TIDMIDOX

RNS Number : 9131B

IDOX PLC

15 June 2021

15 June 2021

Idox plc

Half Year Results for the six months ended 30 April 2021

Strong performance and 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 2021 ("FY21 H1").

Financial highlights

Continuing operations (excluding disposed Idox Content businesses) :

Revenue

   --    Increased by 4% to GBP31.1m (FY20 H1: GBP30.0m); 
   --    Recurring revenues* decreased by 1% to GBP17.6m (FY20 H1: GBP17.8m), comprising: 

o Growth of 1% in Public Sector Software ('PSS') to GBP14.5m, or 2% like-for-like growth when excluding the contribution from 6PM Malta, exited in FY20 H1;

o A decline of 11% in Engineering Information Management ('EIM') to GBP3.1m, due to on-going impact from Covid-19 pandemic on some key asset-heavy sectors.

-- Orderbook for contracted non-recurring software and services increased by 9% to GBP12.5m (FY20 H1: GBP11.5m)

Profit

   --    Adjusted** EBITDA increased by 17% to GBP10.1m (FY20 H1: GBP8.7m). 
   --    Adjusted** EBITDA margin increased to 33% (FY20 H1: 29%). 
   --    Adjusted** Profit before tax increased by 45% to GBP6.4m (FY20 H1: GBP4.4m). 
   --    Adjusted** EPS increased by 98% to 1.13p (FY20 H1: 0.57p). 

Cash

-- Net cash*** at 30 April 2021 of GBP7.6m (30 April 2020: net debt GBP14.3m, 31 October 2020: net debt GBP16.1m), a significant improvement following continued strong cash generation in the period and net cash inflow of GBP10.7m from the disposal of our Content business.

-- Net cash available at 30 April 2021 of GBP19.0m (FY20 H1: net bank debt GBP2.6m) excluding the 6PM bond of GBP11.4m (FY20 H1: GBP11.7m).

   --    The Group has a bank revolving credit facility of GBP35m. 

Total Operations (including disposed Idox Content businesses):

-- Group revenue decreased by 0.3% to GBP35.0m (FY20 H1: GBP35.1m) and Group Adjusted** EBITDA increased by 8% to GBP10.4m (FY20 H1: GBP9.6m).

   --    Group statutory profit before tax of GBP7.9m (FY20 H1: GBP0.3m). 

Operational highlights

The first half of FY21 has seen continued strategic delivery following the transformation across the Group over the previous two financial years.

-- The disposal of our Content businesses in line with our strategy to focus on pure software businesses.

-- Good progress with our sales and marketing initiatives, directly increasing levels of customer engagement. We are seeing improved revenues as a direct consequence of these efforts.

-- Ongoing improvements to margins through higher quality revenues, improved operational efficiencies and corporate simplification.

-- Continued progress on prospecting for acquisitions, with active conversations with further potential targets.

-- High levels of colleague engagement with increased focus on our collective environmental, social and governance projects.

   --    Idox is now firmly in the 'Fly' phase of its 'Walk, Run, Fly' strategy. 

Current trading and outlook:

   --    Enter second half with good momentum and benefit of acquisition of Aligned Assets. 
   --    Well placed to continue organic growth and add complementary businesses to our portfolio. 

-- Full year financial performance is expected to be slightly ahead of management previous expectations.

David Meaden, Chief Executive of Idox said:

"We have made good progress as we pursue our strategy of focussing on software businesses that deliver exceptional value to customers and which engender long term patronage through their excellence in managing challenging operational, legislative, and regulatory issues.

"Operationally, the business continues to perform strongly within our 'Four Pillars' framework, and we have encouraged a culture of openness and leadership throughout our business. I am particularly pleased with the progress from the investment in our leadership groups, the changes in sales and marketing, and with the many simplification programmes across our organisation. All of this has helped deliver much improved quality of revenue, at higher margins with strong cash generation.

"It has been a busy time with regards corporate activity, as we completed two disposals and managed an approach for the Group that ultimately did not proceed to a formal offer. We have also continued our efforts in sourcing credible acquisitions and were delighted to complete the acquisition of Aligned Assets in early June.

The outlook for the business is promising as we continue to build momentum and improving operational performance. We are now focussed on our 'fly phase' which we believe will drive exceptional value for customers, our people, and shareholders."

Notes

* Recurring revenue is defined as existing, contracted annuity revenues that have a high expectation of renewal for a minimum of twelve months.

** Where relevant, adjusted measures of profit have been used alongside statutory definitions. The items that are added back to statutory profit are: amortisation from acquired intangible assets, impairment, restructuring costs, acquisition & financing costs and share option costs. 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. See note 11 for further details. There have been no adjustments to any of our reporting metrics for any impact of the Covid-19 pandemic.

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

There will be a webcast at 9:30am UK time today for analysts and investors. To register for the webcast please contact MHP Communications on idox@mhpc.com .

For further information please contact:

 
 Idox plc                                +44 (0) 870 333 7101 
 Chris Stone, Non-Executive Chairman 
 David Meaden, Chief Executive 
 Rob Grubb, Chief Financial Officer 
 
 Peel Hunt LLP (NOMAD and Broker)        +44 (0) 20 7418 8900 
 Edward Knight 
 Paul Gillam 
 Nick Prowting 
 
 MHP Communications                     + 44 (0) 203 128 8170 
 Reg Hoare                                      idox@mhpc.com 
 James Bavister 
 Amy O'Sullivan 
 

About Idox plc

For more information see www.idoxplc.com and @Idoxgroup

CHAIRMAN'S STATEMENT

Introduction

It is a great pleasure to be able to present these strong results. The first six months of this financial year have seen a lot of activity in corporate matters, and the continuing complications of managing through lockdown and social distancing, but this has not distracted the management team from building on the strong performance of FY20 and achieving a number of new highs for the business.

At the headline level, reported Group revenues showed a slight decline, as this included the performance of our Content businesses for the full period in FY20 H1, but only 5 months in FY21 H1. However, on a continuing basis, adjusting for this disposal, the business grew by 4% in revenue, and 17% for adjusted EBITDA; our main reporting measure. This is a really good performance and fed through to a very strong period of cash generation. Cash balances were helped by the proceeds of the two Idox Content division disposals, which together generated initial net proceeds of GBP10.7m, with more to come from deferred payments and vendor loan notes. As result of both good trading and the disposals, we closed out the period with a net cash balance of GBP7.6m, compared to a net debt position of GBP14.3m at 30 April 2020.

Looking forward, continued growth in our order book gives us confidence that this growth trend can be maintained. In particular, we are seeing high levels of customer engagement in our Public Sector business, and whilst our Oil and Gas focused EIM business has been held back by the wider challenges in those markets, it is encouraging to see that we have continued to add new clients in that sector, demonstrating the attractiveness of our offer.

We will also be looking for further opportunities to grow our business through smart acquisitions. The acquisition of the Tascomi business in August 2019 has been successful for all stakeholders. In early June 2021 we completed the acquisition of Aligned Assets, an organisation we and our customers know well, bringing 24 new employees and further well-respected products into the Group. We hope to be able to complete additional similar acquisitions to further supplement our organic growth and provide further offerings to our customers that are complementary to our existing products.

