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Idox keeps growing

RESULTS: Acquisitions have boosted Idox but the company is still growing revenue organically and analsysts expect another year of growth in 2013
December 12, 2012

Whatever the extent of the squeeze on public spending, the moral of Idox 's (IDOX) experience is that governments need to shuffle paperwork in bad times, as well as good. When the effects of acquisitions are stripped out, the electronic document processor recorded organic sales growth in its key public sector business of 6 per cent as local councils, in particular, outsource document management to private providers. However, it was also clear that private sector companies are also using Idox to manage their paperwork in increasing numbers.

IC TIP: Buy at 50p

These results showed that the strategy to increase exposure on specialist engineering information management (EIM) is starting to have an effect. Revenues in this business segment tripled to £17.8m, partly through organic sales growth of 46 per cent and also from a full-year contribution from the CT Space business, which Idox acquired in November last year. With divisional cash profits increasing five-fold to £5.3m, the EIM segment now contributes a third of the group total. The one area of concern was the recruitment software business where a decline in less profitable contract recruitment caused revenues to fall by 19 per cent to £2.5m.

Chief financial officer William Edmondson said he was comfortable with rise in gearing as Idox's divisions were starting to throw off significant amounts of cash.

Broker Investec forecasts current year pre-tax profits of £19m and EPS of 4p (2012: £14.8m and EPS of 3.4p).

IDOX (IDOX)

ORD PRICE:49.5pMARKET VALUE:£174m
TOUCH:49-50p12-MONTH HIGH:53pLOW: 24p
DIVIDEND YIELD:1.3%PE RATIO:26
NET ASSET VALUE:11p*NET DEBT:55%

Year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200834.06.661.400.12
200932.24.481.010.20
201031.34.941.070.45
201138.65.611.310.60
201257.96.901.940.67
% change+50+23+48+12

Ex-div: 17 Apr

Payment: 24 Apr

*Includes intangible assets of £71.3m, or 20p a share