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12 Mar 2021 | 09:07

Idox offloads compliance operations for £9m cash

(Sharecast News) - Information management software company ldox has agreed the disposal of its compliance operations business to digital learning and technology provider Sponge Group, it announced on Friday, for £9m cash on completion. The AIM-traded firm's compliance operations business, part of its content division, is based in Germany and Belgium and employs 48 people.

It said the transaction would see Sponge acquire the entire share capital of Idox Germany and Idox Belgium, together with a number of UK-based customer contracts.

The board described Idox Compliance as "one of Europe's leading providers" of compliance solutions, providing customers with e-learning platforms focussed on supporting organisations to comply with compliance law and regulation.

It said the compliance operations reported revenues of £5.3m, an adjusted EBITDA contribution of £1.2m and profit before tax of £0.3m in the financial year ended 31 October.

Gross assets on that date totalled £5.4m.

The disposal was expected to generate a profit on sale of £5.4m in the group's current financial year.

Idox said the proceeds of the disposal would be used to reduce the company's net debt, which stood at £16.1m as at 31 October, and to continue to invest in its organic and inorganic growth strategy.

Following the disposal, Idox's grants consultancy business would make up the entirety of its content division.

"Our strategy, as stated in our recent 2020 results, is to build value as a public-sector focused software organisation," said chief executive officer David Meaden.

"Whilst we are pleased with the progress of our Compliance business in the last two years, within our 'four pillars framework', this transaction provides us with an opportunity to simplify operations within the group and focus on our key markets, whilst at the same time providing the compliance business with a more relevant owner in order to realise its own ambitions.

"I look forward to seeing the continued success of the Idox Compliance team and products as it moves into its next phase with Sponge."

At 0848 GMT, shares in Idox were up 0.33% at 72.44p.
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