Idox Share Discussion Threads

[techno20] 02/3/2014 18:27

RL - just to say thank you for taking the time to write up your views on the AGM.

Techno.

[roger-lawson] 02/3/2014 14:11

Yes your right, the former F.D.s name is/was William Edmondson and I obviously misheard what was said in the meeting and did not check my notes when I wrote them up. The full report will be corrected. But as he is history, perhaps not a critical error.

[phillis] 02/3/2014 13:55

I believe the previous FDs name was Edmondson
Silly mistake to make...

Surely the share price collapsed because it got too far ahead of what was probable in terms of business growth and it tanked when no growth in revenues transpired.
The current CEO was previously the FD
He has no operational experience in knitting together a group of acquired companies
Let us hope they concentrate on organic growth for a bit


And also
What about the CEOs bonus?

PS hardly a technology stock in the proper sense of the definition

[marben100] 02/3/2014 12:59

As Roger has mentioned, his full report is available to ShareSoc members on our members network. ShareSoc is a not for profit organisation, which works to protect the interests of individual investors, e.g. By pressing IDOX to provide the preesentation which they did at the AGM. We'd appreciate your support by joining us at www.sharesoc.org/membership.html

Cheers,

Mark
Twitter @marben100
ShareSoc twitter @ShareSocUK

[roger-lawson] 02/3/2014 10:20

Here's my report and comments on the IDOX AGM last week (a very brief summary of a longer report):

IDOX Plc held their Annual General Meeting in London on the 27th February 2014. IDOX provides software to local authorities (primarily in the planning and document management areas in the UK), and engineering management information software (EIM) to a wider global commercial base via a subsidiary named McLaren Software which was a relatively recent acquisition.

The year 2013 was not an easy one for the company. The share price peaked at 60p early in the year but by the end of the calendar year it was down at 32p. This was due to a profits warning and substantial downward revisions to analysts forecasts - more on this hiccup later. Previously the company had achieved impressive revenue and profits growth for a number of years under the leadership of Chairman Martin Brooks and CEO Richard Kellett-Clarke, but this problem, the resignation of the finance director and the temporary absence of Mr Kellett-Clarke with health problems clearly spooked a lot of investors. Many VCTs who held the stock took the opportunity to reduce their holdings. At present the company trades at a relatively low rating for technology stocks in current markets - a forecast p/e of 14.6 at the time of writing, after the share price recovered to over 40p.

On the morning of the AGM the company issued an announcement which said "Idox has enjoyed a much better start to 2014 [their financial year end is October] with group revenues growing by just over 10% in the first quarter compared to the same period last year". It mentioned recovery in the EIM division "bolstered by a more disciplined and rigorous approach to our new business pipeline management". There were expectations of further benefits in the second half mentioned. So things are looking up in essence.

There were about 8 ordinary shareholders present at the meeting and all the directors. The company had also agreed to give a presentation at the end of the meeting prompted by a request from D.S. which certainly proved helpful and is surely something all companies should do at their AGMs. Very brief notes follow (there is a much fuller report on the ShareSoc Members Network which I would recommend to investors in this company).

When general questions commenced I asked about the new manager who had been appointed for the EIM division (McLaren). His name was given as Peter Russell-Smith and you can see his profile on LinkedIn. He will be based in the UK and had started in November. This is clearly a very critical appointment because it is this division where major account sales were disappointing (and big orders not closed as expected).

I also asked about Mr Kellett-Clarke's health problem which had actually been mentioned in the Annual Report and which I was already aware of. He assured the audience he was now fully recovered and later said he had been on a cycling holiday in Cuba last week.

Another shareholder asked about the basis for the award of share options. The answer was it was at board discretion after the remuneration committee gives recommendations to the main board. They had set up an LTIP last year and it had been announced but then not implemented as it included a share price target and concurrently the aforementioned business problems arose. I mentioned it was rather odd to announce an LTIP and then not implement it. It was stated that it is currently being reviewed and will be resubmitted to the board in 2014 and re-announced again.

A question also arose on the resignation of the finance director. The Chairman said that Will Evans decided to resign for personal reasons. There was no exceptional financial settlement and he worked out a lot of his notice.
In the presentation by Mr Kellett-Clarke he blamed the share price collapse on a badly worded AGM statement last year which went down poorly in terms of investor relations. His health problem had affected the writing of it. In 2012 and 2013 he said they needed to strengthen and restructure but that had been delayed. The EIM divisions problems were a management issue, not a product or market issue. Note the Chairman's statement in the Annual Report spells out a lot of the business issues and is a good example of how it should be done in smaller companies. In effect the past acquisitions seemed to have stretched the management team and its skills, resulting in some indigestion. So the emphasis in 2013 was on a streamlined structure, system changes (including a new ERP system) and management changes. It was stated that there is a much improved position going forward into 2014.

