The year-end numbers only tell part of the story of document management software provider Idox, a company that has undergone significant change and a reality check.
After a stellar 2012, expectations were unrealistically high going into 2013 and the punishment came in H1 (see here). Major opererational and management changes were needed but with CEO Richard Kellett-Clarke out of action for much of H1 they were delayed. By H2, the CEO was back in full swing, management had been strengthened, complexity reduced (including reorganising from 4 divisions into 2 and selling off the non-core TFPL recruitment business), and many of the integration issues within the EIM division resolved.
Performance across the year reflects this background. Full year revenue (to October 31 2013) from continuing operations was up a modest 3% to £57m, with adjusted EBITDA down 9% to £15m and PBT down 5% to £7.5m. Talking with Kellett-Clarke, it is clear that H1 was effectively a write-off as the company managed its way through its many issues but there was a real improvement in H2 - revenue was up 8.5% yoy with profits up 10%. Given the level of disruption, managing to deliver revenue growth for the full year was something of an achievement especially as the business mix is also shifting towards recurring revenue from hosted and managed services within the public sector business.
There is plenty of work ahead but its prospects are improving. Although the EIM segment is strengthening and deals deferred from 2013 have been signed in FY14, the challenge is converting the existing pipeline into deals in a predictable manner, although incremental spending from existing customers will help. In the public sector, the drive to cut costs is still a pressure but Idox has credibility within the planning segment and initiatives such as its joint marketing deal with Calderdale county council are opening new opportunities within areas such as revenue and benefits and social care. There is a lot of positive activity within Idox, so it pays to look behind the numbers.