On the topic of corporate activity, and as was announced at the time, we received an unexpected approach for the Group, which we rejected until the proposed offer price was at a point where the Board felt that, if this were to be confirmed, it was at a level that shareholders would want to consider. Ultimately, the proposed offer did not materialise, and I am pleased to note that the inevitable workload associated with such an approach did not distract our colleagues from the focus required to deliver the excellent results described above.

As reported in previous statements, I am very proud of the way in which all our colleagues at Idox have responded to working within the constraints imposed by managing the Covid-19 pandemic. We have not made any reduction in staff numbers or used any of the government loan or furlough schemes. We did take advantage of the VAT deferral programme in the early days of the pandemic, but we are now repaying this deferral in line with HMRC's guidelines. We have also started repaying some of our loan facilities, after drawing them fully to ensure flexibility during the period of uncertainty at the beginning. It is a huge compliment to all of our staff that the business has performed so well during such an unusual period.

Dividend

As previously announced, the Group paid a dividend of 0.3p in April 2021 in respect of the year ending 31 October 2020. Our current policy is to only declare a final dividend and therefore there is no interim dividend in respect of FY21 H1 (FY20 H1: nil). We will keep the level of future dividends under review.

Board

There have been no changes to the Board composition during this period. We are satisfied with the composition of the Board but continue to consider the need for additional skills and experiences on an ongoing basis. The Board considers all three of its Non-Executive directors independent.

Summary

The Group has made credible progress with its strategy on the current 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.

Christopher Stone

Chairman

14 June 2021

CHIEF EXECUTIVE'S STATEMENT

Building momentum

I have written extensively on our transformation here at Idox, based upon the three phases of 'Walk, Run, Fly' and our four pillars of Revenue expansion, Margin enhancement, Simplification and Communication. We have continued to build momentum and I am pleased to report on another period of strong performance. During the first six months of FY21 we have continued the process of focussing on software businesses that deliver exceptional value to customers and which engender long term patronage through their excellence in managing challenging operational, legislative, and regulatory issues. This focus on software has allowed the business to be more cohesive, operate with more agility, improve outcomes for customers, improve engagement across our teams and in turn, deliver value for shareholders.

With our focus on software and organisational simplification, we have sold the two businesses that formed the Idox Content Division. The Compliance business based in Germany was sold for a consideration of GBP9.0m and the Consulting business based in the Netherlands was sold for an initial consideration of GBP3.6m. This means that Idox is now exclusively a software business focussed on key niche areas that have good organic growth prospects.

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.

I am pleased to report we acquired Aligned Assets in early June 2021 which, like Tascomi in August 2019, is a well-respected provider of software solutions to local authorities that complement the existing Idox product portfolio. We are excited about the addition of new colleagues, technology and customers to our Group as part of this acquisition and are optimistic the combination will drive strong growth in both organisations.

Strong progress

During this reporting period we have seen growth in Group revenues for our continuing operations of 4%, with accompanying adjusted EBITDA improving by 17% from GBP8.7m to GBP10.1m. Following strong cash generation, alongside the GBP10.7m net cash inflow from the business disposals, we moved from a net debt position this time last year of GBP14.3m to a net cash position of GBP7.6m.

The focus has now shifted into our 'fly phase' and given our sure footing we are well placed for growth in our software operations and have established a strong position from which to add sensible bolt on acquisitions to our portfolio of offerings.

The 'Four Pillars' programme

Revenue expansion

Despite the continuing and ongoing effects of the pandemic our core business areas performed well. Naturally some parts of our business have seen slower demand during the course of the pandemic, but 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 improved margins and bottom-line performance.

Order intake across the Group for the six months ended 30 April 2021 continued to grow, helping to support the in-year revenue growth and build the future orderbook. In the period we secured over GBP35m of total contract value with new business and new product sales, increasing by 10% over the same period last year.

Sales in local government continued to rise, up 32% on the same period for new business and incremental customer sales. New wins in FY21 H1 included Coventry City Council and Warrington Borough Council, along with the Government of Bermuda choosing to implement the Idox Cloud Solution for Building Control on the Island. The Idox Cloud business has seen good growth in FY21 H1 as planned, with revenues up 27%, with the growth in recurring revenue up 49% on the same period last year.

In CAFM ('Computer Aided Facility Management' for properties) we saw the industry struggle with the impacts of Covid-19, albeit with some green shoots of recovery evident in the new business area. Sales from new customers were up over 90% on the same period last year, helping to balance some lower spend seen from within the existing customer base.

In Elections, a strong performance in the local elections helped compensate for the higher revenues generated by the general elections in the comparable half year period, with revenues down just 6% when compared to the same period in FY20.

Health revenues increased 8% on the comparable period with increased recurring revenue. This excludes the impact of exiting 6PM Ireland and Malta in FY20 H1, and delivery of the carried forward order book. Sales orders were down slightly as clients continued to focus their efforts on managing the Covid-19 pandemic however we have seen that easing towards the end of the period.

In FY21 H1 Idox launched major updates to the existing Grant database solutions Grantfinder and ResearchConnect, incorporating a vastly improved new user interface and search capabilities. In addition to the launch of the updated solution, Idox also launched a new product to the Grants market: 'My Funding Central'. Our key aim is to provide a service to the 10,000 previous subscribers of the National Council Voluntary Organisation (NCVO) funding portal following the NCVO withdrawal of this service. My Funding Central is aimed at organisations with an income of less than GBP1m and Idox has made this service free to access for Charities and organisations with an annual income less than GBP30,000.

Sales order intake in EIM ('Engineering Information Management') was up as the market recovered from the early impacts of the pandemic last year, in both new business sales and sales of new product and service to existing customers. New business sales were supported by a significant new FusionLive sale to Ebla Computer Consultancy which will be used to help the management of the expansion of Doha Airport.

Margin enhancement

During the period we have driven the consolidation of all software business units into a single Idox Software structure, sharing resources across software development, professional services and support services enabling better use of Group resources and operational scale across our full range of software offerings.

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.

As highlighted earlier, the sale of the Idox Content businesses, both of which operated at margins below the Group average, allows for greater management focus on our software operations and related services moving forward.

Simplification

Stratification of the sales organisation continues to bring better customer engagement. The internal sales desk has been extended to cover all software products and now includes a revenue assurance function, focussed on customer retention and improving the renewal processes.

Our CRM implementation continues to support better customer engagement and is providing improved insights and pipeline visibility. The CRM now provides timely visibility of the actions needed to secure every new business or renewal opportunity.

The integration of the professional services teams and implementation of Idox best practice has improved revenue and utilisation forecasting. This has resulted in a 5% improvement in utilisation averages when compared to the same period in FY20, along with better controls and greater clarity on future revenues through achievement of milestones. Further projects in this area aim to reduce the implementation timelines for Idox Cloud based solutions, providing customers with access to automated data conversion processes, speeding up the return on their investment.

The consolidation of the software business units across Idox has allowed significant simplification of company legal structures and our associated accounting management system. As a result of these consolidation activities and the disposal of Idox Content, the Idox Group now has a single UK trading entity and single UK accounting management system.

