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AIMprospector

One of the few: AIM software company paying dividends Idox is a well-established technology firm. The company develops ‘information management’ solutions that are sold into the UK public sector and regulated engineering industries. Quoted since 2001, Idox today trades around the top 10% of AIM companies by market capitalisation. Idox reports figures with respect to its two divisions: Public Sector Software (PSS) and Engineering Information Management (EIM). In 2014, EIM made around half of the sales and profits delivered by PSS. According to the most recent results statement, the PSS division “is the leading applications provider to UK local government for core functions relating to land, people and property, such as its market leading planning systems and election management software”. The fact that the PSS operations recently delivered “the majority of electoral services for the Scottish referendum” gives credence to Idox’s claim to its market standing.

EIM made around half of the sales and profits delivered by PSS The EIM division offers a document control service, frequently deployed in heavy industry. EIM’s software product is used to control the thousands of engineering and management documents that relate to major upgrade, construction or installation projects. The North American market

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is the majority of the EIM business. Around one third of Idox’s EIM sales are to the oil and gas sector, with the company listing a number of majors among its clients. 2014 full-year results (Idox has an October year-end), laid plain management concerns for earnings over the medium term. Shareholders were warned to expect little growth in public sector IT spending as governments step back from investing in anything but ‘frontline services’. Prospects in the oil and gas sector are limited as majors withdraw from major capital spending projects. It seems especially inauspicious that both sides of Idox’s business have simultaneously slowed. This leaves

warned to expect little growth in public sector IT spending

Dividends at the firm have increased in every year since 2006 net profit following a similar trajectory. Dividends at the firm have increased in every year since 2006. Only fifteen AIM-quoted companies have managed more than eight years of successive dividend increases. Idox is a quality AIM operation, currently trading through sticky markets. Debts at the company appear entirely manageable, with cash generated from operations more than ten times 2014 interest payments. The current share price appears to suggest that despite the gloomy outlook, Idox will deliver significant earnings growth this year and next. Alternatively, the market may simply have concluded that the company is of such calibre that a premium rating is deserved. IDOX (LON:IDOX) FOR

me with concerns over just how predictable profits are at the company. However, Idox does appear to have a strong position in its markets and management have previously delivered strong growth in a more favourable climate. Idox’s past record is one of the most impressive on all of AIM. In the last five years, sales have nearly doubled, with

Successful operation Strong market position AGAINST Soft markets High earnings growth assumed Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high

£144m 39.5p:40.5p 12.6 2.00% 35p:47p

www.aimprospector.co.uk

April 2015 AIM Prospector  
April 2015 AIM Prospector  

Featuring five AIM companies: Benchmark Holdings, GVC Holdings, Jelf Group, idox and Top Pick: Nichols plc.