IDOX shrugs off CSR, raises guidance

24th Nov 2010 14:07

Document management specialist IDOX said back in July that it was not unduly worried about the government's impending spending cuts and its optimism seems to have been borne out so far, with full year results set to be materially ahead of market expectations.Higher profitability was achieved despite revenue being slightly down on 2009; last year turnover was padded by a large, one-off project.Cash generation has been strong and revenue visibility, thanks to the group's focus on recurring revenues, is good, which will enable the company to accelerate its progressive dividend policy."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," said company chairman Martin Brooks. The company said the impact of the government's comprehensive spending review (CSR) was much as it had expected, and its view remains that there will be no major impact on software and services expenditure where it supports efficiencies in areas like planning.Brooks added that IDOX has been working with its customers in local government to devise shared service initiatives and outsourced solutions to save costs while 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," Brooks said.The only fly in the ointment for the group seems to be the contract recruitment business, which continues to report depressed revenues. The permanent recruitment side has picked up, however, which should leave the entire division's contribution virtually unchanged from last year. Back in July chief executive Richard Kellett-Clarke sounded keen to get shot of the recruitment arm. "We've spent years trying to sell the recruitment business but in the current environment no one seems interested in it," Kellett-Clarke lamented.