Welcome everyone to the interim results for Idox PLC for the half year end of 30 of April, 2023. I've got Anoop with me, and our plan today is to take you through the operational highlights for the business in the first half of the year. I'll hand over to Anoop, who will take us through the financial review, and then I'll come back, talk a little bit about strategy and operations, our buy and build program, ESG, and further outlook for the business. Without further ado, just report it's been a very strong performance from Idox in the first half of 2023. We feel we're building real momentum in the business, and the changes that we've made in organizational structure, and the way that we operate across the business, has led to a set of very good results.
During the period, our order intake was up 23%, GBP 52 million. Obviously, that was significantly ahead of last year, and that provides us really with great visibility for the remainder of 2023 and into 2024. Anoop will talk about our results generally, but revenue is up 8%, EBITDA up 10% on the same period last year, and I think that just gives you a very good feeling for the continued momentum build that we have in the business and the strong performance overall. We've continued to develop the group's geospatial capabilities. Those of you who are familiar with the business will know that we see this as a really strong growth area over the coming years, as clients have an extremely strong appetite for geospatial information and data.
I'm pleased to report here that, you know, a couple of our acquisitions, exeGesIS, revenue is up 90% year-over-year, and our Aligned Assets business has seen a very good order intake, up 31% on the same period last year. Both of those businesses are now integral parts of Idox, and we feel that we've done a very good job with the businesses overall and their performance, and integrating them into our culture and the way that we work. We'll talk a little bit more about our new divisional structure later, but it is now fully embedded. I'm delighted and thrilled that the people that we have heading up those businesses are all internal appointments from within Idox, and importantly, have been through our Leading Together program.
It's a very strong cohort, and it's enabled us to focus our organization on this Fly stage of our, of our plan to enable us to focus very heavily on markets, customer service, and to deliver sharper sales execution. During the period, we've seen a number of significant contract wins and extensions across our Land, Property & Public Protection base. You can see that our cloud order intake is up 28% on the same period. Revenues in that area are also up about 30% year-on-year, and our assets and communities business has seen 14 new clients in Research Connect, and we've seen over 100% order intake improvements during the period for that product set, and that's as well as taking some long extensions with existing clients for existing product sets.
A number of clients taking new services from us, such as East Lothian, Harborough District Council, who are all taking hosting services to extend the capabilities of what Idox provides to those councils. The good organic revenue, double-digit profit growth driven by very strong LPPP performance, and across the group, continued focus, as you would expect from us, on cash generation, taking the group to a net cash position, which is a little bit of a highlight, I think, for us all, from where we started our journey at sort of minus GBP 35 some time ago. Overall, a really good H1, importantly, building momentum for H2 and into future years. With that, I'll hand over to Anoop, and he's gonna take us through the numbers in a little bit more detail.
Great. Thanks, Dave. Welcome to our half year 2023 results presentation. Firstly, let me take you through the results for the group as a whole, and then I'll move on to the individual segments, pulling out some key themes and observations for the period. Overall, it's been a very good performance for the group for the first half, against the backdrop of what continues to be challenging macroeconomic conditions. It's pleasing to see that our results were in line with our expectations. We delivered revenues of GBP 35.8 million, which were up 8% on last year, and demonstrate the continued progress the group is making. Of the GBP 35.8 million, GBP 21.1 million was generated from recurring revenue, which was 7% up on the previous year. As we continue to build and maintain long-term relationships with our customers.
Recurring revenues accounted for 59% of the group's overall revenue, with good growth in our LPPP division, the Land, Property & Public Protection part of the business. The group ended the period with a strong order intake of GBP 52 million, which is up 23% on 2022, and provides good visibility for the remainder of 2023 and into 2024. Pleasingly, our adjusted EBITDA is up 10% to GBP 12.1 million, and has been delivered through a combination of new wins, upsell and cross-sell, pricing, and a disciplined approach to cost management, despite continued inflationary pressures. The positive contribution on EBITDA has blown down to earnings per share, where we delivered an adjusted EPS for the period of 1.33 pence per share, which is up 10% on 2022.
We continue to focus on cash generation and strong cash management. As a result, we have reduced net debt by GBP 7.8 million to a net cash position of GBP 1.1 million, driven by strong billings and collections in the first half. Coupled with an RCF facility of GBP 35 million and an accordion of GBP 10 million, this means that the group has good balance sheet strength and resources to pursue its M&A strategy. Moving on to break out the results into our new reporting segments. Following the reorganization of the business into three distinct divisions at the start of the financial year, we now present our results under our new divisions: Land, Property, and Public Protection, otherwise known as LPPP, Assets, and Communities.
