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I'd kinda guessed these issues were causing grave concern to many and not properly reporting is always a bad practice, however, for a relatively small wager, I'm looking for much of this to be in the severely depressed price.
The CEO, didn't impress me on the presentation he gave (noted in an earlier post) but perhaps the change is going to be a good thing, as the Chairman has previously held all the right positions in the company in the past and knows the organisation very well.
At 0.65% of my wad -- it looks a balanced risk with plenty of upside in the next couple of years -- unless of course there is something more sinister.
They get a mention in the latest Share Soc Bulletin. I've not read it, but having been alerted to the company by Games, I thought I'd share what they say. (Not read it myself yet.)
"A company I have held for a long time is AIM listed software company IDOX. This company was very successful under the leadership of former CEO Richard Kellett-Clarke. The company issued a profit warning in December (not the first) saying that results for the year ending October 2017 will be delayed until next February. The announcement cited concerns about revenue recognition, complicated by the sudden absence of the CEO, Andrew Riley, on sick leave. This is the kind of announcement that investors hate. No detail, and no information on when or if Andrew Riley might return. All we know is that the EBITDA forecast is reduced again to approximately £20 million. But at least we know that Kellett-Clarke is back as interim CEO.
I expressed concerns at the last IDOX AGM about revenue recognition, high debtors and the apparent offering of long payment terms to customers (effectively providing
them credit). I opined at the time that this was no way to run a software company because even if customers are credit worthy, projects can run into unforeseen difficulties causing them to argue about the bills. I reduced my holding in the company substantially at the time, although its still one of my bigger holdings. Leon Boros also made negative comments about cash flows at the company and some investors were shorting the stock at the time they are probably doing so again.
Comments on bulletin boards also raise the issue about the restating of accounts at 6PM, an acquisition that IDOX made in December 2016. But this is old news. Reference
to accounting restatements at 6PM was made in the offer document (page 15, where it says that the Directors expect that the value of the net assets of 6PM under IDOX accounting policies will be reduced materially). Indeed 6PM subsequently
filed accounts in Malta where they are registered showing substantial losses in 2016 and restating the 2015 and 2014 numbers. But these adjustments were surely known about earlier in the year so the latest announcement suggests some other problems.
Needless to say, with all these uncertainties and lack of clarification from the company (which we may not get until February it seems), all the likely share buyers have disappeared because it becomes very difficult to value the business. I will be encouraging the company to clarify the position a.s.a.p., but the change of CEO, even on a temporary basis, might provide some reassurance that the problems will be addressed
i believe it will be months, not weeks away, if at all. IMHO the business is in very good hands with Richard Kellet Clarke back at the helm. He managed it very well for a long time and he manages the investor community very well.
I believe this share price will be back to the 60p+ mark by Mar and have just added another 100,000 to my portfolio.
I havent worked anything out based on numbers. Should look at balance sheet but sadly dont have time. My feeling is based on the large drop of the share price compared to the story that some revenue needs to be deferred. Sadly the market is often right as the people with real money to spend that can move a share price have time to look at the numbers in detail. If the story is just that some revenue needs to me moved then Idox is a bargain at the current price but sadly there is often more to these stories.
mega -- I toed dipped here and it's dropped again since, but often it's hard to find the bottom of a stock when it's out of favour.
It's also hard to find a bottom at the top, which is where many of the stocks appear to be at, at this point in time.
The underlying business looks good here -- it's just as you say, no one likes to see shenanegans played with revenue recognition and profits restated.
Riley looked a little flakey on the piworld presentation - still they often say - "invest in a company that can be run by eejits, because one day they surely will be".
If the core business 80% is renewable or expected, that's pretty sound and now on a P/E of 6 -- it needs clearing up and probably a new CEO to stabilise the ship.
I'm not too worried about the dip - I'd say this is for the medium to long term (3-5 years) and provided it keeps this level of divi cover and it grows above inflation, I'm happy to take the 4% and wait.
gamesinvestor said "or is there something nasty underneath it all?"
And that's the problem. A re-statement of accounts downgrading profits and the responsible senior management going off sick.
Lets hope there are no further downgrades. Like you, I have decided to increase my investment at what looks like a bargain price - but trying to catch a falling knife has never been my forte
Well despite my earlier posts, at this now low level it looks more interesting.
If it turns out that this was just a revenue slip into 2018 then at some point it'll recover strongly, so I've taken a blind punt at this point and will wait until they formally announce to see if it was a smart or a dumb move -- and then maybe add some more.
The underlying business seems sound, the divi is reasonably well covered, despite the debt having risen a tad too much.
The acting CEO has been the FD, Opps Director and CEO in the past, so he should have a pretty good handle on the company.
On a P/E of 6, a yield over 4% -- is it a freak opportunity perhaps, or is there something nasty underneath it all?
waytogo -- This looks highly suspicious --the CEO doesn't go off sick without a proper explanation. There must be a major issue here as £3M on a £23M reported figure is a 15% mistake -- not a small issue as dressed up in the message.