I asked about the level of debt and would it come down this year (in my view it's on the high side). It was said it should come down.

In summary, a meeting which was exceedingly useful to get a better understanding of the business. The presentation gave a lot more information about the past problems and the current prospects for the business. But as in any small to medium size software company, performance will likely depend on the capabilities of the management who have a good past track record in this case. But the company has apparently been suffering some short term growing pains, and it may take a bit of time for confidence to be re-established in this business. Hopefully the latest announcement will help in that regard.

[marben100] 27/2/2014 15:24

Thanks Davidosh. A very useful presentation/meeting.

It became clear that a key problem last year was that RKC fell seriously ill just at a time when restructuring was required to bring McLaren up to scratch. EIM management wasn't really adequate given very rapid growth in that division, which RKC had recognised. New Aussie CEO for EIM now appointed (Peter Russell Smith). CFO resignation was quite unexpected (for personal reasons, including distance of travel to work) and timing was unfortunate.

5 UK offices to be consolidated into two: Theale & Glasgow, bringing cost savings.

Re revenue recognition, licence sales recognised when delivered. Services on signature of completion certificates by clients.

IDOX has a pipeline of potential acquisitions & will consider placing shares, if necessary to keep debt below 2x EBITDA. Pleasing to hear that integration plan for new acquisitions developed during due diligence process.


Cheers,

Mark
Twitter @marben100

[rivaldo] 27/2/2014 12:23

Decent update. And as above re David - much admiration, but I couldn't make it today.

I've sold up today taking advantage of the rise, as forecasts for 2.5p-3p EPS this year and 2.8p-3.2p EPS next year leave not much upside and possible downside at the current price imo, especially taking the debt into account.

That may change in a few months if H1 results lead to upgrades, but at present I wouldn't be buying so decided to take a very nice profit obtained in a short time from 33p or so. Good luck all anyway as I may well be wrong!

[rp19] 27/2/2014 10:34

Positive update. Hope the presentation goes well David. The day job and my residence up north is preventing my attendance, however, I certainly admire your efforts at making companies more investor friendly. In terms of Idox - I have always found them pretty quick to respond to emails, although I appreciate that so much more can be gleaned from actually meeting them.

[davidosh] 27/2/2014 00:57

Phillis...thanks for that and will ensure it gets aired.

Any more questions from those not coming ?

[phillis] 26/2/2014 14:07

Sadly cannot attend tomorrow but still a strong holder after top slicing in the 50s
A couple of things caught my eye
1/ What accounting policy for booking revenue applies when contracts signed on the last day of the fy avoids a profit warning?
2/
The CEOs bonus is massive for a small tiddler company but an asterisk in the remuneration report indicates it is in respect of the prior year ( as does the prior year number)
Why not accrue for the bonus as normal companies do instead of this cash accounting method

Looking at the actual accounts for f/y 2012 there is no such asterisk
All a bit weird really-and confusing given that last year we had a CFO on board!

[clocktower] 25/2/2014 17:08

Nice movement over the past weeks and it all looks very positive imo - Target 70p+ and then maybe even upwards at a rapid pace.Good Trading.

[owenski] 25/2/2014 16:01

Thanks Davidosh, I agree with your ethos but sadly it is not always practical for me to take time out to attend AGMs etc although I would like to.

[marben100] 25/2/2014 11:37

Well done to Davidosh, with the backing of ShareSoc ( www.sharesoc.org ). See you at the AGM!

Mark
Twitter: @marben100

[davidosh] 24/2/2014 22:51

Just to let you all know that I have arranged a presentation by the directors straight after the Agm official business has ended. The Agm details are here...

IDOX announces that it has posted to shareholders its Annual Report and Accounts for the year ended 31 October 2013, which includes a Notice of Meeting for the Company's Annual General Meeting, to be held at 10am on 27 February 2014, at the offices of Idox Plc, 2nd Floor, Chancery Exchange, 10 Furnival Street, London, EC4A 1AB.

[rp19] 24/2/2014 19:26

Some good buying today, hopefully bodes well in advance of Thursday's AGM. I am no chartist but looks positive if we can maintain the breakthrough through 40p.

[rivaldo] 14/2/2014 10:23

Indeed - the AGM is 27th February, so not long to go. The rise has continued today. Hopefully this is a good augury for the AGM update.

[version5] 13/2/2014 16:13

AGM coming up - maybe institutions are expecting/know it will underpin the years forecasts ?

[rivaldo] 13/2/2014 13:47

A sudden surge of buying again.

[rivaldo] 03/2/2014 14:40

RNS out - the AGM is to be on 27th February, and hopefully we can expect a full trading update continuing the more optimistic tone from the 8th January prelims.

[rivaldo] 21/1/2014 09:25

Up again and a nice uptrend developing.

[tryone2] 16/1/2014 20:42

fully agree with you lignum, far two many purchases and not enough looking for contracts