IDOX confident despite expected spending cuts

7th Jul 2010 08:14

IDOX's reliance on orders from the UK public sector is not causing its management any sleepless nights at present as it has a good sales pipeline for the rest of the year, though it is bracing itself for delays in contract signings."Our continued focus on service and quality, combined with a growth in recurring revenues and a reduction in costs, has built a high degree of resilience against the uncertainties of the government's future spending plans," said chairman Martin Brooks.The first half of the company's financial year went well with normalised pre-tax profits 10% higher at £3m compared to £2.8m the year before, despite revenue sliding 5% to £15m from £15.7m a year earlier.The value of recurring revenues as a proportion of group turnover increased to 61% in the six months to the end of April, while the group also saw gross margins improve from 76% to 81%.Revenue from the Software business fell to £11.5m from £12.5m the year before but recurring revenues improved to 59% from 50%.The Information Solutions business increased revenues by 43% to £1.9m (H1 2009: £1.3m), reflecting the full-year impact of the J4B acquisition in April 2009. Subscription-based recurring revenues now account for 53% (H1 2009: 46%) of divisional revenue. In the Recruitment division, revenues in the low-margin contract recruitment business fell to £1.4m from £1.9m at the interim stage in 2009, contributing to a decline in total divisional revenue to £1.6m, down from £2.0m a year earlier. The group's cash position rose to its highest ever level of £14.2m, though since the end of the reporting period the company has paid out £3.3m to acquire Grantfinder, with a further £2.9m expected to go out the door this month when the acquisition of Macdonald, Dettwiler and Associates is completed.The interim dividend has been increased from 0.08p to 0.1p."The new UK coalition government has outlined its initial plans for savings ahead of a three year comprehensive spending review to be published on 20 October 2010. The board's view is while this may cause delays in commitment, the healthy level of current tender activity indicates that many local authorities recognise that IDOX and other software suppliers are critical to achieving the necessary efficiencies demanded by government," the company said. In a separate announcement the company said it has won a three year contract worth £0.5m with the Chester West and Chester council to deliver its land, property and regulatory management systems.