Communication

We have seen a substantial improvement in the engagement of our people with the business, its values and strategy. Having focussed heavily on communicating the Group's strategy and long-term plan we have improved trust and engagement with our teams. This has been highly significant, particularly during a period of lockdown and has been valued by everyone.

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. Our people across the business are highly engaged providing the management team with questions on various parts of the business including performance, market updates and Covid-19 related matters.

Since the pandemic began, I personally conduct final conversations with all prospective new team members to outline how we operate and work at Idox, what they can expect from us and we in turn from them. This way 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.

During the period, people from across our teams have continued to drive a co-ordinated program of workplace wellbeing initiatives providing support, communications, and encouragement across the business to all colleagues.

The introduction of the Idox Voice initiative provides all colleagues with a platform to raise ideas or suggestions to help improve Idox culture. Regular virtual Q&A sessions have been taking place through Microsoft Teams, providing a real time platform where individuals can get advice, ask questions and take part in themed discussions.

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 building lasting commercial relationships across the industries and communities in which we operate. A structured approach to ESG issues that supports the UN Sustainable Development Goals is therefore a strategic imperative to maintain relevance and resilience in our addressable markets in the long-term.

Idox Group 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. We remain committed to our current Scope 1,2 and 3 emissions disclosures and will look to progressing towards reporting this within the Task Force on Climate-related Financial Disclosures ('TCFD') framework.

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 being well governed. The committee, which is attended by members of the Executive Management team, will consult with the key internal and external stakeholders of Idox to understand which issues are most material. This will form the cornerstone of our sustainability framework that is aligned with our strategic goals, and set ESG performance metrics and targets that will ensure we can monitor, manage and report on our performance consistently.

Covid-19 Pandemic

The Group continues to regularly assess the impact of the Covid-19 pandemic on its immediate trading and longer-term prospects. The assessments performed and disclosed in our FY20 reporting remain valid. Additionally, Idox has not needed to participate in any government job retention schemes.

The Group continues to manage carefully the exposures identified, and support our health, local authority, and private sector customers to deal with the ongoing impacts arising from the Covid-19 pandemic.

Outlook

We continue to make excellent progress and our strategy remains unchanged. We remain clear in our view that a cloud-first approach across each of our business areas is a strategic necessity and we will continue to invest selectively to grow our capabilities and extend our reach in the key software markets in which we have developed strong patronage. The business has a strong foundation in property and asset-based solutions and this, along with our focus on a broader SaaS provision, will continue to underpin our future strategy and accelerate our growth.

With strong cash generation, the proceeds from the sale of the Content division and good long-term banking facilities, we are well placed to continue delivering against our organic growth targets and to add to our portfolio of offerings where assets are identified complementary to our core operations. Overall, our current full year financial performance is expected to be slightly ahead of management previous expectations reflecting our strong order book and recurring revenue.

We continue to build momentum across the Group, improving operational performance and we are now focussed on our 'fly phase' which we believe will drive exceptional value for customers, our people, and shareholders.

David Meaden

Chief Executive

14 June 2021

CHIEF FINANCIAL OFFICER'S STATEMENT

Financial review

The first half of FY21 has continued the trend since early FY19 of improved revenue, earnings and cash results. Our commitment to improving performance within our 'Four Pillars' framework is leading to higher quality revenues, and our focus on allocating our capital to strategic priorities has seen us exit our Idox Content businesses and establish strong financial resources to continue investing in our Idox Software portfolio.

Within our reporting, where relevant, adjusted measures of profit have been used alongside statutory definitions. The items that are added back to statutory profit are: amortisation from acquired intangible assets, impairment, restructuring costs, acquisition & financing costs and share option costs. 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. See note 11 for further details. There have been no adjustments to any of our reporting metrics for any impact of the Covid-19 pandemic.

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

Idox Content is classified as discontinued operations given the disposal of its businesses during the period. To enable appropriate year-on-year comparison for Idox Content, UK Databases previously included in Idox Content in FY20 H1 has been included within Idox Software for that period to be consistent with the classification from FY20 H2 onwards. In addition Corporate costs previously allocated to Idox Content in FY20 have been reduced by GBP818,000 to better reflect the actual reduction in Corporate costs as a result of the discontinued operations.

 
                                     FY21        FY20       Variance 
                                       H1          H1 
                                                       ----------------- 
                                   GBP000      GBP000   GBP000      % 
 Revenue 
 - Public Sector Software          26,982      25,684    1,298      5% 
 - Engineering Information 
  Management                        4,148       4,323    (175)     (4%) 
                                  -------  ----------  -------- 
 Idox Software                     31,130      30,007    1,123      4% 
 Idox Content (discontinued)        3,897       5,133   (1,236)   (24%) 
                                  -------  ----------  -------- 
 Total                             35,027      35,140    (113)    (0.3%) 
 
 Revenue Split 
 - Public Sector Software             77%         73% 
 - Engineering Information 
  Management                          12%         12% 
                                  -------  ---------- 
 - Idox Software                      89%         85% 
 - Idox Content (discontinued)        11%         15% 
 
 Adjusted EBITDA 
 - Public Sector Software           9,420       8,102     1,318    16% 
 - Engineering Information 
  Management                          719         568       151    27% 
                                  -------  ----------  -------- 
 Idox Software                     10,139       8,670     1,469    17% 
 Idox Content (discontinued)          276         976     (700)   (72%) 
                                  -------  ----------  -------- 
 Total                             10,415       9,646       769     8% 
 
 Adjusted EBITDA Margin 
  Split 
 - Public Sector Software             35%         32% 
 - Engineering Information 
  Management                          17%         13% 
                                  -------  ---------- 
 - Idox Software                      33%         29% 
 - Idox Content (discontinued)         7%         19% 
                                  -------  ---------- 
 - Total                              30%         27% 
 

Idox Software

The following table analyses the revenues of Idox Software between recurring and non-recurring.

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

Non-Recurring revenue is defined as revenues without any formal commitment from the customer to repeat on an annual basis.

 
                              FY21                Variance 
                                H1   FY20 H1 
                                              --------------- 
                            GBP000    GBP000   GBP000     % 
 Idox Software Revenues 
 - Recurring (PSS)          14,508    14,356      152    1% 
 - Recurring (EIM)           3,117     3,489    (372)   (11%) 
                           -------  --------  -------  ------ 
                            17,625    17,845    (220)   (1%) 
 
 - Non-Recurring (PSS)      12,474    11,328    1,146    10% 
 - Non-Recurring (EIM)       1,031       834      197    24% 
                           -------  --------  -------  ------ 
                            13,505    12,162    1,343    11% 
 
                            31,130    30,007    1,123    4% 
                           -------  --------  -------  ------ 
 - Recurring                   57%       59% 
 - Non-Recurring               43%       41% 
 

Recurring revenues continue to grow well in our local government business (up 9% year on year) but were impacted by small reductions in elections (planned consolidation of products), in social care (Covid-19 impacted), health (planned exit from Malta) and EIM (Covid-19 & corporate activity client-side).

