TIDMIDEA
RNS Number : 9438M
Ideagen PLC
26 January 2016
26 January 2016
Ideagen PLC
("Ideagen" or the "Group")
Unaudited Interim Results for the six months ended 31 October
2015
Ideagen PLC (AIM: IDEA), a leading supplier of Information
Management software to highly regulated industries, announces its
unaudited interim results for the six months ended 31 October
2015.
Financial Highlights
-- Revenue increased by 75% to GBP9.87m (2014: GBP5.65m)
o Underlying organic growth of 6%
o Recurring revenues represent 53% (2014: 53%) of overall
revenues and cover 87% (2014: 86%) of fixed operating overheads
-- Adjusted diluted EPS** increased by 16% to 0.98p (2014: 0.84p)
-- Adjusted EBITDA* increased by 65% to GBP2.41m (2014: GBP1.46m)
-- Adjusted PBT** increased by 65% to GBP2.13m (2014: GBP1.29m)
-- Cash generated by operations of GBP1.15m (2014: GBP0.48m)
-- Net cash of GBP5.44m (30 April 2015: GBP5.27m; 31 October 2014: GBP2.81m)
-- 11% increase in interim dividend to 0.061p (2014: 0.055p)
*Before share based payments and exceptional items
**Before share based payments, amortisation of acquisition
intangibles and exceptional items
Operational Highlights
-- Significant progress within cloud business
o Release of new functionality within the Enlighten product,
Ideagen's cloud based GRC solution
o 4 new Enlighten customer wins
o Industry recognition for Enlighten with GRC 20/20 Award for
technical innovation
o Post period end granted a GBP4.9m Award Decision Notice for
Enlighten
-- Over 50 new on premise customer wins including Schiphol Airport, Kyocera and Fokker
-- Strong customer retention - 97% maintenance and support contract renewal rate
-- Significant contract extensions from existing customers including PWC, BBVA and Meggitt
David Hornsby, CEO of Ideagen, commented: "We are pleased with
the strong first half performance, characterised by further
profitable growth as a result of new customer wins and expanding
our footprint within our existing base of over 2,200 customers. We
have been delighted by the early customer interest and industry
recognition for our recently launched cloud-based product,
Enlighten, which we see as a significant opportunity for the
Group.
"Trading remains robust across all GRC product areas and we have
continued our sales momentum through the third quarter. Therefore,
given the performance of the Group in the year to date, the growing
contracted recurring revenue base, and healthy pipeline of new
sales opportunities, the Board is confident in the outlook for the
year as a whole."
Enquiries:
Ideagen plc 01629 699100
David Hornsby, Chief
Executive
Graeme Spenceley, Finance
Director
finnCap Limited 020 7220 0500
Stuart Andrews/James
Thompson (Nomad)
Stephen Norcross (Corporate
Broking)
Alma PR 020 8004 4218
Josh Royston
Hilary Buchanan
About Ideagen plc
Ideagen is a UK company quoted on the London Stock Exchange AIM
market (Ticker: IDEA.L). Ideagen is a supplier of Information
Management software with operations in the UK, the United States
and the Middle East. The Company specialises in eGRC (Enterprise
Governance, Risk and Compliance) and Content and Clinical solutions
with a primary focus on organisations operating within highly
regulated industries. With an excellent portfolio of software
products, Ideagen is able to provide complete information lifecycle
solutions that enable organisations to reduce risk, meet their
regulatory and compliance standards, helping them to reduce costs
and improve efficiency.
The Group has a customer base of over 2,200 organisations using
the Ideagen suite of products, including many blue chip names such
as BAE Systems, Emirates, Shell and the European Central Bank as
well as 150 hospitals in the UK and US.
For further information please visit www.ideagen.com
CHIEF EXECUTIVE'S REVIEW
Business Review
This has been another period of solid growth for the Group, with
underlying organic growth of 6%. Organic growth has been augmented
by the contribution of the integrated Gael and EIBS businesses,
resulting in overall Group revenue growth of 75%, adjusted EBITDA
growth of 65% and adjusted diluted EPS growth of 16%.
