Austerity and a tepid economic backdrop have forced local governments and businesses to scrimp and save, including by subscribing to document-management software and workflow solutions from Idox (IDOX). That drove a 9 per cent rise in the group's full-year cash profits - excluding restructuring and acquisition costs - to over £16m.
Organic sales at Idox's key public sector division rose 8 per cent as it inked managed services and hosting contracts with several local councils and pinched business from competitors. Idox also strengthened its compliance business by acquiring German rival Digital Spirit, prompting N+1 Singer analysts to raise their sales forecasts by 6-7 per cent for this year and next. But the core market is slowing: management expects public sector spending on software to be flat this year.
Meanwhile, Idox's recent restructuring of its engineering division - which relies on oil and gas companies for a third of its revenues - appeared to pay off as constant-currency sales rose 4 per cent. That also reflects its diversification into other industries: new clients include the muscular car brand Mustang and pharmaceutical giant Eli Lilly. Management plans to drive further growth by tapping into the strengthening US economy, particularly its burgeoning alternative energy industry.
Broker N+1 Singer forecasts full-year pre-tax profits of £16.2m, giving EPS of 3.4p (from £14.7m and 3.1p in 2013).
| IDOX (IDOX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 39p | MARKET VALUE: | £139m | |
| TOUCH: | 38-40p | 12-MONTH HIGH: | 46p | LOW: 34p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 14p* | NET DEBT: | 33% | |
| Year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 31.3 | 4.9 | 1.1 | 0.45 |
| 2011 | 38.6 | 5.6 | 1.3 | 0.60 |
| 2012 | 55.4 | 7.9 | 2.2 | 0.68 |
| 2013 | 57.3 | 7.5 | 2.4 | 0.70 |
| 2014 | 60.7 | 7.6 | 1.7 | 0.75 |
| % change | +6 | +1 | -32 | +7 |
Ex-div: 9 Apr Payment: 24 Apr *Includes intangible assets of £66.8m, or 19p a share | ||||