Growth in non-recurring revenues remains strong across our Idox Software business, as we continue to improve the quality and frequency of our client engagements following establishment of our revenue assurance team and consolidation of our professional services activities under a single leadership structure. Approximately half the increase was due to client continuations from existing customers which whilst repeating over time, can fluctuate from one period to the next.

Adjusted EBITDA increased by 17% to GBP10.1m (FY20 H1: GBP8.7m), delivering an improved EBITDA margin of 33% (FY20 H1: 29%). This increase in adjusted EBITDA is a direct consequence of our ongoing efforts for marginal gains within our 'Four Pillars' framework of improving the quality of revenues, margins, organisational simplicity and communication at the same time as focusing capital on strategic, higher margin activities. Whilst our revenue growth in the period has been modest overall, we have seen good growth in our higher-margin areas of scale, notably Local Authority and Idox Cloud, with slower or slightly negative growth in lower-margin activities, notably elections.

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.

In addition, we are actively seeking bolt-on acquisition opportunities to further leverage the common resources Idox has within its infrastructure with new product and cross-sale opportunity. We strive to replicate the success of Idox Cloud since the Tascomi acquisition in August 2019, which is up 27% FY21 H1 compared to the same period in FY20.

Idox Content

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.

Profit / (Loss) Before Tax

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

 
                                    FY21                    Variance 
                                      H1       FY20 H1 
                                                        ---------------- 
                                  GBP000        GBP000   GBP000     % 
 
 Adjusted EBITDA                  10,139         8,670   1,469     17% 
 
 Depreciation & Amortisation     (5,043)       (4,999)    (44)      0% 
 Restructuring costs               (160)       (1,302)   1,142    (87%) 
 Acquisition costs                   (6)         (125)    119     (93%) 
 Financing costs                    (29)         (317)    288     (91%) 
 Share option costs                (784)         (394)   (390)     99% 
 Net finance costs                 (462)       (1,357)    895     (66%) 
                                --------  ------------ 
 Profit before taxation            3,655           176   3,479    1,977% 
                                --------  ------------  ------- 
 

The reported profit before tax for continuing operations was GBP3,655,000 (FY20 H1: GBP176,000).

Restructuring costs are analysed as follows:

 
                                     FY21                 Variance 
                                       H1   FY20 H1 
                                                     ----------------- 
                                   GBP000    GBP000   GBP000      % 
 
 Redundancies                           -         7     (7)     (100%) 
 Disposal of Malta and Ireland 
  businesses                            -       426    (426)    (100%) 
 Litigation                          (11)        33    (44)     (133%) 
 Property                               -       836    (836)    (100%) 
 Legal fees re Dye and Durham 
  approach                            171         -     171      100% 
                                  -------  -------- 
 Total restructuring costs            160     1,302   (1,142)   (88%) 
                                  -------  --------  -------- 
 

Acquisition costs of GBP6,000 (FY20 H1: GBP0.1m) relates to the final settlements in relation to the acquisition of Idox Cloud (formerly Tascomi) in August 2019.

Financing costs of GBP29,000 (FY20 H1: GBP0.3m) relate to professional fees incurred as part of the ongoing bank facility agreement. The comparative period costs relate to refinancing in December 2019.

Share option costs of GBP0.8m (FY20 H1: GBP0.4m) relate to the accounting charge for awards made under the Group's Long-term Incentive Plan.

Net finance costs have decreased to GBP0.5m (FY20 H1: GBP1.4m) as a result of a foreign exchange gain on the revaluation of the euro denominated bond and less interest being payable in respect of the Group's banking facilities which were fully drawn at 30 April 2020 as part of our Covid-19 pandemic defensive actions but have since been largely repaid.

Cashflow

Cash generated from operating activities after tax as a percentage of Adjusted EBITDA was 175% (FY20 H1: 179%). The Group generally continues to have high levels of adjusted EBITDA to cash conversion due to the timing of our local authority renewals across March and April every year resulting in strong seasonality to our cashflows. The Group's April period end is typically the cash high point for the Group in any given year as a result of the timing of these local authority renewals.

The Group continues to invest in developing commercial-ready innovative technology solutions across the Idox Software portfolio and has incurred capitalised development costs of GBP2.2m (FY20 H1: GBP2.2m).

Free cashflow at 30 April 2021 was GBP13.7m (FY20 H1: GBP12.1m). Free cashflow has improved in the year due to improvements in underlying profitable trading and working capital management.

 
                                          FY21 
                                            H1    FY20 H1 
                                        GBP000     GBP000 
 
 Net cashflow                          (1,876)     25,274 
 
 Add back: 
 Disposals                            (10,730)          - 
 Debt repayments, drawdowns 
  and fees                              25,000   (13,236) 
 Net cost of staff shares schemes 
  / (Issue of shares)                     (69)         63 
 Equity dividends paid                   1,331          - 
                                     ---------  --------- 
 Free cashflow                          13,656     12,101 
                                     ---------  --------- 
 

The Group ended the period with net cash of GBP7.6m (FY20 H1: net debt of GBP14.3m), a significant improvement following continued strong cash generation in the period and net cash inflow of GBP10.7m from the disposal of our Content business. Net cash comprised cash of GBP29.2m less bank borrowings of GBP10.2m and the Maltese listed bond of GBP11.4m.

The Group's total signed debt facilities at 30 April 2021 consisted of a revolving credit facility of GBP35m and GBP10m accordion facility with the Royal Bank of Scotland plc, Silicon Valley Bank and Santander UK plc (the "Lenders").

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. We continue to monitor the situation and adapt our approach as required.

Rob Grubb

Chief Financial Officer

14 June 2021

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 
                                                                    Restated*     Restated* 
                                                                     6 months     12 months 
                                                                           to            to 
                                                      6 months 
                                                   to 30 April       30 April    31 October 
                                                          2021           2020          2020 
                                          Note     (unaudited)    (unaudited)     (audited) 
                                                        GBP000         GBP000        GBP000 
 
 Continuing operations 
 Revenue                                     3          31,130         30,007        57,284 
 Cost of sales                                        (10,055)        (9,149)      (14,752) 
                                                --------------  -------------  ------------ 
 Gross profit                                           21,075         20,858        42,532 
 Administrative expenses                              (16,958)       (19,325)      (38,540) 
                                                --------------  ------------- 
 Operating profit                                        4,117          1,533         3,992 
 
 Analysed as: 
 Adjusted EBITDA                            11          10,139          8,670        17,238 
 Depreciation & Amortisation                           (5,043)        (4,999)      (10,063) 
 Restructuring costs                                     (160)        (1,302)       (1,748) 
 Acquisition costs                                         (6)          (125)         (125) 
 Financing costs                                          (29)          (317)         (306) 
 Share option costs                                      (784)          (394)       (1,004) 
---------------------------------------  -----  --------------  -------------  ------------ 
 
 Finance income                                            801            134           181 
 Finance costs                                         (1,263)        (1,491)       (2,358) 
 
 Profit before taxation                                  3,655            176         1,815 
 
 Income tax charge                           5           (650)        (1,265)       (1,338) 
 
 Profit / (loss) for the period 
  from continuing operations                             3,005        (1,089)           477 
 