The LPPP division comprises our regulatory services across planning and building control, cloud and on-prem software solutions for management of planning and land charges, software solutions to support inspection and enforcement for licensing of public sector housing, and address management solutions for creating and maintaining local land and property gazetteer data. Overall, for the division, revenue was up 22% at GBP 21.5 million, with solid growth in our local government and cloud offerings. Our 2021 acquisitions, Aligned Assets and exeGesIS, continued to perform well and in line with our expectations. Of the GBP 21.5 million of LPPP revenue, GBP 11.7 million was generated from recurring revenue streams, representing 54% of total revenue, and was 10% up on the prior year.
Non-recurring revenues were up 41% at GBP 9.8 million, where local government and cloud continued to perform well. Order intake for the period was GBP 34.9 million, up 45% on the prior period. Within local government, order intake was up 50% on 2022. This included a mix of new services and large contract extensions, including the City of Edinburgh Council and the City of Wolverhampton Council. Within cloud, order intake continued to improve and was up 28% on the same period last year, including new customers such as Conwy and Harrow Council. The Aligned Assets order intake was up 30%, with notable wins with the Metropolitan Police and Cadent Gas, as our specialist address management offerings continued to support key customers. Adjusted EBITDA was 24% up to GBP 7.7 million.
While we continue to invest in the ongoing operations, we remain disciplined and controlled in the way that we approach this, and are cognizant of the continuing inflationary pressures. Despite this, we delivered an adjusted EBITDA margin percentage of 36%. Moving on to the Assets division. The Assets division provides document management and control solutions to asset-intensive industries, and includes our engineering information management, EIM, business, as well as facilities management, asset tracking, and transportation capabilities. Overall, revenue for the division was up 5% at GBP 7.2 million over the period. Within the division, EIM delivered 15% revenue growth year-on-year, with good progress with existing customers and new wins, with customers such as KNPC, VME Process, and Elecnor. Our facilities management revenues grew by 6%, while we experienced slight reductions in transport and iFIT, our asset tracking business.
Recurring revenue remained stable at GBP 4.8 million, whilst non-recurring revenue was up 19% at GBP 2.4 million, which is mainly driven by EIM. Order intake remained stable for the period at GBP 8.3 million, which included new wins in EIM, as mentioned, and as well as a 17% growth in orders in the CAFM business. The adjusted EBITDA for the period is GBP 1.8 million, compared to GBP 2.1 million in the prior period, and was impacted by slightly lower profitability in transport and iFIT. Turning to our Communities division. The Communities division comprises our elections, grants and databases, and social and healthcare offerings.
As anticipated, revenue for the Communities division was lower in the period, at GBP 7.1 million, and was driven by a lack of major election events across the UK and Malta during the first half. Recurring revenues were up 7% at GBP 4.7 million, with good growth in databases and social and healthcare. The non-recurring revenue reduction to GBP 2.5 million was driven by the previously mentioned impact of elections. There was good order intake in the period, at GBP 8.9 million, despite no major election events. We continue to support the Department for Levelling Up, Housing and Communities and central government in gearing up for elections next year.
Our grants and databases business had solid order growth, with 14 new customers in the period, with healthcare solutions increasing order intake by 25% and social care up by 12% in the period. The division ended the period with an adjusted EBITDA of GBP 2.6 million, with an improvement in margins to 36%. The margin improvement was driven mainly by the mixed impact of lower election revenues in the period. Leading on to the more detailed income statement. After taking into account a broadly consistent depreciation and amortization for the period, the group delivered an adjusted EBIT of GBP 8.6 million, up 13% on the previous period. The group's finance charges were broadly consistent at GBP 0.8 million.
After taking into account adjusted tax charges of GBP 1.7 million, the group delivered an adjusted profit after tax of GBP 6.1 million, up 11% on the prior year. The group's adjusted tax rate of circa 21% is up on the prior period, reflecting the tax changes from April 2023. In respect of adjusting items, the key movements in the period related to restructuring costs of GBP 0.3 million in relation to the corporate simplification activities following the divisional reorganization. Acquisition and financing costs of GBP 0.4 million, related to the finalization of deferred consideration costs relating to the exeGesIS acquisition. After all adjusting items, the group delivered a statutory profit before tax of GBP 4.1 million, up 13% on the prior period. Moving on to the group's cash flow for the period.
The group generated net cash from operating activities before tax of GBP 18 million. Against the group's adjusted EBITDA of GBP 12.1 million, this equated to a conversion rate of 148%. Consistent with previous years, the first half cash performance is typically very strong, as the period end ties into local authority renewal and re-sign cycles, with advanced billing and cash collections. The group paid GBP 0.8 million in taxes in the period, and GBP 2.2 million in M&A payments. Of this amount, GBP 1.6 million related to exeGesIS, and GBP 0.5 million related to Aligned Assets, and both were in line with the initial consideration for both acquisitions.
