of subsidiaries net of cash acquired* (2,184) (651) (2,219)
Disposal of subsidiaries - (148) (146)
Proceeds on sale of fixed assets - 11 15
Purchase of property, plant and equipment (387) (404) (911)
Purchase / capitalisation of intangible assets 8 (3,398) (3,184) (6,647)
Finance income 36 37 73
Net cash used in investing activities (5,933) (4,339) (9,835)
Cash flows from financing activities
Interest paid (325) (227) (997)
Loan drawdowns 5,000 2,500 2,500
Loan related costs (77) (76) (183)
Loan repayments (3,000) (3,600) (9,100)
Principal lease payments (423) (509) (927)
Equity dividends paid 4 (2,268) (1,784) (1,784)
Issue of own shares (106) (51) (133)
Net cash outflows from financing activities (1,199) (3,747) (10,624)
Net movement in cash and cash equivalents 10,004 3,041 (4,812)
Cash and cash equivalents at the beginning of the period 13,864 18,283 18,283
Exchange (losses) / gains on cash and cash equivalents (146) 236 393
Cash and cash equivalents at the end of the period 23,722 21,560 13,864
*The £2.2m acquisition of subsidiaries balance relates to the settlement of
deferred consideration balances on Aligned Assets and exeGesIS in the period.
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 2023 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 2022 have been filed with the Registrar of
Companies. The auditor's report on those financial statements was unqualified.
This interim report has been prepared solely to provide additional information
to shareholders to assess the Group's strategies and the potential for those
strategies to succeed. The report should not be relied on by any other party
or for any other purpose.
The report contains certain forward-looking statements. These statements are
made by the Directors in good faith based on the information available to them
up to the time of their approval of this report, but such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information.
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 2023. The Group financial statements
for the year ended 31 October 2022 were prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards as issued
by the IASB. 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, taken to be a period of at least 12 months from the
approval of these interim financial statements. 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 National Westminster Bank
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 18 June 2024. In addition to this the Group can draw down
on a further £10,000,000 via an accordion facility. Refinancing of the
Group's facilities is progressing and expected to be completed well in advance
of the 2023 year-end.
As part of the preparation of our FY22 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 financial
forecasting and stress testing assumptions remain valid at 30 April 2023.
Recent developments regarding Silicon Valley Bank have had no impact on the
Group's financial position and operations.
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 2023, the Group was organised into three
operating segments which are detailed below.
To provide a more targeted focus on the markets that we serve, and to ensure
closer alignment to our customers, effective from 1 November 2022, the Group
have implemented a divisional structure that consolidates Business Units
delivering comparable technical solutions or serving similar markets: Land,
Property & Public Protection, Communities and Assets. Each business unit
is deemed an operating segment. Operating segments with similar economic
characteristics have grouped into three reportable segments as set out below.
IFRS 8 Operating Segments requires the disclosure of reported segments in
accordance with internal reports provided to the Group's chief operating
decision maker. The Group considers its Board of Directors to be the chief
operating decision maker and therefore has aligned the segmental disclosures
with the monthly reports provided to the Board of Directors.
· Land Property & Public Protection (LPPP) - delivering
specialist information management solutions and services to the public sector.
· Assets - delivering engineering document management and control
solutions to asset intensive industry sectors.
· Communities (COMM) - delivering software solutions to clients
with social value running through their core.
Segment revenue comprises sales to external customers and excludes gains
arising on the disposal of assets and finance income. Segment profit reported
to the Board represents the profit earned by each segment before the
allocation of taxation, Group interest payments and Group acquisition costs.
The assets and liabilities of the Group are not reviewed by the chief
operating decision maker on a segment basis. The Group does not place reliance
on any specific customer and has no individual customer that generates 10% or
more of its total Group revenue.
The segment results for the six months to 30 April 2023 were:
LPPP Assets COMM £000 Total
£000 £000 £000
Revenue 21,458 7,177 7,146 35,781
Adjusted EBITDA (note 11) 7,735 1,811 2,557 12,103
Depreciation & Amortisation (3,032) (1,010) (1,246) (5,288)
Restructuring costs (121) (166) (42) (329)
Acquisition costs (340) - - (340)
Share option costs (741) (210) (249) (1,200)
Segment operating profit 3,501 425 1,020 4,946
Financing costs (28)
Operating profit 4,918
Finance income 61
Finance costs (901)
Profit before tax 4,078
The corporate recharge to the business unit is allocated on a head count
basis.
