Idox warns on profits after revenue recognition hitch, CEO on sick leave

Idox warned that annual profits will be lower than it previously indicated due to trouble over revenue recognition, which has been complicated by the sudden absence of its chief executive due to illness.

The information management services company said it has flagged up a "small number of revenue items that it does not consider should be recognised" in the results for the year to end-October.

Taking these items out is expected to reduce earnings before interest, tax, depreciation and amortisation to roughly £20m compared to about £23m stated only last month and down 7% from the £21.5m the previous year.

Full year results are now expected to be announced in February, when the audit is complete.

"Clarification of these issues has been complicated by the sudden absence of Andrew Riley, Idox's CEO, due to illness," the AIM-listed company said.

Former CEO Richard Kellett-Clarke, currently a non-executive director, has agreed to stand in as interim CEO pending Riley's return from sick leave.

Shares in Idox fell 29% to 40.05p by midday on Wednesday.

Analysts at broker N+1Singer said "the contracts in question are large ones – and real", noting that the recognition issue identified by the internal team and brought to the attention of the auditors.