A final GBP 0.5 million is due to be paid in connection with the Aligned Assets acquisition this month. This will conclude the cash payments associated with previous acquisitions. The group invested GBP 3.8 million in development and CapEx. This was in line with prior period, with notable investment into local government, cloud and elections. The group paid a 2022 dividend of GBP 0.005 per share, which resulted in a total cash outflow of GBP 2.4 million. After interest, lease payments, and other items of approximately GBP 1 million, the group moved from a net debt position of GBP 6.7 million at the end of last year, to a net cash position of GBP 1.1 million at the end of the first half. Moving on to the balance sheet.
Overall, the balance sheet has remained fairly stable, half on half. Key movements related to deferred tax movements in relation to share options, acquired intangibles, and tax rate changes. Trade receivables increased since the year end, in line with trading, whereas movement in trade payables since the last half year related to deferred consideration payments in relation to exeGesIS and Aligned Assets. The net deferred income was broadly consistent to last half year, and higher than the year-end position, given the billing and cash collection profile of our contracts in the first half of the year. At the bottom of the slide, I've highlighted the constituent parts of our net cash balance of GBP 1.1 million, which includes EUR 13 million euro-denominated Maltese bond, maturing in 2025. Finally, moving on to future guidance.
This is consistent with guidance we've communicated previously and our medium-term outlook for the business. From an all organic point of view, we continue to believe that mid-single-digit growth is sustainable over the medium-term across the group, as our customers continue to procure stable and efficient solutions. From an EBITDA margin perspective, we continue a journey to deliver a 35% adjusted EBITDA margin on a sustained basis, through a mix of efficiencies and acquisition of higher margin businesses. In terms of cash generation, we continue to expect the business to generate good levels of cash over the medium-term, and I'd expect conversion rates to be closer to 100% of EBITDA. In respect of our dividend policy, the board continues to keep the level of future dividends under review in consideration of our performance and delivery of our strategy.
However, we would expect to be paying a final dividend for 2023. Just finally, in terms of the remainder of the year, we've delivered a good first half performance with encouraging organic growth and continued cash generation. We have good revenue visibility for the remainder of this year, with strong recurring revenue and good levels of contract renewals. We continue to perform well, and therefore, our expectation for FY 23 remains unchanged, albeit we remain cognizant of the current macro environment. At this point, I'll hand back to Dave, who will talk you through the remainder of the presentation. Thank you.
Thanks, Anoop. For those of you who are very familiar with the business, and I think that's pretty much everyone on the call, you'll know the level of importance I put onto the fundamentals that underpin our strategy, the 4 pillars, and our DRIVE values that lead into our Walk, Run, Fly strategy that we've been executing for the last 3 or 4 years. The good news at Idox is nothing changes. We think these are, as I say, fundamentals that are important to the future growth of the business, and become increasingly important as we enter this growth phase, and couple up our strong organic growth with an accretive M&A strategy.
We remain consistently focused on revenue margins, our organizational simplification, and communicating well, we hope, with all the people who are stakeholders in the business and, of course, the people in the business that make all of this happen. I held another CEO broadcast only yesterday, attended by 400 of the 600 employees that we have across the group. I think that goes to show the level of participation that we have across the business, and how keen people are to hear about the journey and how Idox itself is doing, and the things that they can do to help improve the business as we go forward.
All of the recruitment that we're doing at this moment in time, and all of the promotion activity that we do, is really focused on the values that people have, in ensuring that the people that we're putting into leadership positions represent the qualities in the business that we really want to see coming through. Our DRIVE values are an integral part of the things that we do going forward, and are absolutely providing the foundation from which we can grow, both organically and through accretive M&A. Our focus on growth is being accelerated, and I think enhanced by the divisional structure we've put in place that Anoop's described so well earlier.
I think in our Land, Property & Public Protection area, we've identified this as an area where we can see a lot of growth and development with our existing client set. Also importantly, we can see how the data and how the information that our clients use and operate day-to-day can be extended to reach new clients and new cohorts. The work that we're doing with exeGesIS, the work that we're doing now with LandHawk, and thinkWhere is just encouraging us that there's further growth to come in that area, and that this is absolutely the right setup to do that. You'll have heard from Anoop's presentation that we're pleased that EIM is back into growth, half on half, and we're seeing a lot of progress in our CAFM business.
In our communities area, I think there's been some outstanding work in our funding information services area, which we've relayed to you. I think it's really the focus that we can put into each of these areas that's allowed us to unearth further opportunities and deal with further challenges in the business, which naturally you get in any operating environment, tackle things early, and make sure that we're progressing at all times.
Really pleased with the way that our solutions are being represented to clients, and also really, focusing hard on how we develop our product sets going forward to make sure that they're modern, equipped for the digital age, and making sure that our clients can see a coherent and very, incremental way of moving themselves through that digital journey and feeling confident that they've got a partner in Idox that can help them, do that going forwards. With our focus on growth, again, a very familiar slide for people. I think really put some context around that our market cap today, around GBP 300 million. You know, we're seeing now good organic revenue growth, 8%-10%, as we're rolling forward and into the second half of the year, looking to achieve the goals that we've already set out.
