Idox (LON:IDOX), the company that supplies software and services to the UK public sector, has agreed a deal to buy Computershare Electoral Management Services Ltd (CEMS) from Computershare (ASX:CPU) for up to £4.4m in cash. CEMS, which trades as Strand Business Systems and which will be re-named Strand Electoral Management Services, is one of the UK’s leading providers of electoral management software and services, supplying 116 local authorities that cover a voting population of 13m people.

Idox said the deal was “an important strategic addition”, which would enable it to enter another very active local government market with a strong suite of products and good opportunities for growth by cross selling. It is making an initial payment of £3.9m, with a further £0.5m payable in July 2011 subject to certain conditions. The acquisition will be immediately earnings enhancing and completion is expected by the end of July 2010.

Martin Brooks, the chairman of Idox, said: “This acquisition broadens and strengthens IDOX's leadership in the Land, Property and People markets, where our development expertise, operational skills and strong relationships will bring significant benefits to Strand's customers.”

Strand achieved revenues of £1.6m for the year ended June 30, 2010, of which more than 75% is recurring, with a pre-tax profit of £0.8m after exceptional items. Net assets at completion are expected to be £0.4m with cash to be acquired of £1.2m.

Earlier this month Idox signed a major three-year contract worth £0.5m with the new unitary council of Cheshire West and Chester (CW&C) to deliver its land, property and regulatory management systems. The council is the fourth of seven new local authorities created in 2009 to have selected Idox to provide their corporate land and property systems. At the same time, the company reported a 14% rise in interim pre-tax profits to £2.1m despite a 5% fall in sales to £15.0m. Gross margins were up to 81% from 76% and cash balances rose to £10.9m from £6.0m. The company said it was delivering on a substantial order book and had a good sales pipeline for the remainder of the financial year and beyond.

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