TIDMIDOX
RNS Number : 6918W
IDOX PLC
24 November 2010
24 November 2010
IDOX plc
2010 financial year ends ahead of market expectations; enhanced
prospects for the new year
IDOX plc (AIM: IDOX, 'the Group', 'IDOX'), the supplier of
software and services to the UK public sector, has published a
trading update for the year to 31 October 2010.
The Group finished the year strongly and now expects to report
EBITDA and normalised pretax profit ahead of market expectations
and well ahead of the 2009 financial year. Normalised pre-tax
profits exclude amortisation, exceptional items and share based
payments.
Higher profitability was achieved despite revenue being slightly
down on 2009, reflecting a managed reduction in the low-margin
contract recruitment business and the benefit of a large, one-off
project in the previous financial year, offset by some acquisitive
growth.
During 2010 the Group made three individually earnings-enhancing
acquisitions which, together with the continuing strength in the
core business and effective cost control, are expected to deliver
revenue and normalised pre-tax profits in the year to October 2011
materially ahead of current market expectations.
With strong cash generation and good visibility within the
underlying business, the Board intends to accelerate its
progressive dividend policy.
Martin Brooks, Chairman, commented:
"Despite the considerable uncertainty prevalent throughout the
year as a result of the election, emergency budget and subsequently
the Comprehensive Spending Review (CSR), we expect to produce
strong earnings figures.
"We have extended our market leading position - some 90% of
local government buys one or more of our products - completed three
acquisitions to widen our product range whilst materially reducing
our underlying cost base.
"Local government has been anticipating for some time the
challenges placed on them by the CSR and appears well placed to
cope with them. We are working with our customers to deliver shared
service initiatives and outsourced solutions to help them meet
these challenges whilst still maintaining and improving front line
services.
"Our prospects for 2011 and beyond are enhanced, with some 60%
of our revenue now recurring we expect to continue to take
advantage of our strong local government customer base and
reputation to cross sell our full range of software and services as
well as continuing to widen our product range and broaden our
sector coverage with further selective earnings enhancing
acquisitions."
Markets and CSR
The impact on local government expenditure of the CSR, published
on 20 October, was as the Group anticipated and our view remains
that there will be no major impact on software and services
expenditure where it supports efficiencies in areas like planning.
Since the announcement of the CSR, the independent market research
company Kable has reiterated its forecast of modest growth in the
local government software and services market for the next three
years.
The local government market has responded positively and
innovatively to the challenges imposed by the macroeconomic
environment and is well advanced in its planning and implementation
of cost reductions. The government's announcement to remove
restrictions on how total monies are spent will assist councils,
allowing them greater flexibility to maintain citizen services
through improved efficiency and technology.
In the current financial year, IDOX has already helped councils
achieve these savings through facilitating innovative
shared-services, such as the Kent Licensing Partnership and
delivering efficiencies through the provision of managed services
to key customers including Westminster and Leeds City Councils.
Operational highlights
In the Software division, which makes up some 77% of Group
revenues, the last quarter of the financial year saw the highest
order book in the Group's history. It included the closure of two
further Local Government Review ("LGR") sales where councils have
reorganised into larger unitary authorities. The mix of sales
highlighted the trend to more public access based web solutions,
shared services, managed services and hosted solutions.
The Group's Solutions business was impacted by cut backs in
central government which depressed project revenues, but this was
made up by increases in subscription and advertising revenues. The
division also closed its first order for a hosted grants solution
in Spain.
The contract recruitment business has, as anticipated, reported
depressed revenues. However, a strong recovery from permanent
specialist appointments, which were double compared to 2009 levels,
resulted in a virtually unchanged contribution.
With organic growth and acquisitions, the Group has increased
its penetration of the local government market to over 90%. The
evolution of the structure, systems and personnel and investment in
resilient hosted services now makes it possible for IDOX to provide
fully managed services in its vertical market sector.
The Group has continued to reduce costs through a continuing
focus on operational efficiencies and quality of service. Across
the Group, revenue and profit per head rose for the fourth
successive year.
As a result of acquisitions made during the year amortisation of
intangible assets will be higher than market expectations as will
exceptional costs related to the integration of those
acquisitions.
Acquisitions
During the year IDOX completed and fully integrated two
acquisitions within the Software Solutions business as part of its
strategy to widen its product range market leadership and extend
its capability in managed services.
A third acquisition, Grantfinder, has provided further scale for
the growing Information Solutions business which provides
complementary content to the software business on planning and
grants, together with associated websites and decision support
software. The Information Solutions business is now a significant
provider of profits, with a growing international business
resulting from IDOX's operations in the Netherlands. Further
opportunities to create a world class content business
complementary to the software business are being pursued.
IDOX will continue to seek appropriate earnings enhancing
acquisitions in both the public and private sectors which leverage
its infrastructure technology and market position.
Outlook
The Group has started the current financial year serving over
90% of UK local authorities (2009: 75%), with 60% recurring
revenues (2009: 55 %). The Group's land and property software
solutions business comprises over 60% of installed UK local
government planning solutions.
With its other products and acquisitions, IDOX has a major
opportunity for cross selling in addition to the improving business
prospects as uncertainty diminishes in the specialist public sector
software and services market.
IDOX is also now working with a number of local authorities to
improve their efficiency through new shared services and managed
service programmes which further embed the Group within its
customer base.
IDOX plc will announce its audited final results for the year to
31 October 2010 on Tuesday 11th January 2011
Enquiries:
IDOX 020 7332 6000
Martin Brooks, Chairman
Richard Kellett-Clarke, Chief
Executive
William Edmondson, Chief Financial
Officer
Investec 020 7597 4000
Andrew Pinder
Patrick Robb
Dominic Emery
College Hill 020 7457 2020
Adrian Duffield / Carl Franklin
About IDOX plc
IDOX plc is a supplier of software solutions and services
principally to the UK public sector and the leading applications
provider to local government for core functions relating to land,
people and property through its UNI-form, Plantech and IDOX product
range.
The acquisition of Strand Electoral Management Services Limited
in 2010 has extended this capability into the complementary market
for election software. In addition the acquisition of 11 long-term
managed-service contracts for the provision of land and property
information solutions to UK Local Authorities has strengthened
IDOX's managed service business. Over 90% of UK local authorities
are now customers.
The Group gives public-sector organisations the tools to manage
information and knowledge, documents and content, business
processes and workflow as well as connecting directly with the
citizen via the web.
It also supplies decision support content and additional
specialist services via the IDOX Information Solutions business
which was strengthened by the acquisition of Grantfinder in 2010,
as well as transforming approaches to knowledge and content
management via consultancy and training. In addition it provides
these specialist skills to customers through its TFPL branded
recruitment division.
For more information see www.idoxplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
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