 Discontinued operations 
 Profit for the year from discontinued 
  operations                                 6           4,284            107           799 
 
 Profit / (loss) for the period 
  attributable to the owners of 
  the parent                                             7,289          (982)         1,276 
 
 Other comprehensive income / 
  (loss) for the period 
  Items that will be reclassified 
  subsequently to profit or loss: 
  Exchange movement on translation 
  of foreign operations net of 
  tax                                                      401            180          (97) 
 Other comprehensive income / 
  (loss) for the period, net of 
  tax                                                      401            180          (97) 
                                                --------------  -------------  ------------ 
 Total comprehensive income / 
  (loss) for the period attributable 
  to owners of the parent                                7,690          (802)         1,179 
                                                ==============  =============  ============ 
 
 Earnings per share attributable to owners 
  of the parent during the period 
 From continuing operations 
 Basic                                       7           0.68p        (0.25)p         0.11p 
 Diluted                                     7           0.67p        (0.25)p         0.11p 
 
 From continuing and discontinued 
  operations 
 Basic                                       7           1.66p        (0.23)p         0.29p 
 Diluted                                     7           1.62p        (0.23)p         0.29p 
 

* The comparatives have been restated due to the Content business being reclassified as discontinued operations. There has been no change to the overall results.

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

CONSOLIDATED INTERIM BALANCE SHEET

 
                                              At 30 April 
                                                                                         At 31 October 
                                                     2021                Restated*                2020 
                                                                       At 30 April 
                                  Note        (unaudited)         2020 (unaudited)           (audited) 
                                                   GBP000                   GBP000              GBP000 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                                         1,179                    1,171               1,183 
 Intangible assets                8                71,386                   83,505              81,652 
 Right-of-use-assets                                2,066                    3,986               3,726 
 Investment                                             -                       18                  18 
 Deferred tax assets                                1,450                    1,403               1,111 
 Total non-current assets                          76,081                   90,083              87,690 
                                                                                        -------------- 
 
 Current assets 
 Trade and other receivables                       20,088                   22,526              18,700 
 Current tax receivable                                 -                      316               1,117 
 Cash and cash equivalents                         29,159                   32,268              30,812 
 Total current assets                              49,247                   55,110              50,629 
                                            -------------      -------------------      -------------- 
 
 Total assets                                     125,328                  145,193             138,319 
                                            -------------      -------------------      -------------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                           7,372                    7,856               6,084 
 Deferred consideration                                 -                      101                  57 
 Other liabilities                                 33,388                   34,779              26,839 
 Provisions                                         1,967                    1,552               1,261 
 Current tax payable                                  126                        -                   - 
 Lease liabilities                                    701                    1,337               1,188 
 Total current liabilities                         43,554                   45,625              35,429 
                                            -------------      -------------------      -------------- 
 
 Non-current liabilities 
 Deferred tax liabilities                           3,445                    4,503               3,907 
 Deferred consideration                                 -                        -                  27 
 Lease liabilities                                  1,485                    3,033               2,695 
 Other liabilities                                    934                    1,091               1,791 
 Provisions                                             -                        -                 612 
 Bonds in issue                                    11,364                   11,746              11,848 
 Borrowings                                        10,207                   34,863              35,052 
                                            -------------      -------------------      -------------- 
 Total non-current liabilities                     27,435                   55,236              55,932 
                                            -------------      -------------------      -------------- 
 Total liabilities                                 70,989                  100,861              91,361 
                                            -------------      -------------------      -------------- 
 Net assets                                        54,339                   44,332              46,958 
                                            =============      ===================      ============== 
 
 Equity 
 Called up share capital                            4,463                    4,446               4,450 
 Capital redemption 
  reserve                                           1,112                    1,112               1,112 
 Share premium account                             41,466                   41,348              41,356 
 Treasury reserve                                   (594)                    (621)               (621) 
 Share option reserve                               3,068                    2,210               2,618 
 Other reserves                                     7,528                    7,528               7,528 
 ESOP trust                                         (379)                    (366)               (373) 
 Foreign currency translation 
  reserve                                             320                      116               (161) 
 Accumulated losses                               (2,645)                 (11,441)             (8,951) 
                                            -------------      -------------------      -------------- 
 Equity attributable to the 
  owners of the parent                             54,339                   44,332              46,958 
                                            =============      ===================      ============== 
 

* The comparatives have been restated to fully disclose lease liabilities that were previously included in other liabilities.

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

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 
 
                      Called                                                                            Foreign 
                          up       Capital     Share                  Share                            currency 
                       share    redemption   premium    Treasury    options       Other      ESOP   translation    Accumulated    Non-controlling 
                     capital       reserve   account     reserve    reserve    reserves     trust       reserve         losses          interests     Total 
                      GBP000        GBP000    GBP000      GBP000     GBP000      GBP000    GBP000        GBP000         GBP000             GBP000    GBP000 
 Balance at 
  1 November 
  2019 (audited)       4,446         1,112    41,348       (621)      1,837       7,528     (365)          (64)       (10,500)              (110)    44,611 
 Share option 
  charge                   -             -         -           -        414           -         -             -              -                  -       414 
 Exercise / 
  lapses of share 
  options                  -             -         -           -       (41)           -         -             -             41                  -         - 
 ESOP trust                -             -         -           -          -           -       (1)             -              -                  -       (1) 
 Disposal of 
  investment               -             -         -           -          -           -         -             -              -                110       110 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Transactions 
  with owners 
  and 
  non-controlling 
  interests                -             -         -           -        373           -       (1)             -             41                110       523 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Loss for the 
  period                   -             -         -           -          -           -         -             -          (982)                  -     (982) 
 Other 
 comprehensive 
 income 
 Exchange 
  movement 
  on translation 
  of foreign 
  operations               -             -         -           -          -           -         -           180              -                  -       180 
 Total 
  comprehensive 
  loss for the 
  period                   -             -         -           -          -           -         -           180          (982)                  -     (802) 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 At 30 April 
  2020 
  (unaudited)          4,446         1,112    41,348       (621)      2,210       7,528     (366)           116       (11,441)                  -    44,332 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Issue of share 
  capital                  4             -         8           -          -           -         -             -              -                  -        12 
 Share options 
  charge                   -             -         -           -        640           -         -             -              -                  -       640 
 Exercise / 
  lapses of share 
  options                  -             -         -           -      (232)           -         -             -            232                  -         - 
 ESOP trust                -             -         -           -          -           -       (7)             -              -                  -       (7) 
 Transactions 
  with owners              4             -         8           -        408           -       (7)             -            232                  -       645 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Profit for 
  the period               -             -         -           -          -           -         -             -          2,258                  -     2,258 
 Other 
 comprehensive 
 income 
 Exchange 
  movement 
  on translation 
  of foreign 
  operations               -             -         -           -          -           -         -         (277)              -                  -     (277) 
 Total 
  comprehensive 
  profit for 
  the period               -             -         -           -          -           -         -         (277)          2,258                  -     1,981 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Balance at 
  31 October 
  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             13             -       110          27        450           -       (6)             -          (903)                  -     (309) 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 Profit for 
  the period               -             -         -           -          -           -         -             -          7,289                  -     7,289 
 Other 
 comprehensive 
 loss 
 Recycled 
  exchange 
  movements on 
  disposal of 
  subsidiaries             -             -         -           -          -           -         -            80           (80)                  -         - 
 Exchange 
  movement 
  on translation 
  of foreign 
  operations               -             -         -           -          -           -         -           401              -                  -       401 
 Total 
  comprehensive 
  profit 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 
                   ---------  ------------  --------  ----------  ---------  ----------  --------  ------------  -------------  -----------------  -------- 
 

