Ideagen's (IDEA) half-year results were buoyed by the successful integration of recent acquisitions, complemented by 13 per cent organic revenue growth. Future earnings visibility was enhanced by an enormous 122 per cent rise in software as a service (SaaS) sales, which are subscription-based. Recurring revenues thus escalated from £6.7m to £10.8m, representing 63 per cent of the group’s overall top-line.
While Ideagen supplies information management software to highly-regulated industries, it increasingly focuses on governance, risk and compliance (GRC) – perhaps unsurprisingly, research house Gartner valued this market at $4.4bn in 2016. GRC continued to grow as a proportion of Ideagen’s overall sales, reaching 91 per cent. This stemmed partly from the purchase of four GRC businesses in the previous year, but also from the segment’s organic sales growth of 20 per cent.
Such is the growth opportunity in GRC that resources from Ideagen’s other division – content and clinical – have been redeployed here. Indeed, management opted to stop bidding for low-margin service-based contracts within the UK public sector, amid NHS budget constraints and limited new business opportunities. Clinical sales thus fell 29 per cent to £1.6m.
Analysts at FinnCap forecast reported pre-tax profits of £3.2m with EPS of 1.6p for the year to April 2018, up from £0.7m and 0.4p in FY2017.
| IDEAGEN (IDEA) | ||||
| ORD PRICE: | 107p | MARKET VALUE: | £213m | |
| TOUCH: | 105-108p | 12-MONTH HIGH: | 109p | LOW: 68p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 127 | |
| NET ASSET VALUE: | 24p* | NET CASH: | £5.9m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 12.0 | -0.02 | neg | 0.068 |
| 2017 | 17.2 | 0.75 | 0.44 | 0.078 |
| % change | +43 | - | - | +15 |
| Ex-div: | 1 Mar | |||
| Payment: | 20 Mar | |||
| *Includes intangible assets of £54.1m, or 27p a share | ||||
