IDOX swings to a loss after substantial impairment

Consistent with its May trading update, IDOX told investors that revenues had slipped 19% to £35.2m and adjusted EBITDA had dropped a massive 72% in the six months leading to 30 April to end the period at just £2.7m.

An impairment of £39.5m recorded in relation to its health, digital and transport wing dragged IDOX to a pre-tax loss of £43.2m from a £3.4m profit last time. IDOX turned in a loss per share of 9.80p for the half, compared to EPS of 0.74p a year earlier.

Although some parts of the business performed satisfactorily, the impairment had been made to the carrying value of the businesses due to the "poor" financial performance of some units.

On an underlying basis, the AIM-listed group said it was profitable, generated cash and reduced its debt in the period, despite lower revenues and significant losses in the digital divide.

David Meaden, IDOX's chief executive, the ex Northgate Information man who joined last month, said, "The last six months has proved to be a difficult period for Idox."

He said challenges in the digital business related to the acquisition of 6PM and the adoption of appropriate contract pricing and contract terms across the business that reflect the early shift to SaaS-based provision.

"Whilst a number of challenges remain, I now have a much clearer view of the potential and optimal shape of the business going forward. In future years we, therefore, expect that the group's financial performance will benefit from a reduced cost base and a stronger commercial focus on organic growth, recurring revenues and cash conversion."

The second half is expected to see an improvement, helped by several move to focus the company on its core markets, integrate acquisitions, reduce overheads and "drive forward new opportunities", with cost cutting effect beginning to be realised during the second half.