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

CONSOLIDATED INTERIM CASHFLOW STATEMENT

 
                                                                             Restated* 
                                                         6 months             6 months           12 months 
                                                               to                   to                  to 
                                                         30 April             30 April          31 October 
                                                             2021     2020 (unaudited)      2020 (audited) 
                                       Note           (unaudited) 
                                                           GBP000               GBP000              GBP000 
 Cash flows from operating 
  activities 
 Profit for the period before 
  taxation                                                  7,935                  289               2,702 
 Adjustments for: 
 Depreciation of property, 
  plant and equipment                                         467                  393                 817 
 Depreciation of right-of-use 
  assets                                                      610                  576               1,240 
 Amortisation of intangible 
  assets                                                    4,420                4,704               9,282 
 (Gain) / loss on disposal 
  of subsidiary                         6                 (4,592)                    -                 380 
 Finance income                                             (801)                 (89)                 (5) 
 Finance costs                                              1,205                2,014               2,210 
 Debt issue costs amortisation                                 73                (323)                 189 
 Research and development 
  tax credit                                                (100)                (114)               (134) 
 Share option costs                                           903                  414               1,057 
 Loss on disposal of leases                                     -                    -                  36 
 Movement in stock                                              -                   54                  54 
 Movement in receivables                                  (2,879)              (2,662)               1,192 
 Movement in payables                                      10,386               11,647               4,329 
                                                 ----------------  -------------------  ------------------ 
 Cash generated by operations                              17,627               16,903              23,349 
 
 Tax on loss refunded / (tax 
  on profit paid)                                             148                (872)             (2,000) 
 Net cash from operating activities                        17,775               16,031              21,349 
 
 Cash flows from investing 
  activities 
 Disposal of subsidiaries                                  10,730                    -               (200) 
 Purchase of property, plant 
  and equipment                                             (790)                (490)               (931) 
 Purchase of intangible assets                            (2,307)              (2,333)             (5,998) 
 Finance income                                                19                   89                   5 
                                                                                        ------------------ 
 Net cash used in investing 
  activities                                                7,652              (2,734)             (7,124) 
 
 Cash flows from financing 
  activities 
 Interest paid                                              (363)                (655)             (1,644) 
 New loans                                                  5,000               39,012              38,575 
 Loan related costs                                             -                 (14)                (48) 
 Loan repayments                                         (30,000)             (25,762)            (25,762) 
 Principal lease payments                                   (678)                (541)             (1,545) 
 Equity dividends paid                                    (1,331)                    -                   - 
 Issue of own shares                                           69                 (63)               (118) 
                                                 ----------------  ------------------- 
 Net cash flows from financing 
  activities                                             (27,303)               11,977               9,458 
 
 Net movement in cash and 
  cash equivalents                                        (1,876)               25,274              23,683 
 
 Cash and cash equivalents 
  at the beginning of the period                           30,812                7,023               7,023 
 Exchange (losses) / gains on cash 
  and cash equivalents                                        223                 (29)                     106 
 Cash and cash equivalents at the 
  end of the period                                        29,159               32,268                  30,812 
                                                     ============  ===================  ====================== 
 
 

* The comparatives have been restated to fully disclose lease liabilities that were previously included in movement in payables.

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 2021 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 2020 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 2021. The Group financial statements for the year ended 31 October 2020 were prepared under International Financial Reporting Standards as adopted by the European Union. 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, which covers a minimum period of twelve months from approval of these accounts, the Directors have considered the Group's trading budget, cash flow forecasts, available headroom and projected financial covenants on the banking facility, and levels of recurring revenue.

Idox along with most companies has been impacted by the Covid-19 pandemic and recurring national lockdowns, however the impact on our Group has in the main been limited to the initial disruption of the early stages of the emerging challenges, 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 the recurring national lockdowns. From our experience of the impact of the Covid-19 pandemic since March 2020, we are confident we are fundamentally resilient to the challenges of the Covid-19 pandemic 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.

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 2021, the Group was organised into three operating segments which are detailed below.

Financial information is reported to the chief operating decision maker, which comprises the Chief Executive Officer and the Chief Financial Officer, monthly 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.

-- Idox Content - delivering funding and compliance solutions to corporate, public and commercial customers.

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 6 months to 30 April 2021 were:

 
                                                        Continuing   Discontinued 
                                                        operations     operations 
                                       PSS       EIM         total        Content     Total 
                                    GBP000    GBP000        GBP000         GBP000    GBP000 
 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) 
                                  --------  --------  ------------  -------------  -------- 
 Adjusted segment operating 
  profit                             3,738       408         4,146          (297)     3,849 
                                  --------  --------  ------------  -------------  -------- 
 Financing costs                                              (29)              -      (29) 
 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 corporate recharge to the business unit is allocated on a head count basis with the exception of Content, which has had corporate costs reduced to avoid stranded costs.

The segment results for the 6 months to 30 April 2020 were:

 
                                                     Continuing   Discontinued 
                                                     operations     operations 
                                   PSS*       EIM         total       Content*     Total 
                                 GBP000    GBP000        GBP000         GBP000    GBP000 
 Revenue                         25,684     4,323        30,007          5,133    35,140 
                               --------  --------  ------------  -------------  -------- 
 Adjusted EBITDA (note 
  11) **                          8,102       568         8,670            976     9,646 
                               --------  --------  ------------  -------------  -------- 
 Depreciation & Amortisation    (4,256)     (743)       (4,999)          (674)   (5,673) 
 Restructuring costs            (1,302)         -       (1,302)          (149)   (1,451) 
 Acquisition costs                (125)         -         (125)              -     (125) 
 Share option costs               (394)         -         (394)           (20)     (414) 
                               --------  --------  ------------  -------------  -------- 
 Adjusted segment operating 
  profit                          2,025     (175)         1,850            133     1,983 
                               --------  --------  ------------  -------------  -------- 
 Financing costs                                          (317)              -     (317) 
 Finance income                                             134              -       134 
 Finance costs                                          (1,491)           (20)   (1,511) 
                                                   ------------  -------------  -------- 
 Profit before tax                                          176            113       289 
                                                   ------------  -------------  -------- 
 

* UK Databases has been reclassified from Idox Content to Idox Software (Public Sector Software) in FY20 H1 to enable appropriate year-on-year comparison.

** Corporate costs for Idox Content have been reduced by GBP818,000 to better reflect the actual reduction in Corporate costs as a result of the discontinued operations. These costs have been allocated to PSS and EIM on a headcount basis.

