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Ideagen remains on track for growth

The software group expects first-half revenues to “significantly” exceed those seen a year earlier, with strong cash generation
November 7, 2017

Ideagen issued a trading update for the six months to 31 October, noting that revenue and adjusted cash profits are expected to be “significantly ahead” of the same period a year earlier, with underlying organic revenue growth of approximately 12 per cent. Meanwhile, the group is trading in line with market expectations for the year to April 2018.

IC TIP: Buy at 86.5p

Net cash was encouraging at £5.9m, up from £4.2m in April. Chief executive David Hornsby referred to the group’s “strong start” to the year, with “excellent” cash generation and good recurring revenues.

Andrew Darley at broker finnCap forecasts adjusted pre-tax profits of £9.7m for the year to April 2018, with EPS of 4.2p, up from £3.9m and 2.7p, respectively, in 2017. The shares fell nearly 4 per cent in early trading, but had recovered slightly at the time of writing. With no warning signs to support this drop, it seems fair to assume that some investors chose to take profits on the day.