The Group's core expertise is in the development and
implementation of Governance, Risk and Compliance (GRC) software
tools that enable customers to identify, assess and prioritise risk
and to manage information in line with rigorous regulations. In
each of our chosen verticals, our customers are increasingly
required to take a holistic view of risk management, internal audit
and compliance, with many organisations at the beginning of the
adoption phase of sophisticated, enterprise-wide solutions.
Demand in all of the Group's key GRC verticals continue to be
robust, with new customer wins achieved across a range of
industries. Growth in the period has been driven by a combination
of new customer wins and expanding our footprint within the
existing customer base of more than 2,200 organisations. New wins
include Schiphol Airport, HNZ Global, Fokker, Providence
Healthcare, Edmundson Electrical and Kyocera. Significant orders
from the existing customer base include PWC, BBVA, Meggitt and
BTG.
The Group continues to benefit from a strong base of recurring
revenues, which now represent 53% of revenue (2014: 53%), covering
87% of the fixed overhead base (2014: 86%). Additionally 24% of
revenue was derived from additional licence and service sales to
existing customers. Therefore 77% of revenue is either recurring or
repeatable in nature providing strong visibility over future
earnings. In the period, 23% of revenue was derived from brand new
customer wins.
During the period we have been pleased with the success of our
recently launched SaaS-based Enlighten platform. Post period end
the Group announced an Award Decision Notice from a Public Sector
organisation stating its intent to procure Enlighten in a contract
that is expected to be worth GBP4.9m over 5 years. As previously
announced, the formal procurement process was subject to a
mandatory standstill period. The standstill period has now ended
and the contract is expected to be executed in the near future. As
rapid delivery of the solution is essential to the customer, the
Group, as an interim measure, has agreed to work under a short term
contract to expedite immediate initiation whilst the 5 year
contract is finalised. The programme is therefore well underway and
the Group expects to generate significant revenues from the
customer this financial year.
While the contribution of cloud based SaaS revenue to total
Group revenue is currently modest, we are confident that Enlighten
will be profitable and cash generative in the Group's 2016-2017
financial year. The Group has continued to invest in the required
product development and sales resources and we view this as an area
of significant potential growth for the business.
Markets: GRC and Content & Clinical
The Group operates in two areas: supplying GRC solutions to
highly regulated industries including Healthcare, Complex
Manufacturing, Finance and Transport; and, through leveraging our
core technology, we operate a parallel business in the supply of
Content and Clinical management solutions, predominately to the
NHS. The Group has established a broad customer base across both
markets, including 7 of the top 10 UK accounting firms; 125 of the
165 English NHS Acute Trusts; all 7 of the top 7 Global Aerospace
& Defence companies; and 14 of the 14 Scottish Regional Health
Boards.
GRC represents the greatest part of Ideagen revenues (c. 77%)
and the Group believes will continue to be the core driver of
overall growth. The market remains highly fragmented - there is no
one dominant supplier but rather numerous smaller vendors providing
niche product sets. We believe that, with our broad product
portfolio and best of breed capabilities, the Group has realised
only a small proportion of the available opportunity to date.
23% of Group revenue is derived from our Content and Clinical
solutions. This area of the Group's operations continue to be
impacted by delays in decision making within acute NHS trusts,
typically around enterprise patient information opportunities. This
is due to budgetary constraints at acute trust level as no
additional technology fund has been made available for the current
financial year to support the Government Paperless NHS strategy.
However, outlook for the business remains encouraging over the
medium term as it is likely that the central technology fund will
be reintroduced in 2016-2017, following which there will be a
locally funded Sustainability and Transformation Plan (STP) which
will focus on digital initiatives at acute trust level.
Acquisitions
As previously announced, the integration of EIBS and Gael has
provided a robust business platform. The Board continues to pursue
acquisition opportunities in line with its stated strategy of
acquiring complementary businesses that have strong IP and
significant recurring revenues.