You've seen our continued views on margin expansion and the way that our cloud and SaaS penetration is continuing to drive our growth. You know, we just feel that's a great platform now to add on to that accretive M&A. You know, Anoop and I talk all the time about adding good assets to the business that can help that rolling forward. We're excited about this journey to getting ourselves to an EV of around GBP half a billion. We think that's very achievable. We can see a number of steps that will help us get there, really is now about the execution of that strategy.
We think we're fulfilling the requirements of it in the organic sense, and we need now just to step through the M&A, and bring the right kind of assets to the group and to our clients so that they can benefit from an extended portfolio from Idox. On M&A, you know, I'm pleased to report that we have a really strong pipeline of opportunity. As it says there, it includes over 300 vetted targets, of whom we know approximately 30 of those are considering their options now in what they do rolling forward. Got a very experienced team. I've been putting some of my own personal time and effort into chivvying along some of the opportunities that we have.
We genuinely feel that there is the strong balance sheet that we've been able to develop over time, is really gonna help us move this thing forward over the course of the next 12, 18 months. We are hoping and anticipating that we'll have transaction activity in the second half, but as ever, here at Idox, that will only be where we have good opportunities, and we're paying what we think are fair prices for assets as we roll forward. We think we're very excited about some of the opportunities that we think could conjoin with Idox to make it a stronger and more expansive business going forwards. For those of you who have a focus on ESG, pleased to say that our ESG activities continue.
We focused very much during the period on the work in supporting communities and focusing on our people. All of our TCFD reporting remains in train, and I think that's transparent there for everyone to see. With our people, you know, we're very keen to have an engaged set of people working for Idox. We listen to them very hard, as well as our Dare to Be Different survey that we're repeating the autumn of this year. We also have our Be Heard survey, rather, that's going on at the moment. That's an opportunity for people to really bring forward their things that they think can improve the way that we work in the business.
In supporting our communities, we're really proud that we offer the free My Funding Central licenses to low-earning charities who were deprived of that service by central government as it closed things down last year. We now have about 3,500 organizations that benefit for free from Idox's ability to put them in touch with funding streams and available funding to support small charity work in the community. With that in mind, as you probably gathered, our outlook as we move forward, really positive. We think we've built some really strong momentum, a good first half performance, absolutely in line with our expectation. High levels of recurring income and order intake, giving us good visibility for the remainder of the year. As Anoop pointed out, we're always cognizant of things that could trip us up. We absolutely catch the paranoia.
We press our business plans very hard to ensure that we're considering all the risks that are there. We are cognizant of the higher inflationary environment, the effects that that may have on government spending, as we roll forward, and what the potential changing in government structures might look like over the next 18 months. Importantly, what we're doing for clients remains as important as it ever did, and their reliance upon Idox to deliver better outcomes for them is increasing. We think that's a great trait to support our growth rolling forward. We have good M&A pipeline, which remains strong, and good progress on a number of targets, and the business continues to perform well, and the 2023 outlook is absolutely in line with the board's expectations.
With that, we'll conclude our presentation for today, and we'd be delighted to take any questions you may have of us.
We have a question from Kai Korschelt from Canaccord.
Just had a question around the obviously, very strong order intake, which I think for, you know, probably 12+ months has been, you know, running in the double digits. I'm just curious, kind of, obviously, some of this is also reflecting the conversion, you know, into sort of more recurring and longer term contracts. Just wondering, when, you know, when do you feel that will translate into sort of similar growth rates in a top-line basis? We've obviously seen a, you know, super encouraging acceleration already in the first half. I'm just sort of curious how you think about the sort of second half and also perhaps next year.
Also within that, which are the two areas that you are most excited about in terms of, you know, driving growth and where there is the strong demand? I know you highlighted some of them, but it'd be good to get maybe a bit more color on some of the, sort of, you know, use cases or secular growth drivers as well in terms of applications and stuff. Thank you.
Yeah. Kai, I think, you know, with the order intake being up GBP 52 million, 23% year-over-year, and that is a mix of new customers coming through, but then existing customers going on to longer term arrangements as well, in some cases, 3-5 years. Some of that revenue will burn over the next 3-5 years, and therefore you won't see a 20% uplift in revenue immediately. What we do expect in the second half is the growth to be slightly ahead of where it's been in the first half. That should be across all of the divisions. Like I said, I think because of the longevity of the contracts, you know, you're not, you're not gonna see that 20% dropping into revenue in the near term.
In terms of, in terms of, you know, the areas driving the growth, I think it's pretty clear to everyone that the work we've put into the LPPP phase has been really effective. You know, when I, when I first arrived in the business, it was clear to me that we just didn't have a clear cloud strategy for the business. We fixed that very quickly, and we've seen really strong growth amongst clients, but particularly with new customers coming on board who wanted to move into a more digital format from their old products and services. We see that cloud assimilation going on for some time to come, and we're excited about that.
