Idox documents progress

That business has proven lucrative. Idox’s half-year pre-tax profit - adjusted for acquisition and restructuring costs - climbed 40 per cent year on year to £6.9m. It also slashed net debt by a half to under £9m. Those gains stemmed from its public sector software division, which signed seven new managed service contracts and recorded a 9 per cent rise in organic sales.

A more surprising performer was Idox’s recently restructured engineering information division, which earns about a third of its revenues. Higher licensing sales pushed revenues there up by a fifth and adjusted cash profits leapt nearly 70 per cent to £2.2m.

Both divisions’ gains speak to a broader strategic shift towards signing longer-term contracts and selling more services, which drives recurring revenues. That involves step-by-step product improvements that resemble "peeling an artichoke", says chief executive Richard Kellett-Clarke. But by improving its offerings and managing paperwork across all of its clients' activities, it’s also laying the groundwork for future opportunities. For example, Idox could collate the data it manages for local authorities then sell it back to them.

Broker N+1 Singer expects full-year pre-tax profit of £11.8m, giving EPS of 2.5p (from 3p in 2013).