Product Strategy
"On Premise"
The focus for on premise product development going forward will
be the closer integration of the established product set. The
demand from customers continues to evolve toward the need for
robust operational risk management across the enterprise combining
the need for big data analysis with the escalation of information
available within a corporate environment. We believe the optimum
way to achieve this is through the implementation of a single,
modular platform.
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As such, our efforts will be on the closer integration of our
best-in-breed product set to unify all product components
(development standards, installation method, user interface) into a
single standard format, and to enable product interoperability - or
the exchange of data across each product - through a common service
bus. This will allow us to rationalise the product set to avoid any
duplicate functionality whilst providing a modular platform.
The ability to deliver this comprehensive capability through a
modular portal will enable us to continue to pursue a 'land and
expand' growth strategy as well as move into complementary industry
verticals.
"Cloud"
To ensure that the Group is able to take advantage of the
growing demand for cloud based solutions we have continued to
invest in Enlighten, a risk-based, ultra-modern GRC software
product. Enlighten has been designed for large enterprise and built
for the cloud using Amazon Web Services (AWS). It contains all the
rich features that any large, highly regulated organisation needs
to achieve exceptional performance while managing compliance,
quality and safety.
Enlighten is suitable for large enterprises who have a dispersed
workforce, require rapid deployment and fast access to a GRC
platform often through a mobile device. For example the large
Public Sector customer referred to earlier intends to make
Enlighten available to over 70,000 users to allow real time
reporting of incidents to drive safety across an entire
industry.
We were also delighted that during the period, Enlighten was
recognised for its technical innovation by the 4(th) Annual GRC
20/20 Awards. The GRC 20/20 Awards recognise the leading GRC
(Governance, Risk and Compliance) software products on the market.
GRC 20/20 named Ideagen's Enlighten product as the most innovative
product in its Environmental Health & Safety category. Judges
were impressed with Enlighten's scalability, user experience,
analytics and mobile capability.
Current Trading & Outlook
Trading remains robust across all GRC product areas and we have
continued our sales momentum through the third quarter. Therefore,
given the performance of the Group in the year to date, the growing
contracted recurring revenue base, and healthy pipeline of new
sales opportunities, the Board is confident in the outlook for the
year as a whole.
David Hornsby
Chief Executive Officer
FINANCIAL REVIEW
Revenue for the 6 months ended 31 October 2015 increased by 75%
to GBP9.87m (2014: GBP5.65 m). Organic growth in revenue was 6%
based on a comparison of revenue in the period under review with
pro-forma revenue for the comparative period adjusted for the Gael
and EIBS acquisitions. Recurring revenues represent 53% (2014: 53%)
of overall revenues and cover 87% (2014: 86%) of fixed operating
overheads.
Adjusted EBITDA increased by 65% to GBP2.41m (2014: GBP1.46m).
Amortisation of acquired intangibles of GBP1.86m (2014: GBP0.86m)
represents the majority of the total depreciation and amortisation
charge. The increase in the period is mainly attributable to the
acquisition of Gael in January 2015.
The adjusted group tax charge was GBP0.31 million (2014: GBP0.20
million). This has been adjusted to exclude the deferred taxation
associated with the amortisation of acquired intangibles and share
based payment charges. The adjusted group tax charge represents 15%
(2014: 16%) of adjusted PBT of GBP2.13m (2014: GBP1.29 million).
The Group continues to benefit from the availability of R&D
taxation credits.
As a result of the above, adjusted diluted earnings per share
increased by 16% to 0.98p (2014: 0.84p).
The Group's financial position has continued to strengthen with
net assets increasing to GBP31.8m (30 April 2015: GBP31.2m; 31
October 2014: GBP14.0m). The significant increase on 2014 was
largely due to the GBP17.5 million share placing to support the
acquisition of Gael. Net current assets increased to GBP2.69m (30
April 2015: GBP1.23m; 31 October 2014: GBP1.79m).
Cash generated by operations amounted to GBP1.15m (2014:
GBP0.48m) representing 48% (2014: 33%) of adjusted EBITDA. Cash
generated by operations is normally lower in the first half of the
year partly due to the payment of a number of larger annual
overheads in this period. Trade and other payables reduced by
GBP1.16m in the six months to 31 October 2015. The Group ended the
period with cash balances of GBP5.44m (30 April 2015: GBP 5.27m; 31
October 2014: GBP2.81m) and no debt.