I think the second part is all of the near adjacent areas that relate to planning and property information. You know, we're finding that as we put geospatial information onto planning data and onto the things that are important for our customers, we find that that's equally important to other people in the commercial sector that use that information. You know, whether it's conveyancing organizations, construction companies, whether it's civil engineering businesses, there are lots of people that want to see a combination of planning data, planning permissions, combined with maps and geospatial information, that we think we can put together offerings for over the, over the coming 18 months to 2 years, that will really add to the way that we can drive our organic growth rates.
Those parts of the business remain very exciting for us, and I should add that that's also influencing the way that we're looking at M&A and the things that we can do to bolster that capability rolling forward. That, for me, is a really strong area of the business. The second thing I'd say is that, you know, just putting our business into these three units, as we've described in assets, communities, and LPPP, it does enable us to focus in very sharply on M&A opportunity rolling forward in those areas. Each one now is a sizable business in its own right and very capable of operating under a buy and build service. You know, when we're doing our M&A, it isn't solely linked to the one division.
We do feel we have opportunities to bolster and grow all the divisions across the group. I think that's very helpful.
We'll go to Julian Yates at Investec.
Looking at the sort of the non-recurring piece with an LPPP, that was very strong. Great news, just interesting into what drove that, and I'm sort of thinking about the organic growth going forward, and my assumption is that will be underpinned by the recurring sort of part of the business as you go forward. Just interested in that mix and the underpinning to organic growth going forward. While I'm on organic growth, I guess it's sort of there was a couple bits that went backwards within assets and communities, so I guess organic is not particularly helpful because those will probably bounce back or plateau at some stage. I guess the organic is maybe more helpful looking at it with those couple of bits out.
Is that relevant to the 8-9%, sort of, organic growth you spoke about in H2 sort of coming through, which is obviously a very sort of healthy number, sort of going forward? I guess the other question is more sort of strategic. In the three divisions, clearly a lot of internal work has been done here. What are clients sort of seeing from an end client point of view? I'm trying to think, are they seeing the full impact of that three divisional sort of focus to the end client as yet.
I'm sort of seeing a bit, but is there a lot more to come from an end client point of view, which will then sort of drive sales and trying to get, you know, it's early stages from a client point of view, but obviously a lot of work to be done internally? Just trying to see if there's an acceleration from the end clients as we sort of go forward over the next 12 months as that really hits? Are we seeing that already within these results from an end client point of view? Will they not notice it as just sort of an Idox internal thing, and then clients will just see the thing sort of continuing over? Just interested on views there.
rring piece, non-recurring revenue typically comprises our project work, our professional services division, and also the license element of resigns and renewals that we record every year. Depending on the timing of basically projects being delivered and also resigns and renewals happening over a 10-period, that number can fluctuate from period to period. It just so happens in the first half of this year, we had a good, strong delivery in those areas from those 2 areas, and that resulted in a higher revenue piece.
One of the things there, because we are delivering non-recurring project revenue, within that row or that row of numbers, once the project is completed, typically what then happens is that the project is live, and so live over a period of time, so 2, 3, 4 years, and then it will flip into a recurring revenue stream going forward for maintenance and support. Therefore, we see, you know, the growth opportunity coming through in the revenue recurring revenue going forward. I think in terms of the organic growth piece, yes, you're right.
Overall, you know, it's sort of 8% year-on-year, if you were to unpick things like the elections, and some of the lumpier parts of the business, such as that, you'd see the underlying growth across the business actually is significantly more than that. You know, it gives us good confidence and visibility going into next year. You know, 8% for the first half, I expect that to tick up a little bit in the second half. Sort of, you know, a similar kind of level going into 2024.
Yeah.
I think on the other stuff, Julian, hi, by the way. We're starting to see more cross-sell capability coming through having the divisional focus. I was talking with Jonathan Legdon, our COO, a little while back, and we sort of shrugged our shoulders and said: "Well, who knew?" But we've seen, you know, our document management products that supported in EIM, selling to some of our CAFM clients. Similarly, we've seen sales of our asset products into our EIM customers or asset tracking. You know, I think that general view of a new management group focusing on what's important and looking at revenue opportunities from the portfolio of products we have is helpful.
I genuinely hope that we'll see a lot more of that sort of capability coming through. I think also, you know, the other change that we made is to have a new head of engineering in the business, Rick Hazzard, who was part of the Idox Cloud business as it came across. You know, Rick's put a new rigor and focus into the types of technologies we use to develop further products, creating some unification in that regard, creating new ways of bringing products to market in slightly sharper ways. I think that's also giving us a lot of confidence going forward that we'll have more new products to be able to sell to existing and new clients as we roll.