The segment revenues by geographic location were as follows:

 
                                     Continuing   Discontinued   Total Group 
                                         GBP000         GBP000        GBP000 
 FY21 H1: 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 
 Australia                                  187              -           187 
 Rest of World                              279              -           279 
                                    -----------  -------------  ------------ 
                                         31,130          3,897        35,027 
                                    ===========  =============  ============ 
 
 
                                     Continuing   Discontinued   Total Group 
                                         GBP000         GBP000        GBP000 
 FY20 H1: Revenues from external 
  customers: 
 United Kingdom                          24,751            154        24,905 
 North America                            3,216             52         3,268 
 Europe                                   1,328          4,926         6,254 
 Australia                                  311              -           311 
 Rest of World                              401              1           402 
                                    -----------  -------------  ------------ 
                                         30,007          5,133        35,140 
                                    ===========  =============  ============ 
 

4 Dividends

During the period a dividend was paid in respect of the year ended 31 October 2020 of 0.3p per ordinary share at a total cost of GBP1,331,000 (FY20 H1: GBPNil) .

The directors do not propose a dividend in respect of the interim period ended 30 April 2021 (FY20 H1: GBPNil).

5 Tax on profit on ordinary activities

 
                                                                                    12 months 
                                                                                           to 
                                                  6 months             6 months    31 October 
                                                        to                   to          2020 
                                                  30 April             30 April 
 Continuing operations                    2021 (unaudited)     2020 (unaudited)     (audited) 
                                                    GBP000               GBP000        GBP000 
 Current tax 
 UK corporation tax on profit / 
  loss for the year                                  1,116                  761           936 
 Foreign tax on overseas companies                     294                   62          (16) 
 Under / (over) provision in respect 
  of prior periods                                    (53)                    -           317 
                                       -------------------  -------------------  ------------ 
 Total current tax                                   1,357                  823         1,237 
                                                                                 ------------ 
 
 Deferred tax 
 Origination and reversal of timing 
  differences                                        (723)                  141           738 
 Adjustment for rate change                             16                  301         (181) 
 Adjustments in respect of prior 
  periods                                                -                    -         (467) 
 Other                                                   -                    -            11 
                                       -------------------  -------------------  ------------ 
 Total deferred tax                                  (707)                  442           101 
                                       -------------------  -------------------  ------------ 
 
 Total tax charge                                      650                1,265         1,338 
                                       ===================  ===================  ============ 
 
 
                                                                                    12 months 
                                                                                           to 
                                                  6 months             6 months    31 October 
                                                        to                   to          2020 
                                                  30 April             30 April 
 Total operations                         2021 (unaudited)     2020 (unaudited)     (audited) 
                                                    GBP000         GBP000              GBP000 
 Current tax 
 UK corporation tax on profit / 
  loss for the year                                  1,136                  757         1,065 
 Foreign tax on overseas companies                     294                   62          (16) 
 Under / (over) provision in respect 
  of prior periods                                    (88)                    -           235 
                                       -------------------  -------------------  ------------ 
 Total current tax                                   1,342                  819         1,284 
                                                                                 ------------ 
 
 Deferred tax 
 Origination and reversal of timing 
  differences                                        (712)                  151           774 
 Adjustment for rate change                              -                  301         (169) 
 Adjustments in respect of prior 
  periods                                               16                    -         (473) 
 Other                                                   -                    -            10 
                                       -------------------  -------------------  ------------ 
 Total deferred tax                                  (696)                  452           142 
                                       -------------------  -------------------  ------------ 
 
 Total tax charge                                      646                1,271         1,426 
                                       ===================  ===================  ============ 
 

Unrelieved trading losses of GBP350,000 overseas remain available to offset against future taxable trading profits (excluding unrecognised losses of GBP641,000 in the UK and GBP9,667,000 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:

 
                                                                                        12 months 
                                                   6 months            6 months                to 
                                                to 30 April         to 30 April        31 October 
                                           2021 (unaudited)    2020 (unaudited)    2020 (audited) 
                                                     GBP000              GBP000            GBP000 
 
 Revenue                                              3,897               5,133            10,733 
 Expenses                                           (4,209)             (5,020)           (9,846) 
 Gain on disposal                                     4,592                   -                 - 
 Profit before tax                                    4,280                 113               887 
 
 Attributable tax expense                                 4                 (6)              (88) 
 Net loss attributable to discontinued 
  operations                                          4,284                 107               799 
                                         ==================  ==================  ================ 
 

During the period, Content contributed GBP0.0m (FY20 H1: (GBP0.1m)) to the Group's net operating cash flows and contributed GBP10.7m (HY20 H1: GBPNil) 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:

 
                                                        Restated*     Restated* 
                                          6 months       6 months     12 months 
                                                to             to            to 
                                          30 April       30 April    31 October 
                                              2021           2020          2020 
  Continuing operations                (unaudited)    (unaudited)     (audited) 
                                            GBP000         GBP000        GBP000 
 
 Profit / (loss) for the period              3,005        (1,089)           477 
                                     -------------  -------------  ------------ 
 
 Basic earnings per share 
 Weighted average number of shares 
  in issue                             439,422,715    432,170,594   439,245,132 
                                     -------------  -------------  ------------ 
 
 Basic earnings per share                    0.68p        (0.25)p         0.11p 
                                     =============  =============  ============ 
 
 Weighted average number of shares 
  in issue                             439,422,715    432,170,594   439,245,132 
 Add back: 
 Dilutive share options                  9,809,942      1,295,912     7,279,721 
 Weighted average allotted, called 
  up and fully paid share capital      449,232,657    433,466,506   446,524,853 
                                     -------------  -------------  ------------ 
 
 Diluted earnings per share 
 
 Diluted earnings per share                  0.67p        (0.25)p         0.11p 
                                     =============  =============  ============ 
 

Diluted earnings per share cannot further dilute the loss attributable to the owners, therefore, diluted earnings per share during a loss-making period is the same as basic earnings per share.

 
                                          6 months       6 months     12 months 
                                                to             to            to 
                                          30 April       30 April    31 October 
                                              2021           2020          2020 
 Total operations                      (unaudited)    (unaudited)     (audited) 
                                            GBP000         GBP000        GBP000 
 
 Profit / (loss) for the period              7,289          (982)         1,276 
                                     -------------  -------------  ------------ 
 
 Basic earnings per share 
 Weighted average number of shares 
  in issue                             439,422,715    432,170,594   439,245,132 
                                     -------------  -------------  ------------ 
 
 Basic earnings per share                    1.66p        (0.23)p         0.29p 
                                     =============  =============  ============ 
 
 Weighted average number of shares 
  in issue                             439,422,715    432,170,594   439,245,132 
 Add back: 
 Dilutive share options                  9,809,942      1,295,912     7,279,721 
 
 
                                            6 months      Restated*     Restated* 
                                                  to       6 months     12 months 
                                                                 to            to 
                                            30 April       30 April    31 October 
                                                2021           2020          2020 
 Adjusted earnings per share             (unaudited)    (unaudited)     (audited) 
                                              GBP000         GBP000        GBP000 
 
 Adjusted profit for the period 
  (see note 11)                                5,221          2,475         6,576 
 
 Weighted average number of shares 
  in issue - basic                       439,422,715    432,170,594   439,245,132 
 Weighted average number of shares 
  in issue - diluted                     449,232,657    433,466,506   446,524,853 
 
 Adjusted basic earnings per share             1.16p          0.57p         1.50p 
 
 Adjusted diluted earnings per share           1.13p          0.57p         1.47p 
 

* The comparatives have been restated due to the Content business being reclassified as discontinued operations. There has been no change to the overall results.