At 31 October 2015 deferred consideration of GBP3.2m was payable
in respect of the acquisition of Gael of which GBP1.6m has
subsequently been paid in January 2016 and GBP1.6m is payable in
January 2017.
Dividend
The Board proposes increasing the interim dividend by 11% to
0.061 pence per share (2014: 0.055 pence per share) payable on 10
March 2016 to shareholders on the register on 19 February 2016. The
corresponding ex-dividend date is 18 February 2016.
Graeme Spenceley
Finance Director
Ideagen plc
Consolidated Statement of Comprehensive Income for the six
months ended 31 October 2015
Six months Six months
ended ended
31 October 31 October
2015 2014
GBP'000 GBP'000
Revenue 9,867 5,653
Cost of sales (1,206) (949)
Gross profit 8,661 4,704
Operating costs (6,254) (3,247)
----------- -----------
Profit from operating activities
before depreciation, amortisation,
share-based payment charges and
exceptional items 2,407 1,457
Depreciation and amortisation (2,141) (847)
Share-based payment charges (384) (85)
Costs of acquiring businesses - (74)
----------- -----------
(Loss) / profit from operating
activities (118) 451
Finance income 3 2
----------- -----------
(Loss) / profit before taxation (115) 453
Taxation credit / (charge) 121 (75)
----------- -----------
Profit for the period 6 378
Other comprehensive income
Exchange differences on translating
foreign operations (10) 13
Total comprehensive income for
the period attributable to the
owners of the parent company (4) 391
=========== ===========
Earnings per share Pence Pence
Basic 0.00 0.31
Diluted 0.00 0.29
Ideagen plc
Consolidated Statement of Financial Position at 31 October
2015
31 October 30 April 31 October
2015 2015 2014
GBP'000 GBP'000 GBP'000
Assets and liabilities
Non-current assets
Intangible assets 33,891 35,050 13,419
Property, plant and equipment 339 302 202
Deferred income tax assets 962 876 171
----------- --------- -----------
35,192 36,228 13,972
----------- --------- -----------
Current assets
Inventories 55 55 96
Trade and other receivables 7,312 7,332 4,024
Cash and cash equivalents 5,442 5,266 2,806
----------- --------- -----------
12,809 12,653 6,926
----------- --------- -----------
Current liabilities
Trade and other payables 2,206 3,476 1,623
Contingent consideration
on business combinations 47 47 327
Current income tax liabilities 129 44 492
Deferred revenue 6,108 6,228 2,697
Deferred consideration
on business combinations 1,628 1,628 -
----------- --------- -----------
10,118 11,423 5,139
----------- --------- -----------
Non-current liabilities
Deferred consideration
on business combinations 1,613 1,613 -
Deferred income tax liabilities 4,434 4,656 1,611
----------- --------- -----------
6,047 6,269 1,611
----------- --------- -----------
Net assets 31,836 31,189 13,968
=========== ========= ===========
Ideagen plc
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Consolidated Statement of Financial Position at 31 October 2015
(continued)
31 October 30 April 31 October
2015 2015 2014
GBP'000 GBP'000 GBP'000
Equity
Issued share capital 1,789 1,773 1,229
Share premium 23,568 23,443 6,983
Merger reserve 1,167 1,167 1,167
Share-based payments reserve 956 653 635
Retained earnings 4,373 4,160 3,944
Foreign currency translation
reserve (17) (7) 10
Equity attributable to
owners of the parent 31,836 31,189 13,968
=========== ========= ===========
Ideagen plc
Consolidated Statement of Cash Flows for the six months ended 31
October 2015
Six months Six months
ended 31 ended 31
October October
2015 2014
GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 6 378
Depreciation of property, plant
and equipment 98 60
Loss on disposal of property,
plant and equipment 2 -
Amortisation of intangible
non-current assets 2,043 787
Business acquisition costs
in profit or loss - 74
Share-based payment charge 384 85
Finance income recognised in
profit or loss (3) (2)
Taxation (credit) / charge
recognised in profit or loss (121) 75