I think, you know, the divisional structure is making a real difference. I think it will act as an accelerator as we go forward, and as I said earlier, more importantly, perhaps, or as importantly, it will offer a capability for us to put in good, accretive acquisitions that, you know, hopefully do that magic 1 plus 1 equaling 3 type stuff, as we build capabilities, product sets, and professional services skills that our clients really want to see. Yeah, I think it's making a difference, and I think there'll be more to come as we go forward. We'll try and bring that to life a little bit, maybe at the full year.
Yep.
Yep.
Okay, that's helpful. Could I have a follow-up, please? Just on that, I mean, you spoke about the accretive acquisitions. You've got the, I guess, the acceleration from this divisional structure you just sort of mentioned coming through. We've got the underlying organic growth sort of ticking up. You're probably guessing where I'm heading to. All this sort of boils down to pretty healthy margins. You've got the sort of the cap on the 35% there. It feels like you're gonna have to work hard to keep it below 35% before those things sort of come into play. I get the inflation piece, I get the unexpected pieces around the corner that may. You know, you always got to sort of watch out for stuff like that.
Would that be the sort of way about, sort of thinking about this, is that if things do go right, it'll be quite hard to cap it at 35 over the next couple of years, unless there's something else you wanna do?
Well, the focus for us as a business when we arrived was to say, "Look, this is, you know, our strength is to be as a software business." You know, margins were not reflecting the fact that that was the strength of the business. There were a lot of distractions going on and things that caused us to allow margins to evaporate in the business.
Rob Grubb and I, when we first arrived, sort of set 35% out as our sort of, you know, our goal, because I felt that was the sort of margin that a mature software business like ourselves should be producing, and was kind of in line with, you know, my history in, in this market, but also what I felt were, you know, would be a slightly superior offer to near competitors. I guess what we're seeing as we move forward is that, you know, there's no real limit to software margins as a software business when you focus and concentrate on the things that you do incredibly well. We would hope to see our margins improve over time.
We haven't set ourselves a near-term goal to, you know, really push that on into particular areas, but you can see already in our LPPP business that we've got margins ahead of 35%. You know, as long as we're using that well to continue to serve clients appropriately, then, you know, I think that's okay. We would hope some improvement as we go forward over the next 24 months for sure.
We'll go to Caspar Erskine from Singer Capital Markets.
I was just wondering, in assets, if you could give a little bit more color around the depth of your telematics and asset tracking capability. Obviously, this is quite an exciting and fast growth area. Is this something which you could potentially build a more broadened customer reach into? Second question was just around the M&A. Is the M&A strategy as it stands, just sort of an ongoing focus on geospatial data assets, or sort of are you looking outside that more towards potentially sexual health or other data products you could begin to push down your pipes? Finally, just going back to the margins, as a follow-up to Julian's question, 35% cap, as I sort of entirely agree with Julian here, I think it does sort of look, you know, quite undemanding now.
I was just wondering, is that sort of indicative of ambitions regarding M&A, maybe, and, you know, the scale of acquisitions going forward? Just, you know, obviously taking on sort of slightly more dilutive M&A to acquired assets, and, you know, maybe how we see that shaping over time is just more sort of synergy extraction potential.
Yeah. On assets, if I could take a couple of these as we go. On assets, on asset tracking, our capabilities there really center around products that we've delivered into the healthcare sector. Essentially they're, think of them as tracking documents, assets, and people. They're using a whole variety of sensors, trackers to log and register those things over short or wide area networks and over short or wide area distances. You're right, the capability of that product set is not just limited to the market which it's traditionally served, and part of the rationale of putting it into an assets division was to expose it to a number of further capabilities that it could be exposed to across a greater range of markets. You know, we are interested in that particular product.
We want to make sure that all of our attention is driven around the software capabilities, not around some of the larger projects that involve lots and lots of hardware and lots and lots of, you know, bits and bobs that, you know, we probably wouldn't want to dilute our margins with as we roll forward. You know, that's a key differentiator there. On, on M&A, one of the reasons that we put ourselves into the divisions and gave them some size and capabilities so that we can absolutely consider accretive M&A across each division. A lot of our focus over the period has been on the geospatial LPPP area, but we do have a good pipeline of opportunities, both across assets and across our communities business.
I guess my hope is that when we do announce acquisitions as we go forward, they're not gonna be a surprise to anyone on the call. I think more importantly for our customers, they'll see them as great assets that they can get better access to by being part of the Idox family. I mean, that's always the main reason that we would do that. I do feel that in each of these areas, as well as serving our existing client structure, the assets should be giving us ability to get to nearer adjacent markets by doing the same thing, and that's the most important thing.