Following the establishment of the new divisional structure from 1 November
2022 as described above, the re-presented segmental information for the six
months to 30 April 2022 were:
LPPP Assets COMM Continuing operations total Discontinued operations Content Total
£000 £000 £000 £000 £000 £000
Revenue 17,540 6,819 8,847 33,206 - 33,206
Adjusted EBITDA (note 11) 6,217 2,053 2,720 10,990 - 10,990
Depreciation & Amortisation (2,833) (991) (1,504) (5,328) - (5,328)
Restructuring costs (24) (84) (11) (119) - (119)
Acquisition costs (11) - - (11) - (11)
Share option costs (643) (274) (332) (1,249) - (1,249)
Segment operating profit 2,706 704 873 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 segment revenues by geographic location were as follows:
H1 FY23 H1 FY22
£000 £000
Revenues from external customers:
United Kingdom 31,727 29,546
North America 2,421 2,008
Europe 1,123 1,407
Rest of World 510 245
35,781 33,206
4 Dividends
During the period a dividend was paid in respect of the year ended 31 October
2022 of 0.5p per ordinary share at a total cost of £2,268,000 (H1 FY22: 0.4p
per ordinary share at a total cost of £1,784,000).
The directors do not propose a dividend in respect of the interim period ended
30 April 2023 (H1 FY22: £Nil).
5 Tax on profit on ordinary activities
The tax charge is made up as follows:
6 months to 6 months to 12 months to
30 April 2023 (unaudited) 30 April 2022 (unaudited) 31 October 2022
(audited)
£000 £000 £000
Current tax
UK corporation tax on profit for the year 1,308 361 2,022
(Over) / under provision in respect of prior periods (20) 43 (181)
Total current tax 1,288 404 1,841
Deferred tax
Origination and reversal of timing differences (525) 11 (775)
Adjustment for rate change (31) (12) (141)
Adjustments in respect of prior periods 8 124 66
Total deferred tax (548) 123 (850)
Total tax charge 740 527 991
Unrelieved trading losses of £749,890 (H1 FY22: £1,217,000) remain available
to offset against future taxable trading profits (excluding unrecognised
losses of £58,806 (H1 FY22: £549,249) in the UK and £14,433,730 (H1 FY22:
£11,480,717) overseas).
6 Discontinued operations
There were no discontinued operations during the six months ended 30 April
2023. In 2021, the Group disposed of its continental compliance business and
Netherlands Grant consultancy operations. The loss on disposal reported in the
prior periods relates to the finalisation of balances in connection with these
disposals.
The results of the discontinued operations, which have been excluded in the
consolidated income statement, were as follows:
6 months to 30 April 2023 (unaudited) 6 months to 30 April 2022 (unaudited) 12 months to
31 October 2022 (audited)
£000 £000 £000
Revenue - - -
Expenses - - -
Loss on disposal - (567) (567)
Profit before tax - (567) (567)
Attributable tax expense - - -
Net (loss) / profit attributable to discontinued operations - (567) (567)
During the period, Content contributed £Nil (H1 FY22: £0.1m) to the Group's
net operating cash flows and incurred £Nil (H1 FY22: £0.1m) 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 2023 30 April 2022 31 October 2022
(unaudited) (unaudited) (audited)
Profit for the period (£000) 3,338 3,075 5,611
Basic earnings per share
Weighted average number of shares in issue 447,942,345 441,605,209 443,413,006
Basic earnings per share 0.75p 0.70p 1.27p
Weighted average number of shares in issue 447,942,345 441,605,209 443,413,006
Add back:
Dilutive share options 7,150,750 10,214,904 8,636,936
Weighted average allotted, called up and fully paid share capital 455,093,095 451,820,113 452,049,942
Diluted earnings per share
Diluted earnings per share 0.73p 0.68p 1.24p
Adjusted earnings per share 6 months to 12 months to
6 months to 30 April 2022 31 October 2022
30 April 2023 (unaudited) (audited)
(unaudited)
Adjusted profit for the period (£000) (see note 11) 6,075 5,483 11,015
Weighted average number of shares in issue - basic 447,942,345 441,605,209 443,413,006
Weighted average number of shares in issue - diluted 455,093,095 451,820,113 452,049,942
Adjusted basic earnings per share 1.36p 1.24p 2.48p
Adjusted diluted earnings per share 1.33p 1.21p 2.44p
Total operations 6 months to 6 months to 12 months to
30 April 2023 30 April 2022 31 October 2022
(unaudited) (unaudited) (audited)
Profit for the period (£000) 3,338 2,508 5,044
Basic earnings per share
Weighted average number of shares in issue 447,942,345 441,605,209 443,413,006
Basic earnings per share 0.75p 0.57p 1.14p
Weighted average number of shares in issue 447,942,345 441,605,209 443,413,006
Add back:
Dilutive share options 7,150,750 10,214,904 8,636,936
Weighted average allotted, called up and fully paid share capital 455,093,095 451,820,113 452,049,942
Diluted earnings per share
Diluted earnings per share 0.73p 0.56p 1.11p
8 Intangibles
Goodwill Customer relationships Trade names Software Development costs Total
£000 £000 £000 £000 £000 £000
At 31 October 2022 52,639 13,715 2,203 9,791 14,062 92,410
Additions - - - - 3,398 3,398
Fair Value Adjustment 22 - - - - 22
Amortisation - (757) (188) (904) (2,613) (4,462)
At 30 April 2023 52,661 12,958 2,015 8,887 14,847 91,368
No impairment charge was incurred during H1 FY23 (H1 FY22: £Nil).