Also -- not having been looking at this, I just looked at the last interim report and the alarm bells should have been ringing back then. These are the highlights with my comments inserted as >>> :-
Financial Highlights Revenues up 19% to £44.2m (H1 2016: £37.2m),
benefiting from first time half year contributions from
three recent acquisitions
>>>> All looks good at this point - a growing business (at least by aquisition).
Adjusted EBITDA* increased 2% to £10.3m
(H1 2016: £10.1m)
>>> This looks concerning in the sense that these numbers include the 3 acquired companies six months numbers as well. Had they not made the acquisitions, I assume the earnings would have been distinctly negative.
Profit before tax was £4.1m** (H1 2016: £6.5m) Basic EPS 0.87p (H1 2016 1.71p) Adjusted profit before tax*** £6.9m (H1 2016: £7.9m),
reflecting increased investment and finance costs
>>> This partly explains it.
Adjusted EPS*** 1.46p (H1 2016: 1.97p) Cash generated from operating activities before tax as
a percentage of Adjusted EBITDA was 116%
(H1 2016: 145%)
Net debt as at 30 April 2017 was £28.2m (H1 2016
£13.9m; 31 October 2016: £25.0m); including £5.4m
cash paid to vendors in H2 2016 acquisitions and £11.6m
bond from 6PM acquisition
>>> That's a pretty hefty debt for a company with after tax profits some way south of £4M -- not sure what the tax figure is but even ignoring the tax, the debt/profit figure is 7X and probably closer to 7.5 to 8X once tax taken off.
Games -- The P/E is still at 12 with the decline in the price to 38.25 divided by an expected EPS 3.64p (reduced by approx 13% = 3.16p) = 12 ---- assuming there are not any other shocks in the numbers.
mmm -- I watched a company video on this and looked at the numbers a few times in the last months with a view to investing.
I doubt I'd consider it now after reading the 6PM report, and if I held the stock I would sell it immediately.
If the previous fraud was uncovered and over two years, it makes you wonder what else they are hiding.
I also listened to a company update from the CEO, he didn't impress me much at all.
I don't know the motivations of Charlie, but a few comments:
Firstly views positive and negative are welcome. I dont like rampers up or down but I want to hear views of all sorts.
Secondly, I think it would be wrong to assume the market in idox is "perfect" and all information is fully absorbed into the price - the volume on this share is too low for that to be true.
And most importantly - THIS IS A PRETTY SHOCKING REVELATION ABOUT THE COMPANY I AM INVESTED IN.
A disaster.....why this is not announced here I do not know...
It gets much worse when you consider the under the covers massive restatement of the 6pm accounts in Oct for the prev 2 years which show they acquired a massive loss making, reducing revenue business.
You're up against Recognia on this one, who released this alert on Monday. (Mind you, with the target over 260 days you could both be right! Good luck! I admire your efforts very much and wish I had more time to engage with them.):
"Recognia has detected a "Double Top" chart pattern formed on IDOX PLC (IDOX:LSE). This bearish signal indicates that the stock price may fall from the close of 58.12 to the range of 39.00 - 43.00. The pattern formed over 260 days which is roughly the period of time in which the target price range may be achieved, according to standard principles of technical analysis.
Tells Me: The price seems to have reached a top, after failing to break through a resistance level and ultimately breaking downward in a sign of reversal to a new downtrend. The Double Top pattern forms during an uptrend as the price reaches two distinct peaks at roughly the same price level. Volume reflects a weakening of the upward momentum, tending to diminish as the pattern forms, with some pickup at each high, less on the second high. Finally the price breaks down below the lowest low to confirm the bearish signal"
Introduction - 00:16
History of idox - 1:09
Idox today - 02:07
Renewed focus on the public sector 04:40
Acquisition of 6pm - 04:45
Idox business model - 09:45
Services to Local Government- 11:40
Local Government market share - 13:56
Idox customers 14:38
Financial highlights (year ended 31st October 2016) 16:10
Summary and outlook 17:57
That is a point very well made about the sexual health market and the synergy. After more research it is clear that 6pm are the market leader as well, by some distance.
On another point, they also offer telehealth solutions and already monitor around 10,000 patients at home through their emcare service. As social care budgets become more integrated with NHS budgets to provide a singe healthcare budget such as the model being adopted in manchester, telehealth will really start to take off in the UK at last.
When you consider all that, this looks like a potentially very good acquisition.
Yes, the results were good, but organic growth at c. 5% is really needing to be backed up by an acceleration of acquisitive growth which seems to be gathering pace.
I guess 6PM won't be listed in Malta for long if the offer is taken up. The acquisition does make sense in terms of IDOX's current markets in that local authorities, since 2013, have been responsible for areas previously under the NHS such as substance abuse, sexual health and community care. 6PM's products address these areas as well as offering solutions for NHS Trusts. There may be cross sell opportunities given their existing relationships with councils.