Decrease in inventories - 293
Decrease / (Increase) in trade
and other receivables 19 (36)
Decrease in trade and other
payables (1,158) (1,060)
Decrease in deferred revenue (119) (173)
---------- ----------
Cash generated by operations 1,151 481
Interest received 3 2
Income tax repaid 8 64
Business acquisition costs
paid (102) (146)
---------- ----------
Net cash generated by operating
activities 1,060 401
---------- ----------
Cash flows from investing activities
Payments of deferred consideration
on business combinations - (50)
Net cash outflow on acquisition
of businesses net of cash acquired - (1,259)
Payments for development costs (884) (368)
Payments for property, plant
and equipment (150) (65)
Proceeds of disposal of property,
plant and equipment 12 -
Net cash used by investing
activities (1,022) (1,742)
---------- ----------
Cash flows from financing activities
Proceeds from issue of shares
under share option scheme 141 123
Net cash generated by financing
activities 141 123
---------- ----------
Net increase / (decrease) in
cash and cash equivalents during
the period 179 (1,218)
Cash and cash equivalents at
the beginning of the period 5,266 4,011
Effect of exchange rate changes
on cash balances held in foreign
currencies (3) 13
Cash and cash equivalents at
the end of the period 5,442 2,806
---------- ----------
Ideagen plc: Consolidated Statements of Changes in Equity
Share Share Merger Share-based Retained Foreign Total
capital premium Reserve payments earnings currency attributable
reserve translation to owners
reserve of the
parent
-------- -------- -------- ----------- --------- ------------ -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months to
31 October 2015
At 1 May 2015 1,773 23,443 1,167 653 4,160 (7) 31,189
Profit for the period - - - - 6 - 6
Share-based payments - - - 384 - - 384
Shares issued under
share
option scheme 16 125 - - - - 141
Transfer on exercise
of share options - - - (81) 81 - -
Taxation on share-based
payments in equity - - - - 126 - 126
Other comprehensive
income
for the period - - - - - (10) (10)
-------- -------- -------- ----------- --------- ------------ -------------
At 31 October 2015 1,789 23,568 1,167 956 4,373 (17) 31,836
======== ======== ======== =========== ========= ============ =============
For the six months to
31 October 2014
At 1 May 2014 1,219 6,870 1,167 596 3,520 (3) 13,369
Profit for the period - - - - 378 - 378
Share-based payments - - - 85 - - 85
Shares issued under
share
option scheme 10 113 - - - - 123
Transfer on exercise
of share options - - - (46) 46 - -
Other comprehensive
income
for the period - - - - - 13 13
-------- -------- -------- ----------- --------- ------------ -------------
At 31 October 2014 1,229 6,983 1,167 635 3,944 10 13,968
======== ======== ======== =========== ========= ============ =============
Ideagen plc: Consolidated Statement of Changes in Equity for the
year ended 30 April 2015
Share Share Merger Share-based Retained Foreign Total
capital premium reserve payments earnings currency attributable
reserve translation to owners
reserve of the
parent
-------- -------- --------- ----------- --------- ------------ -------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 May 2014 1,219 6,870 1,167 596 3,520 (3) 13,369
Share placing 515 16,985 - - - - 17,500
Share placing issue
costs - (584) - - - - (584)
Shares issued under
share
option scheme 39 172 - - - - 211
Profit for the year - - - - 480 - 480
Other comprehensive
income
for the year - - - - - (4) (4)
Share-based payments - - - 142 - - 142
Transfer on exercise
of
share options - - - (85) 85 - -
Taxation on
share-based
payments in equity - - - - 294 - 294
Equity dividends paid - - - - (219) - (219)
Balance at 30 April
2015 1,773 23,443 1,167 653 4,160 (7) 31,189
======== ======== ========= =========== ========= ============ =============
Ideagen plc
Notes to the interim financial information
1 Basis of information
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