IDOX
SOFTWARE & COMPUTER SERVICES
16 November 2022
IDOX.L
60.7p
Market Cap: £273.8m
SHARE PRICE (p)
80 | |
70 | |
60 | |
50 | |
40 | |
30 | |
12m high/low | 72p/57p |
Source: LSE Data (priced as at prior close)
KEY DATA
Net (Debt)/Cash | £(6.7)m (at 31/10/22) |
Enterprise value | £280.5m |
Index/market | AIM |
Next news | FY22 results, Jan. '23 |
Shares in Issue (m) | 451.0 |
Chairman | Chris Stone |
Chief Executive | David Meaden |
Chief Financial | Anoop Kang |
Officer | |
COMPANY DESCRIPTION
Idox is a software business selling to UK public sector and global engineering clients.
www.idoxplc.com
PERLPARA
IDOX IS A RESEARCH CLIENT OF PROGRESSIVE
ANALYSTS
Ian Robertson
+44 (0) 20 7781 5318 irobertson@progressive-research.com
Gareth Evans
+44 (0) 20 7781 5301 gevans@progressive-research.com
www.progressive-research.com
Trading update shows strategy driving results
Idox has today released a trading update for the year ended 31 October 2022. The statement reports a strong performance, with particularly encouraging news on order flow and sales of Idox Cloud. We have adjusted our forecasts for FY23 and FY24 to reflect new assumptions around cash payments and working capital. Management expectations for FY23 are maintained and the year has started well. The update reflects the progress over recent years and the strong position Idox holds, which should allow further organic and acquisition-driven growth.
- Robust and confident trading update. Revenue at £66m is slightly below our expectations (£70.2m) but the £22.5m adjusted EBITDA is broadly in line with our estimate (£22.8m). Given wider economic issues, we expect the revenue softness to be in large part a result of general economic exposure at EIM. The record order intake 'in excess of c.£74m' is very impressive, as are the 15 new sales for Idox Cloud in the period.
- Cash flow still good but revised down. Year-endnet debt of £6.7m compares with our expectation of £1.9m, but still represents a reduction across the year of some £1.4m. The figure was impacted by the end of Covid VAT deferrals, higher-than-usuallevels of tax payments on account (five payments vs four) and payments for acquisitions.
- Strong start to FY23; forecast adjustments. FY23 has started well with good recurring revenues and contract renewals along with a solid order book and healthy pipeline. Management's expectations for FY23 remain unchanged. We are adjusting our forecasts to reflect the statement, mainly adjusting the cash figures. We leave our FY23 revenue estimate unchanged and have edged down our FY23 adjusted EBITDA to £24.7m from £25.0m, with approximately 93% conversion for adjusted EBITDA to operating free cash flow. Changes to key estimates are shown overleaf.
- Well placed for acquisitions. The net debt of £6.7m set against £45m of additional loan facilities places Idox strongly for further acquisitions; in a market that should provide a flow of opportunities for Idox's disciplined and focused approach to deals.
- Strategy shows through in strong results. Idox has delivered a strong performance in FY22 despite the challenging economic backdrop. We see the modest top-linepressure as a reflection of wider economic issues, but believe that the strong order book, delivery on adjusted EBITDA and positive trading outlook reflect management's strategy and execution.
FYE OCT (£M) | 2020 | 2021 | 2022E | 2023E | 2024E |
Revenue | 68.0 | 62.2 | 66.0 | 74.0 | 77.7 |
Adj EBITDA | 19.6 | 19.5 | 22.5 | 24.7 | 26.1 |
Fully Adj PBT | 10.5 | 12.4 | 13.8 | 15.8 | 17.3 |
Fully Adj EPS (p) | 1.8 | 2.4 | 2.5 | 2.7 | 2.9 |
EV/Sales (x) | 4.1x | 4.5x | 4.2x | 3.8x | 3.6x |
EV/EBITDA (x) | 14.3x | 14.4x | 12.4x | 11.4x | 10.7x |
PER (x) | 34.0x | 25.5x | 23.8x | 22.5x | 21.1x |
Source: Company Information and Progressive Equity Research estimates.
This publication should not be seen as an inducement under MiFID II regulations.
Please refer to important disclosures at the end of the document.
16 November 2022
We make adjustments to our estimates as shown below, to reflect the detail in today's update for FY22 and revised assumptions around the cash profile over FY23 and FY24.
