Idox plummets after slower-than-expected first half

AIM-listed software group Idox saw shares drop sharply on Wednesday morning after the company's bottom-line guidance for the full year came in below analysts' expectations.

Idox, which provides software and services to the UK public sector and global engineering information markets, said that it has made underlying progress in all of its businesses in the first half ended April 30th but has faced a slower-than-expected six months.

The group said that its public-sector businesses have continued to increase market share in core markets and are now starting to bid for contracts outside the UK. However, while the sales pipeline in the Engineering Information Management (EIM) division has grown, closed order values are down year-on-year.

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To reflect the "uncertainty of timing" as to when certain growth opportunities will come through, the firm now expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) to be "no less than £18m".

The current consensus estimate is for EBITDA of around £21m in the year ending October 31st 2013, up from £16.7m the year before, according to analyst David Johnson from Northland Capital Partners.

"FY13 EBITDA of £18m would represent growth (c. 7.5%) but whilst constrained spending in the public sector is well known, the softness in the newer EIM division will raise concerns," he said.

The share price was down 19.13% at 37p in early trading on Wednesday.

Idox's Chief Executive Officer Richard Kellett-Clarke said: "Whilst the first-half performance is disappointing and has been impacted by delays in new Engineering Information Management licence sales in particular, we believe we remain very well positioned."