9 Long-term incentive plan (LTIP)
During the period, no options were granted under the LTIP.
The Group recognised a total charge of £1,200,000 (H1 FY22: £1,249,000) 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 2023 30 April 2022 31 October 2022
No. No. No.
Outstanding at the beginning of the period 16,978,852 15,557,052 15,557,052
Granted - 5,462,258 6,460,939
Forfeited - - (194,375)
Exercised (1,626,974) (4,182,312) (4,844,764)
Outstanding at the end of the period 15,351,878 16,836,998 16,978,852
Exercisable at the end of the period 3,473,759 4,722,051 6,034,065
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
Within these financial statements, the Group makes reference to Alternative
Performance Measures (APMs) which are not defined or specified under
International Financial 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.
We believe that these measures provide a user of the accounts with important
additional information. The following tables set out the Alternative
Performance Measures in respect of continuing operations:
Continuing operations 6 months to 30 April 2023 (unaudited) 6 months to 30 April 2022 (unaudited) 12 months to 31 October 2022
£000 £000 £000
Adjusted EBITDA:
Profit before taxation 4,078 3,602 6,602
Depreciation & Amortisation 5,288 5,328 10,584
Restructuring costs 329 119 470
Acquisition costs 340 11 183
Financing costs 28 30 30
Share option costs 1,200 1,249 2,584
Net finance costs 840 651 2,056
Adjusted EBITDA 12,103 10,990 22,509
Free cashflow:
Net cashflow from operating activities after taxation 17,136 11,127 15,647
Capex (3,785) (3,588) (7,558)
Lease payments (423) (509) (927)
Free cashflow 12,928 7,030 7,162
Net (cash) / debt:
Cash (23,722) (21,560) (13,864)
Bank borrowings 11,245 14,466 9,201
Bonds in issue 11,362 10,848 11,325
Net (cash) / debt (1,115) 3,754 6,662
Adjusted profit for the period and adjusted earnings per share:
Profit for the period 3,338 3,075 5,611
Add back:
Amortisation from acquired intangibles 1,769 1,881 3,670
Restructuring costs 329 119 183
Acquisition costs 340 11 470
Financing costs 28 30 30
Share option costs 1,200 1,249 2,584
Tax effect (929) (882) (1,533)
Adjusted profit for the period 6,075 5,483 11,015
Weighted average number of shares in issue - basic 447,942,345 441,605,209 443,413,006
Weighted average number of shares in issue - diluted 455,019,425 451,820,113 452,049,942
Adjusted basic earnings per share 1.36p 1.24p 2.48p
Adjusted diluted earnings per share 1.33p 1.21p 2.44p
Profit before taxation is adjusted for depreciation, amortisation,
restructuring costs, acquisition costs, financing costs, share option costs
and net finance costs to calculate a figure for EBITDA which is commonly
quoted by our peer group and allows users to compare our performance with
those of our peers. This also provides the users of the accounts with a view
of the trading picture which is comparable year on year.
Depreciation and amortisation are omitted as they relate to assets acquired by
the Group which may be subject to differing treatment within the peer group
and so this allows meaningful comparisons to be made.
Amortisation on acquired intangibles omitted in order to improve the
comparability between acquired and organic operations as the latter cannot
recognise internally generated intangible assets. Adjusting for amortisation
provides a more consistent basis for comparison between the two.
Restructuring costs, acquisition costs, financing costs and net finance costs
are omitted as they are considered to be one off in nature or do not represent
the underlying trade of the Group. The items within these categories are
assessed on a regular basis to ensure that they do not contain items which
would be deemed to represent the underlying trade of the business.
Share option costs are excluded as they do not represent the underlying trade
of the business and fluctuate subject to external market conditions and number
of shares. This would distort year on year comparison of the figures.
Profit after taxation is adjusted for amortisation from acquired intangibles,
restructuring costs, acquisition costs, financing costs and share option
costs, as well as considering the tax impact of these items. To exclude the
items without excluding the tax impact would not give the complete picture.
This enables the user of the accounts to compare the core operational
performance of the Group. Adjusted earnings per share takes into account all
of the factors above and gives the user of the accounts information on the
performance of the business that management is more directly able to influence
and on a comparable basis for year to year.
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