Changes to key estimates
FY22E | FY22E | FY23E | FY23E | FY24E | FY24E | ||
New | Old | New | Old | New | Old | ||
£m | £m | £m | £m | £m | £m | ||
Revenue | 66.0 | 70.2 | 74.0 | 74.0 | 77.7 | 77.7 | |
Adj. EBITDA | 22.5 | 22.8 | 24.7 | 25.0 | 26.1 | 26.5 | |
Adj. EPS | 2.5 | 2.6 | 2.7 | 2.8 | 2.9 | 3.0 | |
Net (debt)/cash | (6.7) | (1.9) | 0.2 | 6.4 | 10.9 | 15.4 | |
Source: Progressive Equity Research estimates
2 | Idox |
16 November 2022
Financial Summary: Idox
Year end: October (£m unless shown) | |||||
PROFIT & LOSS | 2020 | 2021 | 2022E | 2023E | 2024E |
Revenue | 68.0 | 62.2 | 66.0 | 74.0 | 77.7 |
Adj EBITDA | 19.6 | 19.5 | 22.5 | 24.7 | 26.1 |
Adj EBIT | 12.7 | 12.7 | 15.3 | 17.0 | 18.2 |
Reported PBT | 2.7 | 7.3 | 8.3 | 10.0 | 10.9 |
Fully Adj PBT | 10.5 | 12.4 | 13.8 | 15.8 | 17.3 |
NOPAT | 10.3 | 10.3 | 12.7 | 13.1 | 13.6 |
Reported EPS (p) | 0.1 | 1.3 | 1.5 | 1.8 | 1.9 |
Fully Adj EPS (p) | 1.8 | 2.4 | 2.5 | 2.7 | 2.9 |
Dividend per share (p) | 0.3 | 0.4 | 0.5 | 0.6 | 0.7 |
CASH FLOW & BALANCE SHEET | 2020 | 2021 | 2022E | 2023E | 2024E |
Operating cash flow | 22.0 | 10.0 | 16.9 | 22.9 | 25.9 |
Free Cash flow | 11.5 | (4.4) | 5.2 | 11.1 | 14.3 |
FCF per share (p) | 2.6 | (1.0) | 1.1 | 2.5 | 3.2 |
Acquisitions | (0.6) | (10.5) | (2.5) | (2.7) | (1.5) |
Disposals | (0.3) | 10.7 | 0.0 | 0.0 | 0.0 |
Shares issued | (0.1) | 0.1 | 0.8 | 0.8 | 0.8 |
Net cash flow | 10.3 | (11.3) | 1.4 | 6.9 | 10.6 |
Overdrafts / borrowings/bonds | (46.9) | (26.4) | (26.4) | (26.4) | (26.4) |
Cash & equivalents | 30.8 | 18.3 | 19.7 | 26.6 | 37.2 |
Net (Debt)/Cash | (16.1) | (8.1) | (6.7) | 0.2 | 10.9 |
NAV AND RETURNS | 2020 | 2021 | 2022E | 2023E | 2024E |
Net asset value | 47.0 | 60.8 | 65.9 | 71.9 | 77.8 |
NAV/share (p) | 10.6 | 13.6 | 14.6 | 15.9 | 17.2 |
Net Tangible Asset Value | (34.7) | (31.2) | (19.0) | (13.5) | (7.6) |
NTAV/share (p) | (7.8) | (7.0) | (4.2) | (3.0) | (1.7) |
Average equity | 45.8 | 53.9 | 63.3 | 68.9 | 74.8 |
Post-tax ROE (%) | 23.0% | 22.9% | 21.9% | 22.9% | 23.1% |
METRICS | 2020 | 2021 | 2022E | 2023E | 2024E |
Revenue growth | N/A | (8.6%) | 6.2% | 12.1% | 5.0% |
Adj EBITDA growth | (0.3%) | 15.5% | 9.6% | 5.8% | |
Adj EBIT growth | 0.2% | 20.5% | 10.8% | 6.9% | |
Adj PBT growth | 17.4% | 12.0% | 14.1% | 9.3% | |
Adj EPS growth | 32.9% | 7.2% | 5.8% | 6.4% | |
Dividend growth | N/A | 33.3% | 25.0% | 20.0% | 16.7% |
Adj EBIT margins | 18.7% | 20.5% | 23.2% | 23.0% | 23.4% |
VALUATION | 2020 | 2021 | 2022E | 2023E | 2024E |
EV/Sales (x) | 4.1 | 4.5 | 4.2 | 3.8 | 3.6 |
EV/EBITDA (x) | 14.3 | 14.4 | 12.4 | 11.4 | 10.7 |
EV/NOPAT (x) | 27.3 | 27.2 | 22.0 | 21.4 | 20.6 |
PER (x) | 34.0 | 25.5 | 23.8 | 22.5 | 21.1 |
Dividend yield | 0.5% | 0.7% | 0.8% | 1.0% | 1.2% |
FCF yield | 4.3% | (1.7%) | 1.9% | 4.1% | 5.2% |
Source: Company information and Progressive Equity Research estimates
3 | Idox |
16 November 2022
Disclaimers and Disclosures
Copyright 2022 Progressive Equity Research Limited ("PERL"). All rights reserved. Progressive's research is commissioned by the subject company under contract and is freely available to the public and all institutional investors. Progressive does not offer investors the ability to trade securities. Our publications should not, therefore, be considered an inducement under MiFID II regulations. PERL provides professional equity research services, and the companies researched pay a fee in order for this research to be made available. This report has been commissioned by the subject company and prepared and issued by PERL for publication in the United Kingdom only. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however, PERL does not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of PERL at the time of publication, and any estimates are those of PERL and not of the companies concerned unless specifically sourced otherwise. PERL is authorised and regulated by the Financial Conduct Authority (FCA) of the United Kingdom (registration number 697355).
This document is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. PERL does not make investment recommendations. Any valuation given in a research note is the theoretical result of a study of a range of possible outcomes, and not a forecast of a likely share price. PERL does not undertake to provide updates to any opinions or views expressed in this document.
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IDOX plc published this content on 16 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2022 08:08:18 UTC.