Idox finals

The Company is engaged in the development and supply of software solutions and services to the United Kingdom public sector and asset intensive industries worldwide. It operates in four segments: Public Sector Software, which delivers software service solutions to mainly local government customers across a broad range of departments; Engineering Information Management, which delivers engineering document management and control solutions to asset intensive industry sectors; Information Solutions, which delivers both an information service and consultancy services to a diverse range of customers across both private and public sectors and Recruitment, engaged in providing personnel with information, knowledge, records and content management to a diverse range of customers. It also provides information management, Web development, online publishing and training services. I have a holding in my growth portfolio (epic code: IDOX)

Yesterday Idox released their final results, with no further trading surprises.  Group revenues from continuing operations grew by 3% to £57m, due to organic growth in the PSS division and the impact of the three acquisitions made during last year. 


The geographical split of its revenue was similar to the prior year with 33% generated outside of the UK. 


Gross profit earned was 4% higher at £52m and Idox saw an increase in gross margin from 90% to 91% as a result of an increased mix of higher margin software business. 


As guided by a previous trading update see here EBITDA decreased by 9% to £15.0m (marginally better than expected) with EBITDA margins of 26% compared to 30% last year.


Despite the problems, Idox still generates reasonable amounts of free cash flow, £6.6m compared to £7.4m last year.  


Diluted adjusted EPS fell 7% to 3.38p and statutory diluted EPS increased by 13% to 2.07p.


Management sated that "...The Group starts the new financial year in an improved position in terms of capability, reliability and revenue visibility going forward..."


So is the worst behind us and can we expect good improvement from here?  It is difficult to tell, the following statement from the Chairman would imply some further overhead increases: 


"...Idox has had a long tradition of running a very lean business in terms of costs and people and we now recognise that we need more depth and capability across the Group to manage our newer activities around the world and provide more cover and support when needed in critical management positions. In addition, the complexities of the sales process for both software and services in large global organisations means we need to be more competitive in terms of management skills..."


There was also no detailed mention of the progress in recruiting a CFO (other than it is likely to be the last recruitment in the process of strengthening their management team) since the last one left rather swiftly in October and they had expected to have one in place by December.


They usually hold their AGM in late February and issue a trading statement at the same time, so I will wait to then before taking any action.