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Summary
- Idox Plc had reported a surge in revenues of 4% during FY20 ended on 31 October 2020.
- IDOX had delivered £11.2 million of free cash flow during FY20.
- The order book had witnessed a surge of 31% for contracted software and services to £15.9 million during FY20.
- The Company had not utilized any government schemes in FY20.
Idox Plc (LON:IDOX) is the LSE listed technology stock. The Company is the leading developer of the specialist software solution. IDOX’s shares have generated a return of about 46.58% in the last 12 months. The Company is listed on FTSE AIM All-Share.
Business Model
The Company is the provider of specialist management solutions, mostly to public sector companies around the world. The Company provides its services to five key industries –
- Government
- Health
- Engineering & Construction
- Transport
- Property
The Company had two reportable business segments –
- Idox Software – It can be classified into PSS (Public Sector Software) & EIM (Engineering Information Management)
- Idox Content
Recent News
On 02 December 2020, the Company had announced regarding a contract with the Scottish Government and Scottish Local Authorities. Under this contract, the Company would deliver the electronic counting of ballot papers for the Local Authority elections during 2022. The Company would work in collaboration with Fujitsu and Elite Training under a five-year contract to serve the Scottish Government.
FY20 Financial Highlights (for twelve months period ended 31 October 2020, as on 02 February 2021)
(Source: Company result)
- The Company’s total revenue had witnessed a jump of 4% from £65.5 million during FY19 to £68.0 million during FY20 due to the significant growth of the order intake.
- The order book had witnessed a surge of 31% for contracted software and services to £15.9 million during FY20, while it was £12.1 million for FY19.
- On the profitability front, the adjusted EBITDA grew by 36% to £19.6 million during FY20. The adjusted EBITDA margin had also improved to 29% during the period.
- IDOX had reduced its restructuring cost to £1.8 million during FY20 compared to £2.2 million during FY19.
- The Board had declared a final dividend of 0.3 pence per share during FY20, while it had not paid any final dividend during FY19.
- The adjusted earnings per share had increased to 1.81 pence for FY20.
- The Company had managed to reduce its net debt by 39% from £26.4 million during FY19 to £16.1 million during FY20.
- The Company had significant financial headroom consisted of a revolving credit facility of £35 million as of 31 October 2020.
- The Company had shown significant improvement in free cash flow and delivered £11.2 million of free cash flow during FY20 compared to £4.4 million during FY19 driven by the favourable working capital management.
- The cash conversion had improved to 109% during FY20 from the levels of 86% achieved during FY19.
FY20 Operational Highlights (as on 02 February 2021)
- The Company had fully integrated the Tascomi acquisition into the company and rebranded as “Idox Cloud”.
- The Company had not utilized any government schemes in FY20.
- IDOX had completely exited its sub-scale operations in Ireland and Malta.
- The Company had made significant progress towards digital transformation initiative by winning new contracts and software developments for Idox cloud development framework.
Sectoral Update (as of 02 February 2021)
Idox Software
(Source: Company result)
The Company had brought PSS and EIM business segments under the same management structure. This segment had shown a surge of 6% in its revenues to £57.3 million during FY20, representing almost 84% of total revenue. Idox Software had 62% contribution from recurring revenue, and the remaining 38% accounted for non-recurring revenue. The surge in recurring revenues was driven by the first full year of revenues from the Idox Cloud business purchased in August 2019. The non-recurring revenue increase was due to the impact of the transformations in the PSS business during the first half of FY19. The adjusted EBITDA demonstrated an increase of 35% to £18.6 million during FY20, while it was £13.8 million during FY19. PSS contributed around 71%, and EIM represented approximately 13% of the Company’s total revenue during FY20.
Idox Content
(Source: Company result)
The revenue across Idox Content segment was declined by 6% to £10.7 million during FY20 as Covid-19 pandemic resulted in lower revenues in the German and Belgium Compliance business. However, the adjusted EBITDA had increased by 78% to around £1.0 million. This segment accounted for 16% of total revenue during FY20.
Share Price Performance Analysis of Idox Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Idox Plc were trading at GBX 52.46 and were down by close to 1.96% against the previous closing price as on 03 February 2021, (before the market close at 09:02 AM GMT). IDOX's 52-week Low and High were GBX 24.50 and GBX 56.00, respectively. Idox Plc had a market capitalization of around £237.37 million.
Business Outlook
The Company had highlighted the consequences of Covid-19 pandemic, but it remained optimistic regarding the future business prospects of public sector markets and software solutions. IDOX had reformulated its strategy, with an increased focus towards rendering digital solutions and services to the public sector in the United Kingdom. The Company would accelerate this strategy by making key acquisitions to bring multiple synergies and accelerate the pace of business progress. The combination of increasing recurring revenue and impressive order book had ensured the bright outlook of the Company for FY21. The trading performance during FY21 year-to-date had been satisfactory so far. The Company had demonstrated improvements in revenue, margins, order book, recurring revenue and cash generation.
