For highly acquisitive, expensively rated technology companies, evidence of strong organic growth is crucial; without it, buying other companies and their intellectual property can just seem like an exercise in figure massaging. Good news then for shareholders in information management software specialist Ideagen (IDEA), which saw a 16 per cent increase in the top line on an underlying basis in the six months to October.
Key to this growth has been what management described as “significant progress” in the cloud division, which notched up 37 new 'software as a service' customers and seven new clients for its Enlighten software product.
Reassuringly, a return to the acquisition trail through the purchases of Covalent Software and Logen did not put a serious dent in the balance sheet, although a post-period deal to buy governance risk and compliance software provider IPI Solutions has already reduced net cash by £2.9m. Ideagen is paying £0.5m in shares and a further £2.1m over the next two years for the profitable and cash generative company, which already has 400 customers in the defence, manufacturing and life sciences sectors.
Broker FinnCap expects adjusted pre-tax profits of £6.9m and EPS of 3.2p in the current financial year, up from £5.7m and 2.7p in the 12 months to April 2016.
| IDEAGEN (IDEA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 68p | MARKET VALUE: | £123m | |
| TOUCH: | 67-69p | 12-MONTH HIGH: | 70p | LOW: 45p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 92 | |
| NET ASSET VALUE: | 19p* | NET CASH: | £4.82m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£000') | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 9.87 | -115 | na | 0.061 |
| 2016 | 12.0 | -24.0 | na | 0.068 |
| % change | +22 | - | - | +11 |
Ex-div:24 Feb Payment:15 Mar *Includes intangible assets of £36.9m, or 20p a share. | ||||