8 Intangibles

 
                                     Customer   Trade            Development 
                     Goodwill   relationships   names  Software        costs    Total 
                       GBP000          GBP000  GBP000    GBP000       GBP000   GBP000 
 
At 31 October 2020     48,019          11,131   3,353     7,504       11,645   81,652 
Foreign exchange            -               -       -         -          (9)      (9) 
Additions                   -               -       -        95        2,218    2,313 
Disposals             (7,421)           (390)   (115)     (130)         (94)  (8,150) 
Amortisation                -           (687)   (323)   (1,340)      (2,070)  (4,420) 
At 30 April 2021       40,598          10,054   2,915     6,129       11,690   71,386 
                     ========  ==============  ======  ========  ===========  ======= 
 

No impairment charge was incurred during H1 2021 (H1 2020: GBPNil).

9 Long-term incentive plan (LTIP)

During the period, 3,387,735 options were granted under the LTIP.

The Group recognised a total charge of GBP892,622 (H1 2020: GBP413,602) 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    30 April   31 October 
                                               2021        2020         2020 
                                                No.         No.          No. 
 Outstanding at the beginning of 
  the period                             12,435,871   8,429,410    8,429,410 
 Granted                                  3,387,735     854,303    4,366,064 
 Forfeited                                (265,345)           -            - 
 Exercised                                (999,428)           -    (359,603) 
--------------------------------------  -----------  ----------  ----------- 
 Outstanding at the end of the period    14,558,833   9,283,713   12,435,871 
--------------------------------------  -----------  ----------  ----------- 
 Exercisable at the end of the period     4,941,749           -    2,450,196 
--------------------------------------  -----------  ----------  ----------- 
 

10 Post balance sheet events

Acquisition of Aligned Assets Holdco Limited

On 7 June 2021, the Group announced the acquisition of Aligned Assets Holdco Limited ("Aligned Assets").

Aligned Assets are market leaders in the address management field, provide cutting edge solutions ranging from high-speed matching and cleansing, to sub-second predictive searching, as well as solutions for managing, sharing and viewing address data including in augmented reality. For local authorities, the business provides specialist cloud-based solutions for creating and managing Local Land and Property Gazetteers (LLPG) and Local Streets Gazetteers (LSG), as well as street naming and numbering. Aligned Assets is based in Woking and has 24 employees.

The Group paid initial cash consideration is GBP7.5m for the purchase of Aligned Assets, increasing to a total maximum of GBP10.5m, comprising earn-out amounts of up to GBP1.5m payable in cash and GBP1.5m payable in equity over two years. The size of earn-out is dependent on progress against targets associated with retention of existing recurring revenues, winning new revenues, and delivery of technical advancements and integrations with the existing Idox Group product set. The consideration will be funded from Idox's existing financial resources, which were bolstered by the disposal of its Content division in March 2021.

Changes to UK Corporation tax rate

The Finance (No.2) Act 2015 reduced the main rate of UK corporation tax to 19%, effective from 1 April 2017. A further reduction in the UK corporation tax rate to 17% was expected to come into effect from 1 April 2020 (as enacted by Finance Act 2016 on 15 September 2016). However, legislation introduced in the Finance Act 2020 (enacted on 22 July 2020) repealed the reduction of the corporation tax, thereby maintaining the current rate of 19%. Deferred taxes on the balance sheet have been measured at 19% (2019 - 19%) which represents the future corporation tax rate that was enacted at the balance sheet date.

The UK Budget 2021 announcements on 3 March 2021 included measures to support economic recovery as a result of the ongoing Covid-19 pandemic. These included an increase to the UK's main corporation tax rate to 25%, which is due to be effective from 1 April 2023. The Finance Bill 2021 was substantively enacted on 24 May 2021. However as this was not substantively enacted at the balance sheet date this has not been reflected in the measurement of deferred tax balances at the period end. If the Company's / Group's deferred tax balances at 30 April 2021 end were remeasured at 25% this would result in further a deferred tax charge of GBP486,000.

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:

 
                                                                 6 months            6 months           12 months 
                                                              to 30 April         to 30 April       to 31 October 
 Continuing operations                                   2021 (unaudited)    2020 (unaudited)    2020 (unaudited) 
                                                                 GBP000's            GBP000's            GBP000's 
 Adjusted EBITDA 
 Statutory measure as reported - Operating 
  Profit                                                            4,117               1,533               3,992 
 Add back: 
  Depreciation & Amortisation                                       5,043               4,999              10,063 
  Restructuring costs                                                 160               1,302               1,748 
  Acquisition                                                           6                 125                 125 
  Financing costs                                                      29                 317                 306 
  Share option costs                                                  784                 394               1,004 
                                                   ----------------------  ------------------  ------------------ 
  Adjusted EBITDA                                                  10,139               8,670              17,238 
                                                   ======================  ==================  ================== 
 
 Adjusted EBIT 
 Statutory measure as reported - Operating 
  Profit                                                            4,117               1,533               3,992 
 Add back: 
  Amortisation from acquired intangibles                            1,737               2,066               4,010 
  Restructuring costs                                                 160               1,302               1,748 
  Acquisition                                                           6                 125                 125 
  Financing costs                                                      29                 317                 306 
  Share option costs                                                  784                 394               1,004 
                                                   ----------------------  ------------------  ------------------ 
  Adjusted EBIT                                                     6,833               5,737              11,185 
                                                   ======================  ==================  ================== 
 
 Adjusted PBT 
 Statutory measure as reported - PBT                                3,655                 176               3,992 
 Add back: 
  Amortisation from acquired intangibles                            1,737               2,066               4,010 
  Restructuring costs                                                 160               1,302               1,748 
  Acquisition                                                           6                 125                 125 
  Financing costs                                                      29                 317                 306 
  Share option costs                                                  784                 394               1,004 
                                                   ----------------------  ------------------  ------------------ 
  Adjusted PBT                                                      6,371               4,380              11,185 
                                                   ======================  ==================  ================== 
 
 Adjusted PAT 
 Statutory measure as reported - PAT                                3,005             (1,089)                 477 
 Add back: 
  Amortisation from acquired intangibles                            1,737               2,066               4,010 
  Restructuring costs                                                 160               1,302               1,748 
  Acquisition                                                           6                 125                 125 
  Financing costs                                                      29                 317                 306 
  Share option costs                                                  784                 394               1,004 
  Tax effect                                                        (640)               (640)             (1,094) 
                                                   ----------------------  ------------------  ------------------ 
  Adjusted PAT                                                      5,081               2,475               6,576 
                                                   ======================  ==================  ================== 
 
  EBITDA     Earnings before interest, tax,                PBT        Profit before 
              depreciation and amortisation                            taxation 
   EBIT      Earnings before interest and tax              PAT        Profit after 
                                                                       taxation 
 
 

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