The market is obviously not thrilled about the dilution but that's probably short term reaction.
I would look more closely at the acquisition on two counts:
1. The Maltese system is entirely based on the London exchange in terms of governance and rules. There is nothing dodgy about it.
2. The company they are acquiring are market leaders in the NHS in some of their specialities. Their website tells you alot. You don't acquire a Chief Medical Officer like theirs without credibility.
"Idox announced the acquisition of Rippleffect, one of the UKs top digital agencies. This follows on from last months acquisition of Open Objects, a provider of digital services for public sector specialising in social care and health. These two bolt-ons extend the groups digital capability across all its domains and sectors and significantly boosts its presence in social care where there are opportunities for wider cross-selling. Our FY16 EPS (YE Oct) is unchanged but further underpinned whilst we upgrade EPS in FY17 and FY18 by 6% and 4%. We believe Idox is experiencing positive momentum across its diversified markets and its EV/EBITDA cal17 rating of 10.6x remains attractive."
Probably the long awaited re-rate after the profit hiccup of three years ago. Management sound like they are in control at the moment, cash is being generated, debt paid down and acquisitions are adding to the bottom line.
Pressure on local councils to deliver more for less via automation will help sales.
"Idox has delivered a steady set of results revealing the typical underlying strength in the Public Sector Software division, and recovery in the problem child that the EIM division formerly represented. With 5% underlying group organic growth and 26% headline growth, momentum is clearly restored with the tried and tested mix of acquired and organic growth which Idox deployed so well up to 2013. The share price has responded with evidence of the return to form, and in the absence of upgrades (with management comfortable with performance "at least" in line with unchanged market expectations)." finnCap's note from this morning, taken from Research Tree
Shorting a rising stock....is much worse when it is done by your resident posters that seemingly are your buddies and convince 'long' holders to give up!
What many pi's fail to grasp is the extent that shorting is taking place. Often we tend to think that the 'shorter' is done with and we expect the stock to now rise, now that 'he' is out of the way? You'd be wrong in many instances, for 'he' the shorter, is often followed by others that 'help' keep the stock down !
Some stocks fall after GOOD NEWS! ....IS it just normal levels of profit taking? Yes, imo....
...BUT the underlying reason for many pi's taking early profits, is simply they are afraid they'll be left in paper losses!
Thus, if the stock, after 'good news' is then shorted, then kiss good bye to this stock reaching new highs in the very near term!
We can't both WIN !
The 'shorts' therefore 'win' their bets, whereas the 'longs' lose the best part of their investment, possibly for some time to come......and just when you thought this couldn't go any lower, THEY'LL SHORT THE STOCK AGAIN !
Why is this? They both can't win...the money has to come from somewhere?
Thanks for all your support. We are now at 4,378 votes!
AND SOARING !
(that's A LOT of irate investors!)
Investors are saying something? They are voting in their thousands !
Bookmark the links if you wish to 'pass the LINK/s on'.... or read later?
BE A PART OF IT
# The big problem with shorting is that THEY (the shorters) WOULD most likely lose most of their money IF they just 'bet' on the price going down without trying to 'help' it down?
So, there is the 'catch 22' scenario. No one would know of an RNS to be released that will contain BAD NEWS, if they did and then 'shorted' the stock, then they are guilty of 'insider trading'.
The only sure way to short a stock and WIN is to spread dis-information to defame the company with help from other posters that are in concert with them. To ENSURE that they don't lose the biggest part of their 'short', ironically, then, they must deramp with (seemingly) believable posts.
When the pro's do it, they simply get the media or well known 'crooked' tipsters, analysts or brokers to do it for them. (say no more). .They're all in cahoots with each other!
The campaign against shorting is for the benefit of the 'cheated' investors that cannot control their investments due to the dirty tricks played out by co-ordinated deramping in order to tank the sp to abnormally low levels.
When the campaign is complete, the results will be reviewed by Govt legislators re- further action! The branch of the FSA ie FCA will be asked by Davide Serra to conduct an investigation into short selling practices, with the view to either:- an outright ban on short selling, or at the very least to be better and more vigorously regulated !
The HMGovt epetition is a regulated and monitored site with legal authority that will NOT under any circumstances allow any auspicious individuals to prevent 'others' from casting their free votes. Discussions of which are freely entered into with individual viewpoints.
Been with this since 13p, though the past year has tried my patience somewhat.
Hopefully the negative sentiment is behind us, though I feel the share is held back slightly because it has not been clear the last 12 months where significant revenue growth will come from. There has been a lot of emphasis on cost cutting and process improvement - which is obviously good - but revenue stability clearly proved tricky in 2013. Hopefully the next update will show further progress.
That said, IDOX is a rare thing for AIM - a cash generative, relatively stable company that pays a reasonable dividend and doesn't have chat forums populated by hysterical types who post incessantly about every last trade, share movement and trip to the pub.
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