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IDOX Plc (IDOX:LSE), the supplier of software and services to the UK public sector, has announced a trading update for the six months to 30 April 2010.
Profits showed a healthy increase over the first half of 2009, underpinned by effective cost controls and operating efficiencies that continue to improve margins. Although revenues were slightly down, the level of recurring revenues has increased and the group's contracted order book and work in progress both remain strong. Revenues were characterised by a higher number of smaller contracts as purchasing decisions on larger contracts were delayed.
Good management of working capital resulted in IDOX ending the half with significantly higher cash levels than last year, which will enable it to increase its interim dividend.
Having made two acquisitions that will enhance earnings in the second half, the group claims to have ample reserves to consider further acquisitions.
Martin Brooks, IDOX Chairman, said "IDOX put in a relatively strong first-half performance. The Group increased profits despite some softening in revenues owing to later than expected customers' decisions on new contracts and some deployments that will now be recognised in the second half."
"Tender activity remains high in local government, our contracted order book is healthy, the business is diversifying, recurring revenues are increasing and our improved efficiency has delivered higher margins and substantially higher cash flow."
"Although we await clarity on the future of local government IT spending, IDOX is in good shape and we remain cautiously optimistic about the outlook for the remainder of the financial year."
The group intends to announce its interim results on Tuesday 6 July 2010.
After the announcement IDOX's shares were up by 2.27% to 11.25 Pence.