You know, we don't want to be one of those businesses that every time it wants to address a new market, it has to bring in a new capability, and then we find ourselves getting dispersed over time. We want to focus on doing things in the core, which we can then extend out the reach of products into new, nearer markets. In terms of... As far as, you know, our sexual health products, as far as, what we're doing in communities around, educational needs, and what we're doing in the asset tracking, and EIM operation, you know, as opportunities come through, we absolutely consider those in line with the, you know, the financial, firepower we've got and the alternative opportunities that present themselves. In terms of the cap, I think you make a good point.
I mean, quite clearly, it's taken us a little while to get ourselves up to really strong margins, and as we bring in new capabilities, it's unlikely that we're gonna be acquiring businesses that necessarily have 35 points margins. We obviously want to be able to see that we can drive those businesses to the kind of overall margins that we would see, and part of that is making sure that their capabilities offer us an ability to reach further and to be able to grow those businesses by giving them access to a client structure that maybe they've found difficult to get to. Certainly, that was the case for us, you know, with our Idox Cloud product.
I think that's been really, a great example of what we can do, and we're now seeing that also with exeGesIS, you know, with thinkWhere, and, we hope going forward, we'll see that as well with the work we're doing with LandHawk. You know, that's the view. You know, I think overall, we still feel that there's a little bit to go on margins, and scale and size will also offer us an ability to look at, you know, our back office work, how we do that. You know, clearly, as we grow, we're not adding back office capabilities, or cost, rather. You know, we've got a structure that will allow us to absorb those things as we roll forward and help us improve margins through efficiencies in our support structures as we run forward.
That's the play and the plan that, hopefully, my waffling there answers the question that you raised.
We'll go to Ian Robertson from Progressive.
Two quick questions. The first one on pricing. Can you give a bit more detail about where and how you've been able to achieve improved pricing, and how much of that has just come through as a result of the nature of the contracts and how they've been structured? Then, sort of, to a certain extent, going back to what you were saying in the last two questions, two responses, your enthusiasm for all areas of the business, you're not just an acquirer, but what point might you become a disposer?
In terms of the assets, I mean, I think we've always said, look, you know, we're comfortable with the portfolio of products that we have. They're all very good software products. They all hold a very strong position in the markets we serve. Clearly, in some areas, we have higher penetration than others, but generally, as a portfolio of products, I think it's strong. You know, we're not a seller at this moment in time, but that doesn't mean things can't be bought. You know, if we were to receive strong inquiries about things, then, obviously, we'd have to consider those as they came through. I think right now, we're happy with the portfolio of offerings that we have. Do you want to talk about pricing a little bit?
Yeah, so when it comes to pricing, so typically our contract forms take 1 of 2 types. 1 form explicitly doesn't have CPI, RPI linkage in the contract, so therefore, you know, when we're putting our bids and tenders together, we think quite carefully about the way that inflation may be going, and build that into our bids and our tenders as we go. The other form of contracting really sort of has a element of CPI inflation, sort of, protection built into it. When you think about how that's impacted the revenues for the first half... So if you cast your mind back 12-18 months, you know, inflation wasn't at 10%, it was sort of around about the 4% or 5% level.
When we were re-signing the contracts that are having an impact on this year's revenue, they were coming in at 3%, 4%, 5% of inflation. That's what you're seeing coming through. Of the 8% revenue growth overall, in very simplistic terms, about 1/3 of it is coming through in price rises. As we've moved through the period since, say, last half year, and into the last end of the last calendar year, inflation has clearly risen up to 10%. Therefore, as we've then bidded and tendered for new contracts, we've been built in that element of price inflation into our pricing, but we won't see that come through immediately, so there's a lag before it starts to show in the revenue.
We'll go to James Lockyer from Peel Hunt.
Just wanted to talk about sort of in the employee market, at the moment, and how that's gone. We've seen across the space that retention rates have been improving within companies, and just want to see whether or not that's what you're seeing your end. If they are improving, are you confident you've got the right people in place, in terms of the right people and the right numbers of people, in order to hit the full year numbers, or do you have a pipe to fill any, you know, the additional roles that you may need to get where you want to go? I guess that's the first question.
Second question: one of the main reasons you acquired LandHawk, as I understood at the time, was it was a very strong UI. You know, it was something that you sort of was good in the public sector, but something like it hadn't really been seen within the public sector. Obviously, the first priority would be integrating it and bringing it on. I guess, if you could add a bit color around whether that integration is going well, and whether the future potential that you sort of saw at the time is still there for you, or is it wider now that you've actually bought it in the business?
Finally, any sort of examples of now that you've got the business in place, you know, the structure in place, any sort of examples of sort of cross-sell opportunities that may not have been possible, or you may not have thought about, prior to that reintegration? I think there was at least a couple of examples at the full year last year. Good to see if that's moved on from there.
On the employee market, yeah, retention rates are definitely much better than they were this time last year. I think you'll recall that we didn't really have the sort of issues that a lot of businesses were having at the time, where, you know, people were moving at the drop of a hat because they had generic skills that in a distributed work environment, they could deploy in lots of areas, and people were paying very heavily for talent at that time. You know, I think our attrition at the moment is around sort of 3%-4% right now.
