Management at Ideagen (IDEA) was keen to emphasise the value added by acquisitions made over the full year to 30 April 2017 – not just buying companies for the sake of it, but finding ways to integrate new businesses in a way that enhances their current offering. Revenues for the IT software specialist grew by almost a quarter during the period, which included underlying organic growth of 10 per cent, suggesting that it is not simply inflating its top line via acquisition. But the costs of the strategy meant operating profit fell 30 per cent to £0.7m.
In an attempt to boost recurring revenue, Ideagen is increasingly moving from a licensing model towards a subscription-based model. Progress has already been made, with recurring revenues comprising 57 per cent of Ideagen’s total, up from 54 per cent last year. Management expects that this could reach 70 per cent in the medium term.
The four acquisitions made in the period were intended to add intellectual property and recurring revenue, as well as vertical integration, with one such example being Covalent – purchased to add a risk management element to Ideagen’s audit management offering Pentana.
Analysts at FinnCap expect £9.7m of pre-tax profit in the year to April 2018, giving EPS of 4.2p, compared with £6.9m and 3.2p in FY2017.
| IDEAGEN (IDEA) | ||||
| ORD PRICE: | 83.5p | MARKET VALUE: | £ 165m | |
| TOUCH: | 83.0-84.0p | 12-MONTH HIGH: | 98p | LOW: 52p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 209 | |
| NET ASSET VALUE: | 23.4p* | NET CASH | £4.2m | |
| Year to 30 Apr 2017 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 6.5 | -1.32 | -0.87 | nil |
| 2014 | 9.0 | 1.07 | 0.72 | 0.150 |
| 2015 | 14.4 | 0.61 | 0.35 | 0.165 |
| 2016 | 21.9 | 1.00 | 0.74 | 0.183 |
| 2017 | 27.1 | 0.66 | 0.40 | 0.210 |
| % change | +24 | -34 | -46 | +15 |
| Ex-div: | 02 Nov | |||
| Payment: | 22 Nov | |||
| *Includes intangible assets of £56.4m, or 28.5p a share | ||||