Correct. Yeah.
Down from probably around 12% or 13% this time last year. A very significant change. Do we feel we've got the right people? I think we've always felt we've got good people in the business, and we've always felt we had, you know, a strong capability in our organization to develop talent. You know, I do feel we've got the right people. Just to come back to your, you know, your last question, really, which is... Or, well, the second question around LandHawk, and I'll maybe push this a little bit wider, is, you know, we bought LandHawk because we can see a real requirement for non-public sector organizations to get to fundamental planning and property data that allows them to acquire land, parcels on a, on a, on a more informed basis, and to lessen.
the time that they spend looking at opportunities to develop land that might get rejected in the future, so they get a better quality of outcome by using products like LandHawk. What we've discovered as we've gone through that, you know, as we're integrating the business, and the integration is going well, but as we sort of move forward with that, is we're seeing that, you know, there's a, there's a really strong opportunity with the business to bring together cross-sell capability and also to use our people more effectively across the group. What we're seeing with a number of our staff now are extended roles and capabilities, which is allowing us to develop them further and use the people that came through our Leading Together program more operationally, effectively as we go forward.
That for us is proving well. We still run with a number of vacancies in the business, where we're looking for talented people to help us exploit opportunities that we're discovering in the market. I think the LandHawk stuff is a great example of that. You know, as we combine LandHawk with the capabilities of thinkWhere, we look at the exeGesIS link and the work that we do around address management with the Aligned Assets acquisition, we can see that all of those data sets play a part in providing a much richer quality of service to the markets that we think, frankly, have been underserved to date. That gives us a great, you know, a really great encouragement that there's more to do and more capability for us to put together for those markets rolling forward.
I don't know if you want to add anything about the employees side of the story, Anoop?
No, I mean, I think you know, one of the key aims and objectives we've got is continuing to grow our Indian practice as well. You know, we ended the year last year, it was about 50, 55 people, and that's progressed as we had expected. We're up to about 75 people in India now. We are still seeing opportunity for when people do decide to move on in the UK, that we're able to get appropriately skilled and qualified resource in India.
Can I ask a quick follow-up there? Just on the organic growth questions that people have been asking earlier, and specifically, I guess you've now talked about all the integrations of those acquisitions that drive additional functionality across them. When we think about organic growth going forward, sort of upsell, cross-sell opportunities, how much would you suggest, or, you know, what would you want your goal to be, sort of, what you... You know, the modules you originally had, in terms of selling more of your sort of local authority modules to more local authorities that you... versus, you know, these new businesses that you've acquired, what is there more opportunity in organic growth from the acquired businesses than there is from your core, or is it sort of a mix? How would you...
You know, what would be a win for you in terms of where the organic growth comes from?
I don't think we've really proffered that out as such. I mean, I think the important thing there is, there are some offerings, James, where it's quite clear that we can add a new functional capability or add a new module to existing stuff that allows, you know, customers to buy a, you know, a product suite or a product set from us that makes sense for them. There are other areas where, you know, it's quite clear that just offering the capabilities that these acquisitions brought to us, to a, maybe a slightly different market, is helpful.
You know, there the example, of course, with Aligned Assets is a very strong one because, you know, we've been able to take them into, you know, the work they've been doing around energy in a little bit more of a cohesive way, also putting a little bit more savvy to the work that they've been doing around public protection alongside U.K. police forces. It's a little bit of a mixture of both. Of course, every time we look at an acquisition, we're thinking about what the cross-sell could look like, but importantly, just looking about how we can help accelerate the growth of those businesses.
Sometimes that's through cross-sell, and other times it's through just giving them some more firepower through better sales, through better marketing, through better R&D disciplines, you know, to help them execute on the sales strategies that we've already seen in play. I realize that's a little wooly, but that's as good as I'm gonna get for you today.
That's the end of questions. David, do you have any closing remarks?
Well, from my perspective, it's been a really strong first half. We're, we're really looking forward to the second half. We think we've got the business in good shape, serving clients really well, doing the things that they need from us. You know, we're excited about the opportunity of accretive M&A in the business. You know, I think, as Anoop and I, and the senior management group discussed at great length, you know, we feel at the moment the business continues to perform well and maybe is a little understated and a little underappreciated in its growth opportunities going forward. We just need to focus now on showing and demonstrating the M&A, and hopefully the other things will catch up over time.
It's very clear to us that we have the capabilities to get to being, you know, an over GBP 30 million EBITDA business, which, with a decent rating, should produce a good outcome. Looking forward to the next part of the journey. Lots to do, as ever, but happy with the foundations we've built and the team that we've got to go and execute on it. Thanks for your time today. We really appreciate it. Thank you.